10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008

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.)
1000 Flower Street Glendale, California	91201
(Address of principal executive offices)	(Zip code)

(818) 695-5000

(Registrants’ telephone number, including area code)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x      Accelerated filer  ¨      Non-accelerated filer  ¨      Smaller reporting company  ¨

(Do not check if a smaller reporting company)                                

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock: As of September 30, 2008, there were 78,184,330 shares of Class A common stock and 11,419,461 shares of Class B common stock of the registrant outstanding.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements—DreamWorks Animation SKG, Inc. (unaudited)	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	27
Item 4.	Controls and Procedures	27
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 5.	Other Information	29
Item 6.	Exhibits	32
SIGNATURES		33
EXHIBIT INDEX		34

Unless the context otherwise requires, the terms “DreamWorks Animation,” the “Company,” “we,” “us” and “our” refer to DreamWorks Animation SKG, Inc., its consolidated subsidiaries, predecessors in interest, and the subsidiaries and assets and liabilities contributed to it by DreamWorks L.L.C. (“DreamWorks Studios”) on October 27, 2004 in connection with our separation from DreamWorks Studios, including Pacific Data Images, Inc. and its subsidiary, Pacific Data Images, LLC.

1

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

DREAMWORKS ANIMATION SKG, INC.

CONSOLIDATED BALANCE SHEETS

	September 30, 2008			December 31, 2007
	(unaudited)
	(in thousands, except par value and share amounts)
Assets
Cash and cash equivalents	$	337,905		$	292,489
Trade accounts receivable, net of allowance for doubtful accounts		14,967			3,470
Receivable from Paramount, net of reserve for returns and allowance for doubtful accounts		71,967			272,647
Film costs, net		622,970			541,917
Prepaid expenses and other assets		37,030			47,609
Property, plant, and equipment, net of accumulated depreciation and amortization		103,951			86,772
Deferred taxes, net		48,073			48,664
Goodwill		34,216			34,216
Total assets	$	1,271,079		$	1,327,784
Liabilities and Stockholders’ Equity
Liabilities:
Accounts payable	$	6,162		$	3,169
Accrued liabilities		108,496			108,457
Payable to stockholder		55,927			68,371
Income taxes payable		14,832			31,651
Deferred revenue and other advances		46,985			24,561
Borrowings and other debt		70,059			70,059
Total liabilities		302,461			306,268
Commitments and contingencies
Minority interest		2,941			2,941
Stockholders’ equity:
Class A common stock, par value $.01 per share, 350,000,000 shares authorized, 95,211,372 and 93,547,321 shares issued, as of September 30, 2008 and December 31, 2007, respectively		952			935
Class B common stock, par value $.01 per share, 150,000,000 shares authorized, 11,419,461 and 12,984,461 shares issued and outstanding, as of September 30, 2008 and December 31, 2007, respectively		114			130
Additional paid-in capital		865,113			831,115
Retained earnings		593,706			502,763
Less: Class A Treasury common stock, at cost, 17,027,042 and 10,445,278 shares, as of September 30, 2008 and December 31, 2007, respectively		(494,208	)		(316,368	)
Total stockholders’ equity		965,677			1,018,575
Total liabilities and stockholders’ equity	$	1,271,079		$	1,327,784

See accompanying notes.

2

DREAMWORKS ANIMATION SKG, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
	(in thousands, except per share amounts)
Revenues	$	151,525		$	160,751		$	450,227		$	476,950
Costs of revenues		75,518			70,028			248,101			234,152
Gross profit		76,007			90,723			202,126			242,798
Selling, general and administrative expenses		29,872			23,826			84,043			77,062
Operating income		46,135			66,897			118,083			165,736
Interest income, net		2,312			6,571			7,769			19,224
Other income, net		1,444			1,478			3,301			4,361
Increase in income tax benefit payable to stockholder		(7,760	)		(21,968	)		(25,200	)		(51,694	)
Income before income taxes		42,131			52,978			103,953			137,627
Provision for income taxes		4,780			5,936			13,010			13,407
Net income	$	37,351		$	47,042		$	90,943		$	124,220
Basic net income per share	$	0.42		$	0.47		$	1.00		$	1.22
Diluted net income per share	$	0.41		$	0.47		$	0.99		$	1.22
Shares used in computing net income per share
Basic		89,281			99,367			90,667			101,593
Diluted		90,665			99,891			91,755			102,043

See accompanying notes.

3

DREAMWORKS ANIMATION SKG, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2008			2007
	(in thousands)
Operating activities
Net income	$	90,943		$	124,220
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and write off of film costs		225,884			219,949
Stock compensation expense		28,533			25,467
Depreciation and amortization		10,381			6,829
Revenue earned against deferred revenue and other advances		(58,419	)		(65,478	)
Deferred taxes, net		591			(26,953	)
Change in operating assets and liabilities:
Trade accounts receivable		(11,497	)		(3,049	)
Receivable from Paramount		200,680			105,307
Film costs		(303,704	)		(289,035	)
Prepaid expenses and other assets		11,120			(29,999	)
Accounts payable and accrued liabilities		2,910			52,714
Payable to stockholder		(12,444	)		29,852
Income taxes payable, net		(16,991	)		25,249
Deferred revenue and other advances		88,877			60,512
Net cash provided by operating activities		256,864			235,585
Investing activities
Purchases of property, plant and equipment		(34,088	)		(5,466	)
Net cash used in investing activities		(34,088	)		(5,466	)
Financing Activities
Purchase of treasury stock		(177,840	)		(194,356	)
Other		480			1,617
Net cash used in financing activities		(177,360	)		(192,739	)
Increase in cash and cash equivalents		45,416			37,380
Cash and cash equivalents at beginning of period		292,489			506,304
Cash and cash equivalents at end of period	$	337,905		$	543,684
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes, net	$	29,271		$	14,835
Cash paid during the period for interest, net of amounts capitalized	$	719		$	—

See accompanying notes.

4

DREAMWORKS ANIMATION SKG, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Business and Basis of Presentation

Business

The businesses and activities of DreamWorks Animation SKG, Inc. (“DreamWorks Animation” or the “Company”) include the development, production and exploitation of animated films and characters in the worldwide theatrical, home entertainment, television, merchandising and licensing and other markets. The Company’s films are distributed in theatrical, home entertainment and television markets on a worldwide basis by Paramount Pictures Corporation, a subsidiary of Viacom Inc., and its affiliates (collectively, “Paramount”) pursuant to an exclusive distribution agreement and a fulfillment services agreement through the later of (i) the Company’s delivery to Paramount of 13 new animated feature films and (ii) December 31, 2012, unless, in either case, terminated earlier in accordance with the terms of the agreements. The Company generally retains all other rights to exploit its films, including commercial tie-in and promotional rights with respect to each film, as well as merchandising, interactive, literary publishing, music publishing and soundtrack rights.

Basis of Presentation and Use of Estimates

The consolidated financial statements of the Company present the financial position, results of operations and cash flows of DreamWorks Animation and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The accompanying unaudited financial statements as of September 30, 2008 and for the three and nine months ended September 30, 2008 and 2007 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, certain information and footnote disclosures normally included in comprehensive financial statements have been condensed or omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 2007, was derived from audited financial statements.

These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 (the “2007 Form 10-K”).

The accompanying unaudited consolidated financial statements reflect all adjustments, consisting of only normal recurring items, which in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for the full year or for any future period.

The preparation of financial statements in conformity with GAAP 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, estimates of product sales that will be returned and the amount of receivables that ultimately will be collected, the potential outcome of future tax consequences of events that have been recognized in the Company’s financial statements, loss contingencies and estimates used in the determination of the fair value of stock options and other equity awards for stock-based compensation. Actual results could differ from those estimates. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or results of operations will be affected. Estimates are based on past experience and other assumptions that management believes are reasonable under the circumstances, and management evaluates these estimates on an ongoing basis.

Certain amounts in the prior period’s consolidated financial statements have been reclassified to conform to the current period’s presentation.

5

DREAMWORKS ANIMATION SKG, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued FAS No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 establishes a common definition of fair value to be used whenever GAAP requires (or permits) assets or liabilities to be measured at fair value, and does not expand the use of fair value in any new circumstances. It also requires expanded disclosure about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. On February 12, 2008, the FASB issued FASB Staff Position No. FAS No. 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”) which defers the effective date for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (that is, at least annually), to fiscal years beginning after November 15, 2008. In addition, in February 2007, the FASB issued FAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—including an amendment of FASB Statement No. 115” (“FAS 159”). FAS 159 expands the use of fair value accounting but does not affect existing standards that require assets or liabilities to be carried at fair value. Under FAS 159, a company may elect to use fair value to measure most financial assets and liabilities and any changes in fair value are recognized in earnings. The fair value election is irrevocable and generally made on an instrument-by-instrument basis, even if a company has similar instruments that it elects not to measure based on fair value. The Company adopted both FAS 157 and FAS 159 on January 1, 2008 for its financial assets and liabilities and, in accordance with FSP 157-2, deferred the effective date for its nonfinancial assets and liabilities. The adoption of FAS 157 and FAS 159 had no impact on the Company’s consolidated financial statements.

In December 2007, the FASB issued FAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of Accounting Research Bulletin No. 51” (“FAS 160”). FAS 160 clarifies the classification in a company’s consolidated balance sheet and the accounting for and disclosure of transactions between the company and holders of noncontrolling interests. FAS 160 is effective for the Company January 1, 2009. Early adoption is not permitted. The Company does not expect the adoption of FAS 160 will have a material impact on its consolidated financial statements.

2. Film Costs

Film costs consist of the following (in thousands):

	September 30, 2008		December 31, 2007
	(unaudited)
In release, net of amortization	$	238,348	$	267,724
In production		346,158		239,450
In development		38,464		34,743
Total film costs	$	622,970	$	541,917

The Company anticipates that 50% and 87% of “in release” film costs as of September 30, 2008 will be amortized over the next 12 months and three years, respectively.

6

DREAMWORKS ANIMATION SKG, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

3. Property, Plant and Equipment

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

	September 30, 2008			December 31, 2007
	(unaudited)
Land, buildings and improvements	$	127,127		$	117,060
Furniture and equipment		13,409			9,811
Computer hardware and software		24,279			13,456
Total property, plant and equipment		164,815			140,327
Accumulated depreciation and amortization		(60,864	)		(53,555	)
Property, plant and equipment, net	$	103,951		$	86,772

4. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	September 30, 2008		December 31, 2007
	(unaudited)
Employee compensation	$	48,696	$	54,675
Participations and residuals		44,482		37,275
Deferred rent		6,326		6,686
Other accrued liabilities		8,992		9,821
Total accrued liabilities	$	108,496	$	108,457

As of September 30, 2008, the Company estimates that in the next 12 months it will pay approximately $25.7 million of it accrued participation and residual costs.

5. Deferred Revenue and Other Advances

Deferred revenue and other advances and the related amounts earned consist of the following (in thousands):

					Amounts Earned
	September 30, 2008		December 31, 2007		Three Months Ended September 30,				Nine Months Ended September 30,
					2008		2007		2008		2007
	(unaudited)				(unaudited)
Home Box Office Inc., Advance	$	—	$	—	$	13,333	$	13,628	$	26,666	$	27,550
Strategic Alliance/Development Advance(1)		3,316		2,104		3,811		4,491		11,788		10,115
Deferred Revenue		12,135		5,594		837		792		10,820		18,387
Licensing Advances		26,472		13,185		391		360		1,713		8,120
Other Advances		5,062		3,678		358		591		5,466		5,148
Total deferred revenue and other advances	$	46,985	$	24,561

⁽¹⁾ Of the total amounts earned against the “Strategic Alliance/Development Advances,” $2.4 million for each of the three-month periods ended September 30, 2008 and 2007, and $8.0 million and $3.8 million, respectively, for the nine months ended September 30, 2008 and 2007, were capitalized as an offset to film costs or property, plant and equipment.

7

DREAMWORKS ANIMATION SKG, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

6. Financing Arrangements

Credit Agreements. On June 24, 2008, the Company entered into a new revolving credit facility (“New Credit Facility”) with several banks pursuant to which the Company is permitted to borrow up to $125.0 million. The Company is required to pay a commitment fee at an annual rate of 0.375% on undrawn amounts. Interest on borrowed amounts is determined by reference to either the lending banks’ base rate plus 0.50% per annum or to LIBOR plus 1.50% per annum. Borrowings are secured by substantially all the Company’s assets. The New Credit Facility requires the Company to maintain a specified leverage ratio and, subject to specific exceptions, prohibits the Company from taking certain actions without the lenders’ consent, such as granting liens or entering into any merger or other significant transaction. The New Credit Facility terminates on June 24, 2013. As of September 30, 2008, there were no borrowings under the New Credit Facility.

In connection with entering into the New Credit Facility, the Company terminated its prior $100 million revolving credit facility (“Prior Credit Facility”) and the Company did not incur any material termination penalties in connection with this termination.

Outstanding Financing. The following table summarizes the balances outstanding and other information associated with the Company’s various financing arrangements that were outstanding either at September 30, 2008 and\or December 31, 2007 (in thousands):

								Interest Cost
	Balance Outstanding				Maturity Date	Interest Rate as of September 30, 2008		Three Months Ended September 30,						Nine Months Ended September 30,
	September 30, 2008		December 31, 2007					2008			2007			2008			2007
Animation Campus Financing(1)	$	73,000	$	73,000	October 2009	2.57	%	$	706		$	1,229		$	2,349		$	3,594
New Credit Facility	$	—		N/A	June 2013	0.375	%(2)	$	131	(2)		N/A		$	131	(2)		N/A
Prior Credit Facility(3)		N/A	$	—	N/A	N/A			N/A		$	192	(3)	$	372	(3)	$	952	(3)

⁽¹⁾ The entire amount of the obligation, $73.0 million, is due and payable in October 2009, bears interest primarily at 30-day commercial paper rates and is fully collateralized by the underlying real property. In connection with the adoption of FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities,” the special-purpose entity associated with this financing was consolidated by the Company as of December 31, 2003 and, as such, the balance of the obligation is presented on the consolidated balance sheets as $70.1 million of borrowings and other debt and a $2.9 million minority interest.

⁽²⁾ As of September 30, 2008, there was no debt outstanding under the New Credit Facility. The Company is required to pay a commitment fee of 0.375% per annum on undrawn amounts.

⁽³⁾ There was no debt outstanding under the Prior Credit Facility for the respective periods prior to its termination in June 2008. Under the Prior Credit Facility, the Company was required to pay a commitment fee of 0.75% on undrawn amounts.

As of September 30, 2008, the Company was in compliance with all applicable financial debt covenants.

Interest Capitalized to Film Costs. Interest capitalized to film costs during the three months ended September 30, 2008 and 2007 totaled $0.7 million and $2.3 million, respectively, and for the nine months ended September 30, 2008 and 2007 totaled $2.3 million and $6.9 million, respectively.

8

DREAMWORKS ANIMATION SKG, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

7. Income Taxes

The provision for income taxes for the three and nine months ended September 30, 2008 and 2007, respectively, differed from the amounts computed by applying the U.S. Federal statutory rate of 35% to income before income taxes and increase in income tax benefit payable to stockholder as a result of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2008		2007		2008		2007
	(unaudited)
Provision for income taxes (excluding effects of Stockholder’s Tax Agreement)(1)
U.S. Federal statutory rate	35.0	%	35.0	%	35.0	%	35.0	%
U.S. state taxes, net of Federal benefit	1.3		2.4		1.7		2.1
Revaluation of deferred tax assets, net	(4.9	)	(15.8	)	(4.1	)	(8.8	)
Other	(6.3	)	0.9		(3.0	)	0.3
Total provision excluding effect of Stockholder’s Tax Agreement(1)	25.1	%	22.5	%	29.6	%	28.6	%
Effects of Stockholder’s Tax Agreement(1)
U.S. state taxes, net of Federal benefit	(0.7	)	(1.3	)	(1.0	)	(1.0	)
Revaluation of deferred tax assets, net	(17.4	)	(16.0	)	(19.9	)	(22.6	)
Other	2.6		2.7		1.4		2.1
Total effect of Stockholder’s Tax Agreement(1)	(15.5	)%	(14.6	)%	(19.5	)%	(21.5	)%
Total net provision for income taxes	9.6	%	7.9	%	10.1	%	7.1	%

⁽¹⁾ Stockholder’s Tax Agreement: As a result of a series of transactions entered into by affiliates controlled by a stockholder, the Company is obligated to remit to an affiliate of this stockholder 85% of any such cash savings in U.S. Federal income tax and California franchise tax and certain other related tax benefits.

The Company’s federal income tax returns for the tax years ended December 31, 2005 and December 31, 2006 are currently under examination by the Internal Revenue Service (“IRS”). The Company’s California Franchise tax returns for the years ended December 31, 2004 and 2005 are currently under examination by the Franchise Tax Board (“FTB”). The IRS has concluded its limited-scope audit of the Company’s federal income tax return for the period from October 24, 2004 through December 31, 2004 without any adjustments. All tax years since the Company’s separation from DreamWorks Studios on October 27, 2004 remain open to audit by relevant federal, state and local taxing jurisdictions.

8. Stockholders’ Equity

Class A Common Stock

Stock Repurchase Programs. In December 2007, the Company’s Board of Directors approved a stock repurchase program pursuant to which the Company was authorized to repurchase up to an aggregate of $150 million of its outstanding stock. In July 2008, the Company’s Board of Directors terminated the December 2007 share repurchase program, which had approximately $62 million of unused authorization, and approved a new stock repurchase program pursuant to which the Company may repurchase up to an additional aggregate of $150 million of its outstanding stock. Pursuant to these programs, from January 1, 2008 through September 30, 2008, the Company repurchased approximately 6.5 million shares of its outstanding Class A common stock for approximately $177 million. As of September 30, 2008, the Company had remaining authorization under the July 2008 stock repurchase program to repurchase approximately $61 million of its outstanding stock.

9

DREAMWORKS ANIMATION SKG, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Class B Common Stock

Conversion of Class B Common Stock. In May 2008 and July 2008, David Geffen, a significant stockholder and member of the Company’s Board of Directors, converted 1,100,000 and 465,000 shares, respectively, of the Company’s Class B common stock into an equal amount of shares of the Company’s Class A common. Upon conversion, these shares were immediately donated to a charitable organization established by Mr. Geffen. These transactions had no impact on the total amount of the Company’s shares outstanding.

9. Equity-Based Compensation

The Company recognizes stock-based compensation in accordance with the provisions of FASB Statement No. 123 (revised 2004), “Share-Based Payment” (“FAS 123R”). Under FAS 123R, the Company recognizes compensation costs for equity awards granted to its employees based on their grant-date fair value. Most of the Company’s equity awards contain vesting conditions dependent upon the completion of specified service periods. The Company has awarded some equity awards to senior management that are dependent upon the achievement of established sets of performance or market-based criteria. Compensation cost for service-based equity awards is recognized ratably over the vesting period. Compensation cost for performance-based awards is adjusted to reflect the probability of vesting.

The impact of stock options (including stock appreciation rights) and restricted stock awards on net income (excluding amounts capitalized) for the three- and nine-month periods ended September 30, 2008 and 2007, respectively, was as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
	(unaudited)
Total equity-based compensation	$	10,256		$	6,318		$	28,533		$	25,467
Tax impact(1)		(2,574	)		(1,422	)		(8,446	)		(7,284	)
Reduction in net income	$	7,682		$	4,896		$	20,087		$	18,183

⁽¹⁾ Tax impact is determined at the Company’s blended effective tax rate, excluding the effect of the Stockholder’s Tax Agreement (see Note 7).

Equity-based compensation cost capitalized as a part of film costs was $1.4 million and $0.9 million for the three-month periods ended September 30, 2008 and 2007, respectively, and $4.3 million and $2.5 million for the nine-month periods ended September 30, 2008 and 2007, respectively.

10

DREAMWORKS ANIMATION SKG, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following tables set forth the number and weighted average fair value of equity awards granted during the three- and nine-month periods ended September 30, 2008 and 2007:

	Three Months Ended September 30,			Nine Months Ended September 30,
	Number Granted	Weighted Average Fair Value		Number Granted	Weighted Average Fair Value
	(unaudited)
	(in thousands)			(in thousands)
2008
Stock appreciation rights	49	$	12.25	107	$	11.02
Restricted stock and restricted stock units	76	$	29.72	130	$	28.59
2007
Stock appreciation rights	131	$	14.42	165	$	13.91
Restricted stock and restricted stock units	44	$	32.86	94	$	30.37

As of September 30, 2008, the total compensation cost related to unvested equity awards granted to employees (excluding equity awards with performance objectives deemed not probable of achievement) but not yet recognized was approximately $53.4 million. This cost will be amortized on a straight-line basis over a weighted average life of approximately 2 years.

10. Significant Customer and Segment Information

Significant Customer. Paramount represented 78.6% and 90.3% of total revenue for the three-month periods ended September 30, 2008 and 2007, respectively, and 73.1% and 87.9% for the nine-month periods ended September 30, 2008 and 2007, respectively.

Revenue by Film.

The Company’s revenue by film consists of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2008		2007		2008		2007
	(unaudited)
Kung Fu Panda	$	63,281	$	—	$	109,719	$	—
Shrek the Third		32,526		92,075		110,648		201,173
Bee Movie		27,266		—		101,721		—
Over the Hedge		2,443		17,847		11,945		77,776
Flushed Away		2,589		17,298		22,521		30,870
Film Library / Other(1)		23,420		33,531		93,673		167,131
	$	151,525	$	160,751	$	450,227	$	476,950

⁽¹⁾ Primarily includes film library revenue from Antz, Prince of Egypt, The Road to El Dorado, Chicken Run, Joseph: King of Dreams, Shrek, Spirit: Stallion of the Cimarron, Sinbad: Legend of the Seven Seas, Shrek 2, Shark Tale, Madagascar, and Wallace & Gromit: The Curse of the Were-Rabbit and other revenues which include the 2007 television special Shrek the Halls.

11

DREAMWORKS ANIMATION SKG, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

11. Commitments and Contingencies

Legal Proceedings. From time to time, the Company is involved in legal proceedings arising in the ordinary course of its business, typically intellectual property litigation and infringement claims related to the Company’s feature films, which could cause the Company to incur significant expenses or prevent the Company from releasing a film. The Company also has been the subject of patent and copyright claims relating to technology and ideas that it may use or feature in connection with the production, marketing or exploitation of the Company’s feature films, which may affect the Company’s ability to continue to do so. While the resolution of these matters cannot be predicted with certainty, the Company does not believe, based on current knowledge, that any existing legal proceedings or claims are likely to have a material adverse effect on its financial position, results of operations or liquidity.

12. Net Income Per Share

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
	(unaudited)
Numerator:
Net income	$	37,351		$	47,042		$	90,943		$	124,220
Denominator:
Weighted average common shares and denominator for basic calculation:
Weighted average common shares outstanding		91,262			101,734			92,648			103,960
Less: Unvested restricted stock		(1,981	)		(2,367	)		(1,981	)		(2,367	)
Denominator for basic calculation		89,281			99,367			90,667			101,593
Weighted average effects of dilutive equity-based compensation awards:
Employee stock options and stock appreciation rights		120			161			111			168
Restricted stock awards		1,264			363			977			282
Denominator for diluted calculation		90,665			99,891			91,755			102,043
Net income per share—basic	$	0.42		$	0.47		$	1.00		$	1.22
Net income per share—diluted	$	0.41		$	0.47		$	0.99		$	1.22

The following table sets forth (in thousands) the weighted average number of options to purchase shares of common stock, stock appreciation rights, and equity awards subject to performance conditions which were not included in the calculation of diluted per share amounts because they were anti-dilutive.

	Three Months Ended September 30,		Nine Months Ended September 30,
	2008	2007	2008	2007
	(unaudited)
Options to purchase shares of common stock	1,864	1,336	1,685	1,280
Stock appreciations rights	2,497	1,118	2,504	1,279
Equity awards subject to performance conditions	—	1,849	—	1,849
Total	4,361	4,303	4,189	4,408

12

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This section and other parts of this Quarterly Report on Form 10-Q (the “Quarterly Report”) contain forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results discussed in the forward-looking statements. You should read the following discussion and analysis in conjunction with our unaudited consolidated financial statements and the related notes thereto contained elsewhere in this Quarterly Report, and our audited consolidated financial statements and related notes thereto, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Risk Factors” section included in our Annual Report on Form 10-K for the year ended December 31, 2007 (the “2007” Form 10-K”). We urge you to carefully review and consider the various disclosures made by us in this Quarterly Report and in our other reports filed with the Securities and Exchange Commission (the “SEC”), including our 2007 Form 10-K and Current Reports on Form 8-K, before deciding to purchase, hold or sell our common stock.

Overview

Our Business and Distribution and Servicing Arrangements

Our business is primarily devoted to developing and producing computer-generated, or CG, animated feature films. Our films are distributed in theatrical, home entertainment and television markets on a worldwide basis by Paramount Pictures Corporation, a subsidiary of Viacom Inc., and its affiliates (collectively, “Paramount”) pursuant to an exclusive distribution agreement and a fulfillment services agreement. We generally retain all other rights to exploit our films, including commercial tie-in and promotional rights with respect to each film, as well as merchandising, interactive, literary publishing, music publishing and soundtrack rights. Please see Part I, Item 1 “Business—Distribution and Servicing Arrangements” in our 2007 Form 10-K for a discussion of our distribution and servicing arrangements with Paramount. In addition, we continue to expand the exploitation of our film properties through the development of non-theatrical special content such as our 2007 half-hour television Christmas special, Shrek the Halls, and our upcoming Broadway musical, Shrek the Musical.

Our Revenues and Costs

Our feature films are the source of substantially all of our revenue. We derive revenue from the worldwide exploitation of our feature films in the following markets:

• Theatrical, Home Entertainment and Television—Our films are distributed in the worldwide theatrical, home entertainment, and free and pay television markets by Paramount, our distributor and fulfillment service provider. International results are generally reported to us by our distributor on a 30-day lag. Paramount uses film receipts to recover the distribution and marketing expenses it incurs for each film and to cover its 8% distribution fee. Accordingly, we only record revenue from the exploitation of our films to the extent it exceeds our distributor’s costs and fee, which may be several quarters after a film’s theatrical release.

• Licensing/Merchandising—We generate royalty-based revenues from the licensing of our character and film elements to consumer product companies worldwide. Typically, these agreements provide us with a royalty based upon a percentage of net sales of the products. We also license our characters and storylines for use in conjunction with our promotional partners’ products or services. In exchange, we generally receive promotional fees as well as the additional marketing benefits from cross-promotional opportunities. Because these activities are not subject to our exclusive distribution agreement or fulfillment services agreement with Paramount, we receive payment of licensing and merchandising revenues directly from third parties.

For a detailed description of our sources of revenues, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Revenues and Costs—Sources of Revenue” in our 2007 Form 10-K.

13

Our primary operating expenses include:

• Costs of Revenues—Under our distribution arrangements, our costs of revenues primarily include the amortization of capitalized production, overhead and interest costs, participation and residual costs and write-offs of amounts previously capitalized for films not expected to be released or released films not expected to recoup their capitalized costs. As the profitability for each film varies depending upon its individual projection of total revenue to be received from all sources and its amount of capitalized costs incurred, amortization of capitalized film costs 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 the estimate of any film’s estimated remaining total revenue to be received from all sources or capitalized costs and (iii) write-downs of film costs due to changes in the estimated fair value of unamortized film costs. Distribution and marketing costs are only included in costs of revenues to the extent that we cause our distributor to make additional expenditures in excess of agreed amounts. Exclusive of our distribution arrangements, our costs of revenues also include direct costs for sales commissions to outside third parties for the licensing and merchandising of our characters.

• Selling, General and Administrative Expenses—Our selling, general and administrative expenses consist primarily of employee compensation (including salaries, bonuses, stock compensation and employee benefits), rent, insurance and fees for professional services.

For a detailed description of our operating expenses, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Revenues and Costs—Costs of Revenues” and “—Selling, General and Administrative Expenses” in our 2007 Form 10-K.

Because our films are distributed in foreign countries, fluctuations in foreign currency exchange rates affect our business, results of operations and cash flow. For a detailed discussion of our foreign currency risk, please see “Quantitative and Qualitative Disclosures About Market Risk” under Part I, Item 3 of this Quarterly Report.

Seasonality

Our revenues fluctuate based upon the timing of our films’ theatrical and home entertainment releases and the recoupment position of our distributor on a film-by-film basis, which varies depending upon a film’s overall performance. Furthermore, revenues related to the licensing of our character and film elements are influenced by seasonal consumer purchasing behavior and the timing of animated theatrical releases. As a result, our annual or quarterly operating results for any period are not necessarily indicative of results to be expected for future periods.

14

Results of Operations

Overview of Financial Results

The following table sets forth, for the periods presented, certain data from our unaudited consolidated statements of income. This information should be read in conjunction with our unaudited consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report.

	Three Months Ended September 30,											Nine Months Ended September 30,
	2008			2007			$ Change			% Change		2008			2007			$ Change			% Change
	(unaudited)
	(in millions, except percentages and per share data)
Revenues	$	151.5		$	160.7		$	(9.2	)	(5.7	)%	$	450.2		$	477.0		$	(26.8	)	(5.6	)%
Costs of revenues		75.5			70.0			(5.5	)	(7.9	)%		248.1			234.2			(13.9	)	(5.9	)%
Selling, general and administrative expenses		29.9			23.8			(6.1	)	(25.6	)%		84.0			77.1			(6.9	)	(8.9	)%
Operating income		46.1			66.9			(20.8	)	(31.1	)%		118.1			165.7			(47.6	)	(28.7	)%
Interest income, net		2.3			6.6			(4.3	)	(65.2	)%		7.7			19.2			(11.5	)	(59.9	)%
Other income, net		1.4			1.5			(0.1	)	(6.7	)%		3.3			4.4			(1.1	)	(25.0	)%
Increase in income tax benefit payable to stockholder		(7.7	)		(22.0	)		14.3		65.0	%		(25.2	)		(51.7	)		26.5		51.3	%
Income before income taxes		42.1			53.0			(10.9	)	(20.6	)%		103.9			137.6			(33.7	)	(24.5	)%
Provision for income taxes		4.8			5.9			1.1		18.6	%		13.0			13.4			0.4		3.0	%
Net income	$	37.3		$	47.1		$	(9.8	)	(20.8	)%	$	90.9		$	124.2		$	(33.3	)	(26.8	)%
Diluted net income per share	$	0.41		$	0.47		$	(0.06	)	(12.8	)%	$	0.99		$	1.22		$	(0.23	)	(18.9	)%
Diluted shares used in computing diluted net income per share(1)		90.7			99.9			N/A		9.2	%		91.8			102.0			N/A		10.0	%

⁽¹⁾ During the three- and nine-month periods ended September 30, 2008, and the year ended December 31, 2007, we repurchased a total of 2.9 million, 6.6 million and 10.1 million shares of our Class A common stock, respectively.

15

Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2007

The following table sets forth (in millions), for the periods presented, our revenues by film. This information should be read in conjunction with our unaudited consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report.

⁽¹⁾ For each period shown, “Current year theatrical releases” consists of revenues attributable to films released during the current year, “Prior year theatrical releases” consists of revenues attributable to films released during the immediately prior year and “All Other” consists of revenues attributable to films released during all previous periods, including our library titles, as well as revenues from any other sources.

Revenues. For the three months ended September 30, 2008, our revenue was $151.5 million, a decrease of $9.2 million, or 5.7%, as compared to $160.8 million for the three months ended September 30, 2007. As illustrated in the revenue chart above, the decrease in revenue in the third quarter of 2008 as compared to the third quarter of 2007 was primarily related to the comparative performance of the films comprising the “Current year theatrical releases” category being largely offset by the stronger performance of the “Prior year theatrical releases” category. Kung Fu Panda, our most recent theatrical release, while contributing 41% of the total revenue for the third quarter of 2008, contributed approximately $28.8 million less revenue than the higher-grossing Shrek the Third for the comparable period of 2007. However, the stronger performance of our 2008 “Prior year theatrical releases” (Shrek the Third and Bee Movie) as compared to 2007’s “Prior year theatrical releases” (Over the Hedge and Flushed Away) largely offset the decline in revenue for the “Current year theatrical releases” category.

Revenue for the quarter ended September 30, 2008, was comprised of amounts earned by a variety of films. Kung Fu Panda, our most recent theatrical release and single greatest source of revenue for the quarter, contributed $63.3 million earned primarily in the worldwide theatrical market and through ancillary revenue sources. Bee Movie, our 2007 fourth quarter release, generated $27.3 million of revenue primarily attributable to the domestic television and worldwide home entertainment markets and Shrek the Third earned an additional $32.5 million of revenue earned primarily in the international television market. Over the Hedge and Flushed Away contributed revenues totaling of $5.0 million earned primarily in the international television markets. Our other properties, including our library titles which include Madagascar, Shrek 2 and Shrek, contributed revenues totaling $23.4 million earned across a variety of worldwide markets.

For the third quarter of 2007, a variety of films across several markets contributed to our total revenue of $160.7 million: Shrek the Third, the single greatest source of revenue, contributed $92.1 million of revenue earned primarily in the international theatrical market and ancillary markets, which includes merchandising and licensing; Flushed Away, our 2006 fourth quarter theatrical release, generated revenue totaling $17.3 million

16

attributable to the domestic pay television and worldwide home entertainment markets; and Over the Hedge contributed $17.8 million of revenue earned largely in the international pay television and worldwide home entertainment markets. Our other films, including our library titles which include Shrek 2, contributed revenues totaling $33.6 million attributable primarily to the international television and worldwide home entertainment markets.

Costs of Revenues. Costs of revenues increased by $5.5 million, or 7.9%, to $75.5 million for the three months ended September 30, 2008. Cost of revenues (the primary component of which is film amortization costs) as a percentage of film revenue was 49.8% for the three months ended September 30, 2008 compared to 43.6% for the three months ended September 30, 2007. While the amortization rate for the films comprising each quarter’s respective “Current year theatrical releases” category was fairly comparable, the increase in amortization of film costs as a percentage of film revenue for the three months ended September 30, 2008 was primarily due to the combined higher rate of amortization for our 2008 “Prior year theatrical releases” (Shrek the Third and Bee Movie) for the three months ended September 30, 2008, as compared to the amortization rate for our 2007 “Prior year theatrical releases” (Over the Hedge and Flushed Away) during the comparable period of 2007. This increase in amortization rates between the periods was slightly offset by the lower rates of amortization for the “All Other” category during the quarter ended September 30, 2008 as compared to the quarter ended September 30, 2007.

Selling, General and Administrative Expenses. Selling, general and administrative expenses (including stock compensation expense) totaled $29.9 million for the three months ended September 30, 2008, an increase of $6.1 million from $23.8 million for the three months ended September 30, 2007. The increase in selling, general and administrative expenses is largely related to approximately $3.7 million of higher stock compensation expense, which is generally due to the continued growth in the number of equity awards granted to the overall employee base and the impact of the revision to the terms of certain equity grants, approximately $1.2 million of higher facilities costs related to the expansion of the Company’s headquarters, and the impact of new business initiatives.

Operating Income. Operating income for the three months ended September 30, 2008 was $46.1 million compared to $66.9 million for the comparable period of 2007. The decrease of $20.8 million in operating income for the three months ended September 30, 2008 was primarily due to the stronger performance of Shrek the Third during the three months ended September 30, 2007 as compared to our most current theatrical release, Kung Fu Panda, during the comparable period of 2008 and increased selling, general and administrative expenses.

Interest Income, Net. For the three months ended September 30, 2008, total net interest income was $2.3 million, a decrease of $4.3 million or 65.2% from $6.6 million for the same period of 2007. The decrease in net interest income for the third quarter of 2008 as compared to the third quarter of 2007 was mainly due to lower average rates of interest earned on cash and cash equivalents and, to a lesser extent, lower average balances of cash and cash equivalents largely due to the stock repurchases made throughout 2007 and continuing in 2008.

Interest expense capitalized to production film costs was $0.7 million and $2.3 million for the three months ended September 2008 and 2007, respectively. The $1.6 million decrease between the periods was primarily due to the decrease in amount of interest expense eligible for capitalization during the third quarter of 2008 because of the repayment of debt in 2007 and lower interest rates in 2008 associated with our various financing arrangements.

Other Income, Net. For the three months ended September 30, 2008 total other income was $1.4 million and remained relatively unchanged from that for the third quarter of 2007. Other income in both years consisted entirely of income recognized in connection with preferred vendor arrangements.

Increase in Income Tax Benefit Payable to Stockholder. As a result of a partial increase in the tax basis of our tangible and intangible assets attributable to transactions entered into by affiliates controlled by a stockholder (“Tax Basis Increase”), we may pay reduced tax amounts to the extent we generate sufficient taxable income in the future. As discussed below in “—Critical Accounting Policies and Estimates—Provision for Income Taxes,”

17

we are obligated to remit to such affiliates 85% of any 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. For the quarter ended September 30, 2008, we recorded $9.1 million in net tax benefits associated with the Tax Basis Increase as a reduction in the provision for income taxes and recorded an expense of $7.7 million representing 85% of these recognized benefits to increase income tax benefit payable to stockholder.

During the quarter ended September 30, 2007, we recognized $25.8 million in net tax benefits associated with the Tax Basis Increase as an increase in the provision for income taxes and recorded an expense of $22.0 million representing 85% of these recognized benefits to increase the income tax benefit payable to stockholder for the three months ended September 30, 2007.

Provision for Income Taxes. For the three months ended September 30, 2008 and 2007, we recorded a provision for income taxes of $4.8 million and $5.9 million, respectively, or an effective tax rate of 9.6% and 7.9%, respectively. The quarter-over-quarter change in the effective tax rate is driven by changes in the valuation allowance required against the deferred tax assets. Our effective tax rate for both periods was lower than the 35% statutory federal rate because of the decrease in our valuation allowance for deferred tax assets primarily resulting from the increase in the net tax benefits recognized from the Tax Basis Increase as described above. However, when our provision for income taxes is combined with the amounts associated with the Increase in Income Tax Benefit Payable to Shareholder (see above), the combined percentages remain relatively consistent between the three months ended September 30, 2008 and September 30, 2007, at 25.1% and 22.5%, respectively.

Net Income. Net income for the three months ended September 30, 2008 was $37.3 million, or $0.41 per diluted share, compared to a net income of $47.1 million, or $0.47 net income per diluted share, in the corresponding period in 2007.

Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007

The following table sets forth (in millions), for the periods presented, our revenues by film. This information should be read in conjunction with our unaudited consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report.

⁽¹⁾ For each period shown, “Current year theatrical releases” consists of revenues attributable to films released during the current year, “Prior year theatrical releases” consists of revenues attributable to films released during the immediately prior year and “All Other” consists of revenues attributable to films released during all previous periods, including our library titles, as well as revenues from any other sources.

18

Revenues. For the nine months ended September 30, 2008, our revenues totaled $450.2 million, a decrease of $26.8 million, or 5.6%, as compared to $477.0 million for the nine months ended September 30, 2007. As illustrated in the chart above, the change in revenues for the first nine months of 2008 as compared to the corresponding period in 2007 is a function of the lower revenues contributed by the films comprising the “Current year theatrical releases” and “All Other” categories being largely offset by the stronger performance of the “Prior year theatrical releases” category. Kung Fu Panda, while performing strong enough to contribute almost a quarter of our total revenue for the nine months ended September 30, 2008, contributed approximately $90 million less revenue in the first nine months of 2008 than the higher-grossing Shrek the Third contributed during the comparable period of 2007. In addition, the “All Other” category benefited in the first nine months of 2007 from $25.5 million of net revenue reported by our current distributor in the second quarter of 2007 associated with the conclusion of the transition of our home entertainment fulfillment services from our prior distributor. Nevertheless, the stronger performance of our 2008 “Prior year theatrical releases” (Shrek the Third and Bee Movie) as compared to 2007’s “Prior year theatrical releases” (Over the Hedge and Flushed Away) largely offset the decline in revenue for the “Current year theatrical releases” and “All Other” categories.

Several films contributed to our revenue for the nine-month period ended September 30, 2008. Kung Fu Panda, our most recent release, contributed $109.7 million of revenue associated with its worldwide theatrical release and ancillary revenue sources. In addition to merchandising and licensing revenue, ancillary revenue for Kung Fu Panda included non-recurring revenue associated with the completion of a strategic relationship that accounted for slightly less than a quarter of the film’s total revenue for the nine months ended September 30, 2008. Our “Prior year theatrical releases,” Shrek the Third and Bee Movie, generated a total of $212.4 million primarily attributable to the worldwide theatrical, home entertainment and ancillary markets (including non-recurring revenue associated with strategic relationship that accounted for slightly less than a quarter of Bee Movie’s total revenue for the nine months ended September 30, 2008) and Over the Hedge, Flushed Away and Wallace & Gromit contributed additional revenue of $11.9 million, $22.5 million and $16.1 million, respectively, earned primarily in the international television and worldwide home entertainment markets. Our other properties, including our library of titles which includes Madagascar, contributed revenues totaling $77.6 million earned principally in the international television and worldwide home entertainment markets.

For the nine months ended September 30, 2007, a variety of films across several markets contributed to our total revenue of $477.0 million: Shrek the Third, the single greatest source of revenue, contributed $201.2 million of revenue earned primarily in the worldwide theatrical market and ancillary markets (which includes merchandising and licensing); Over the Hedge contributed $77.8 million of revenue earned largely in the worldwide home entertainment and domestic pay television markets; Flushed Away contributed $30.9 million earned across a variety of markets; and our other films, including our library of titles, contributed revenues totaling $167.1 million, respectively, generated primarily in the worldwide television and home entertainment markets. In addition, during the second quarter of 2007, the transition of our home entertainment fulfillment services from Universal Studios to Paramount was substantially completed. As a result, the net revenue reported to us by our distributor for the quarter ended June 30, 2007 for several of out titles, including Wallace & Gromit and some of our library titles, increased by $25.5 million due to a reduction of certain previously recorded estimates of home entertainment product returns and marketing costs.

Costs of Revenues. Costs of revenues increased by $13.9 million, or 5.9%, to $248.1 million for the nine months ended September 30, 2008. Cost of revenues (the primary component of which is film amortization costs) as a percentage of film revenue was 55.1% for the nine months ended September 30, 2008 and 49.1% for the nine months ended September 30, 2007. While the amortization rates for each period’s respective “Current year theatrical release” (Kung Fu Panda and Shrek the Third) were largely consistent, the increase in amortization of film costs as a percentage of film revenue was principally because the combined amortization rate for our 2008 “Prior year theatrical releases” for the nine months ended September 30, 2008, was higher than that for 2007 “Prior year theatrical releases” (Over the Hedge and Flushed Away) during the comparable period of 2007. This increase in amortization rates between the nine-month periods was slightly offset by the combined lower rate of

19

amortization for the “All Other” category during the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007.

Selling, General and Administrative Expenses. Total selling, general and administrative expenses (which includes stock compensation expense) increased by $6.9 million, or 8.9%, to $84.0 million for the nine months ended September 30, 2008 from $77.1 million for the nine months ended September 30, 2007. The increase spans several categories, including approximately $3.0 of higher stock compensation expense which is generally due to the continued growth in the number of grants made to the overall employee base, approximately $2.0 million of increased corporate travel costs related to new business developments, and $1.9 million higher facilities costs related to the expansion of our Company headquarters.

Operating Income. Operating income for the nine months ended September 30, 2008 was $118.1 million, a decrease of $47.6 million, or 28.7%, compared to that of $165.7 million for the comparable period of 2007. The decrease in operating income for the nine-month period ended September 30, 2008 was largely as a result of the combined impact of the performance of our current theatrical release, Kung Fu Panda, as compared to the superior performance of Shrek the Third during the comparable period of 2007 and the additional revenue reported by our distributor in the second quarter of 2007 as a result of the completion of the transition of home entertainment fulfillment services from our prior distributor. This combined impact was partially offset by the stronger performance of the “Prior year theatrical releases” category during the nine months ended September 30, 2008 as compared to the comparable period of 2007. Additionally, higher selling, general and administrative costs contributed to the decrease in operating income.

Interest Income, Net. For the nine months ended September 30, 2008, total net interest income was $7.7 million, a decrease of $11.5 million or 59.9% from $19.2 million for the same period of 2007. The decrease in net interest income for the first nine months of 2008 as compared to the first nine months of 2007 was due to a combination of lower average rates of interest earned on cash and cash equivalents and lower average balances of cash and cash equivalents largely due to the stock repurchases made throughout 2007 and continuing in 2008.

Interest expense capitalized to production film costs was $2.3 million and $6.9 million for the nine months ended September 30, 2008 and 2007, respectively. The $4.6 million decrease between the periods was primarily due to the decrease in amount of interest expense eligible for capitalization during the first nine months of 2008 because of the repayment of debt in 2007 and lower interest rates in 2008 associated with our various financing arrangements.

Other Income, Net. For the nine months ended September 30, 2008 and 2007, total other income was $3.3 million and $4.4 million respectively. Other income in both years consisted entirely of income recognized in connection with preferred vendor arrangements.

Increase in Income Tax Benefit Payable to Stockholder. As a result of the Tax Basis Increase, we are 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 us. For the nine months ended September 30, 2008, we recorded $29.6 million in net tax benefits associated with the Tax Basis Increase as a reduction in the provision for income taxes and recorded an expense of $25.2 million representing 85% of these recognized benefits to increase income tax benefit payable to stockholder.

For the nine months ended September 30, 2007, we recognized $60.8 million in net tax benefits associated with the Tax Basis Increase as a reduction in the provision for income taxes and recorded an expense of $51.7 million representing 85% of these recognized benefits to increase income tax benefit payable to stockholder.

Provision for Income Taxes. For the nine months ended September 30, 2008 and 2007, we recorded a provision for income taxes of $13.0 million and $13.4 million, respectively, or an effective tax rate of 10.1% and

20

7.1%, respectively. The period-over-period change in the effective tax rate is driven by changes in the valuation allowance required against the deferred tax assets. Our effective tax rate for both periods was lower than the 35% statutory federal rate because of the decrease in our valuation allowance for deferred tax assets primarily resulting from the increase in the net tax benefits recognized from the Tax Basis Increase as described above. However, when our provision for income taxes is combined with the amounts associated with the Increase in Income Tax Benefit Payable to Shareholder (see above), the combined percentages remain relatively consistent at 29.6% and 28.6% for the nine months ended September 30, 2008 and September 30, 2007, respectively.

Net Income. Net income for the nine months ended September 30, 2008 was $90.9 million, or $0.99 per diluted share, compared to a net income of $124.2 million, or $1.22 net income per diluted share, in the corresponding period in 2007.

Financing Arrangements

On June 24, 2008, we entered into a new $125.0 million revolving credit facility (“New Credit Facility”) with several banks. In connection therewith, we terminated our prior $100.0 million revolving credit facility (“Prior Credit Facility”). For further discussion of both our New Credit Facility and our Prior Credit Facility see Note 6 to the unaudited consolidated financial statements contained in Part I, Item 1 of this Quarterly Report.

Other than entering into our New Credit Facility and terminating our Prior Credit Facility, there have been no material changes during the period covered by this Quarterly Report to the financing arrangements specified in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operation” included in our 2007 Form 10-K.

As of September 30, 2008, we were in compliance with all applicable financial debt covenants.

For a more detailed description of our various financing arrangements, please see Note 6 to the unaudited consolidated financial statements contained in Part I, Item 1 of this Quarterly Report and the “Management’s Discussion and Analysis of Financial Condition and Results of Operation” section of our 2007 Form 10-K.

Liquidity and Capital Resources

Current Financial Condition

Our primary operating needs are to fund the production and development costs of our films, make participation and residual payments, fund selling, general and administrative costs and capital expenditures. Our operating activities for the nine months ended September 30, 2008 generated adequate cash to meet our operating needs. For the next 12 months, we expect that cash on hand and cash from operations will be sufficient to satisfy our anticipated cash needs for working capital, stock repurchases and capital expenditures. In the event that these cash flows are insufficient, we expect to be able to draw funds from our revolving credit facility to meet these needs. Over the next two years, we expect to spend approximately $73 million to expand and make general improvements to our Company headquarters located in Glendale, California in order to accommodate general business growth, including 3D expansion. In addition, in October 2009 we are required to repay the $73.0 million principal associated with the existing financing of our Company’s headquarters (see Note 6 to our unaudited consolidated financial statements). We are currently evaluating the various alternatives for the funding of the expansion of our Company’s headquarters and repayment of the existing financing of our Company’s headquarters, including using cash on hand and several financing options.

As of September 30, 2008, we had cash and cash equivalents totaling $337.9 million. Our cash and cash equivalents consist of cash on deposit and short-term money market investments, which are primarily either invested in U.S. government obligations or guaranteed by the U.S. government. Our cash and cash equivalents balance at September 30, 2008 increased by $45.4 million from that of $292.5 million at December 31, 2007. Components of this change in cash for the nine months ended September 30, 2008, as well as for the nine months ended September 30, 2007, are provided below in more detail.

21

Operating Activities

Net provided by operating activities for the nine months ended September 30, 2008 and 2007 is a follows (in thousands):

	2008		2007
Net cash provided by operating activities	$	256,864	$	235,585

Net cash provided by operating activities for the first nine months of 2008 was primarily attributable to the collection of revenue associated with Kung Fu Panda’s and Bee Movie’s worldwide theatrical release, Shrek the Third’s worldwide home entertainment release, worldwide television revenue for Madagascar and, to a lesser extent, the collection of worldwide television and home entertainment revenues for our other films, including Over the Hedge, Shrek 2 and Shrek. The operating cash provided by the collection of revenues during the first nine months of 2008 was offset by $37.6 million paid to an affiliate of a stockholder related to tax benefits realized in 2007 from the Tax Basis Increase, $29.3 million paid (net of refunds) for estimated federal and state income taxes and $44.4 million paid related to employee bonus plans. The operating cash provided by revenues was also partially offset by film production and development spending and participation and residual payments.

Net cash provided by operating activities for the first nine months of 2007 was $235.6 million and was primarily attributable to collection of revenue attributable to Shrek the Third’s worldwide theatrical release and Over the Hedge’s worldwide home entertainment sales and, to a lesser extent, the collection of worldwide theatrical, television and home entertainment revenues for our other films, including Flushed Away, Madagascar, Shark Tale and Shrek 2. The operating cash provided during the first nine months of 2007 was offset by $22.0 million payment to an affiliate of a stockholder related to tax benefits realized in 2006 from the Tax Basis Increase, a $13.1 million payment for estimated federal income taxes and $46.9 million paid to our distributor for distribution costs not deducted from remittances in prior years. In addition, cash provided by operating actives for 2007 was partially offset by film production and development spending and participation and residual payments.

Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2008 and 2007 is a follows (in thousands):

	2008			2007
Net cash used in investing activities	$	(34,088	)	$	(5,466	)

Net cash used in investing activities for the nine months ended September 30, 2008 and 2007 was primarily related to the investment in property, plant and equipment. The increase in the investment in property, plant and equipment for the nine months ended September 30, 2008 as compared to the same period of 2007 is related to new strategic technology initiatives and alliances as well as the expansion of our headquarters.

Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2008 and 2007 is as follows (in thousands):

	2008			2007
Net cash used in financing activities	$	(177,360	)	$	(192,739	)

Net cash used in financing activities for both nine-month periods ended September 30, 2008 and 2007 was primarily comprised of repurchases of our Class A common stock.

22

Contractual Obligations

Contractual Obligations. As of September 30, 2008, we had contractual commitments to make the following payments (in thousands and on an undiscounted basis):

	Payments Due by Year
Contractual Cash Obligations	Remainder 2008		2009		2010		2011		2012		Thereafter		Total
Operating leases	$	1,846	$	7,406	$	7,572	$	6,185	$	3,197	$	—	$	26,206
Glendale animation campus note payable(1)		—		73,000		—		—		—		—		73,000
Other(2)		20,501		40,960		300		300		250		—		62,311
Total contractual cash obligations	$	22,347	$	121,366	$	7,872	$	6,485	$	3,447	$	—	$	161,517

⁽¹⁾ We operate an animation campus in Glendale, California subject to a lease from a special-purpose entity that acquired the property for $73.0 million in March 2002 and leased the facility to us for an initial term of five years, which was subsequently extended through October 2009. In addition to the principal amount of $73.0 million that is due in October 2009, we are obligated to pay interest based primarily on 30-day commercial paper rates (2.57% at September 30, 2008). For further discussion, please see Note 6 to our unaudited consolidated financial statements.

⁽²⁾ Other commitments are principally comprised of a definitive contractual commitment related to the expansion of the Glendale campus which is cancellable in certain limited circumstances.

Additionally, as of September 30, 2008 we had non-cancelable talent commitments totaling approximately $24.3 million that are payable over the next five years.

Critical Accounting Policies and Estimates

Our significant accounting policies are outlined in Note 2 to the audited consolidated financial statements contained in our 2007 Form 10-K. We prepare our consolidated financial statements in accordance with United States generally accepted accounting principles (“GAAP”). In doing so, we have to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenues and expenses, as well as related disclosure of contingent assets and liabilities including estimates of ultimate revenues and costs of film and television product, estimates of product sales that will be returned, the potential outcome of future tax consequences of events that have been recognized in our financial statements and estimates used in the determination of the fair value of stock options and other equity awards for the determination of stock-based compensation. In some cases, changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations will be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We believe that the application of the following accounting policies, which are important to our financial position and results of operations, requires significant judgments and estimates on the part of management.

Revenue Recognition

We recognize revenue from the distribution of our animated feature films when earned and reported to us by our distributor, 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”).

23

Pursuant to our distribution and servicing arrangements, we recognize revenue net of reserves for returns, rebates and other incentives after our distributor has (i) retained 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) deducted its distribution and marketing costs with respect to our films on a title-by-title basis. International results are generally reported to us by our distributor one month in arrears. Because a third party 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 is dependent on the timing, accuracy and sufficiency of the information we receive from our distributor. As typical in the film industry, our distributor may make adjustments in future periods to information previously provided to us that could have a material impact on our operating results in later periods. Furthermore, management may, in its judgment, make material adjustments to the information reported by our distributor to ensure that revenues are accurately reflected in our financial statements. To date, our distributor has not made subsequent, nor has management made, material adjustments to information provided by our distributor and used in the preparation of our historical financial statements.

Revenue from the theatrical exhibition of films is recognized at the later of when a film is exhibited in theaters or when revenue is reported by our distributor.

Revenue from the sale of home video units is recognized at the later of when product is made available for retail sale and when video sales to customers are reported to us by third parties, such as fulfillment service providers or distributors. In addition, we and our distributor provide for future returns of home video product and for customer programs and sales incentives. We and our distributor calculate these estimates by analyzing a combination of 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, and in the case of product returns, 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 and our distributor allow various rights of return for our customers, we do not believe that these rights are critical in establishing return estimates, because other factors, such as our historical experience with similar types of sales, information we receive from retailers and our assessment of the product’s appeal based on domestic box office success and other research, are more important to the estimation process.

Revenue from both free and pay television licensing agreements is recognized at the later of the time the production is made available for exhibition in those markets or it is reported to us by our distributor.

Revenue from licensing and merchandising is recognized when the associated films have been released and the criteria for revenue recognition have been met. Licensing and merchandising related minimum guarantees are generally recognized as revenue upon the theatrical release of a film and royalty-based revenues (revenues based upon a percentage of net sales of the products) are generally recognized as revenue in periods when royalties are reported by licensees or cash is received.

Film Costs Amortization

Once a film is released, the amount of film costs, participations and residual costs relating to that film are amortized and included in costs of revenues in the proportion that the revenue during the period for each film (“Current Revenue”) bears to the estimated remaining total revenue to be received from all sources (“Ultimate Revenue”) as of the beginning of the current fiscal year under the individual-film-forecast-computation method in accordance with the SOP. The amount of film costs that is amortized each period will therefore depend on the ratio of Current Revenue to Ultimate Revenue for each film for such period. We make certain estimates and judgments of Ultimate Revenue to be received for each film based on information received from our distributor and our knowledge of the industry. Historically, there has been a close correlation between the success of a film in the domestic box office market and the film’s success in the international theatrical and worldwide home entertainment markets. In general, films that achieve domestic box office success also tend to experience success in the home entertainment and international theatrical markets. While we continue to believe that domestic box

24

office performance is a key indicator of a film’s potential performance in these subsequent markets, we do not believe that it is the only factor influencing the film’s performance in these markets and recognize that a range of other market and film-specific factors can have a significant impact.

Estimates of Ultimate Revenue and anticipated participation and residual costs are reviewed periodically and are revised if necessary. A change in any given period 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. An increase in estimate of Ultimate Revenues will lower the percentage rate of amortization while, conversely, a decrease in the estimate of Ultimate Revenue will raise the percentage rate of amortization. In addition, we evaluate film production costs 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 costs for that film, the unamortized film costs will be written down to fair value determined using a net present value calculation. The cost of any such write downs are reflected in costs of revenues.

Stock-Based Compensation

We record employee stock-based compensation in accordance with the provisions of FAS No. 123 (revised 2004), “Share-Based Payment” (“FAS 123R”) which requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. As of September 30, 2008, the total compensation cost related to unvested equity awards granted to employees (excluding equity awards with performance objectives deemed not probable of achievement) but not yet recognized was approximately $53.4 million, which will be amortized on a straight-line basis over a weighted average life of approximately 2 years.

The fair value of stock option grants with either service-based or performance-based vesting criteria is estimated on the date of grant using the Black-Scholes option-pricing model. Some of the primary input assumptions of the Black-Scholes option-pricing model are volatility, dividend yield, the weighted average expected option term and the risk-free interest rate. As permitted by and outlined in Staff Accounting Bulletin (“SAB”) 107, “Share-Based Payment” (“SAB 107”) released by the SEC, we apply the “simplified” method of calculating the weighted average expected term. The simplified method defines the weighted average expected term as being the average of the weighted average of the vesting period and contractual term of each stock option granted. Given our lack of sufficient historical exercise data for stock option grants and as permitted under SAB 110, “Use of a Simplified Method,” which was released by the SEC in December 2007, we continue to use the simplified method for calculating the expected term. Once sufficient information regarding exercise behavior, such as historical exercise data or exercise information from external sources, becomes available, we will be required to utilize another method to determine the weighted average expected term. In addition, in accordance with SAB 107, the estimated volatility incorporates both historical volatility and the implied volatility of publicly traded options. As required by FAS 123R, management made an estimate of expected forfeitures and is recognizing compensation costs only for those equity awards expected to vest.

For equity awards of stock options to purchase and restricted shares of our common stock that contain certain performance-based measures, compensation costs are adjusted to reflect the estimated probability of vesting. For equity awards of stock appreciation rights to purchase and restricted shares of our common stock which contain a market-based condition (such as vesting based upon stock-price appreciation), we use a Monte-Carlo simulation option-pricing model to determine the award’s grant-date fair value. The Monte-Carlo simulation option-pricing model takes into account the same input assumptions as the Black-Scholes model as outlined above, however, it also further incorporates into the fair-value determination the possibility that the market condition may not be satisfied and impact of the possible differing stock price paths. Compensation costs related to awards with a market-based condition will be recognized regardless of whether the market condition is satisfied, provided that the requisite service has been provided.

Estimates of the fair value of stock options are not intended to predict actual future events or the value ultimately realized by employees who receive stock option awards, and subsequent events are not indicative of

25

the reasonableness of the original estimates of fair value made by us under FAS 123R. Changes to our underlying stock price or satisfaction of performance criteria for performance-based awards granted to employees could significantly affect compensation expense to be recognized in future periods.

Provision for Income Taxes

We account for income taxes pursuant to FAS No. 109, “Accounting for Income Taxes” (“FAS 109”). Under the asset and liability method of FAS 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 basis and operating loss and tax credit carryforwards. 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 FAS 109, the effect on deferred tax assets and liabilities of a change in tax rates or a change in tax status is recognized in income in the period that includes the enactment date. We record a valuation allowance to reduce our deferred income tax assets to the amount that is more likely than not to be realized. In evaluating our ability to recover our deferred income tax assets, management considers all available positive and negative evidence, including our operating results, ongoing prudent and feasible tax-planning strategies and forecasts of future taxable income.

At the time of our separation from DreamWorks Studios, 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 (previously defined above as the Tax Basis Increase). The Tax Basis increase was $1.61 billion, resulting in a potential tax benefit to us of approximately $595.0 million that is expected to be realized over 15 years if we generate sufficient taxable income. The Tax Basis Increase 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 our 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 us.

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (“FIN 48”), which became effective for us on January 1, 2007. FIN 48 sets out the use of a single comprehensive model to address uncertainty in tax positions and clarifies the accounting for income taxes by establishing the minimum recognition threshold and a measurement attribute for tax positions taken or expected to be taken in a tax return in order to be recognized in the financial statements. We continue to follow the practice of recognizing interest and penalties related to income tax matters as part of the provision for income taxes.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements please see Note 1 to the unaudited consolidated financial statements contained in Part I, Item 1 of this Quarterly Report.

26

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market and Exchange Rate Risk

For quantitative and qualitative disclosures about our interest rate, foreign currency, and credit risks, please see Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk,” of our 2007 Form 10-K. Exposure to our interest rate, foreign currency and credit risks have not changed materially since December 31, 2007.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this Quarterly Report. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the third quarter to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is accurately recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in internal controls over financial reporting.

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

27

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

See discussion of Legal Proceedings in Note 11 to the unaudited consolidated financial statements contained in Part I, Item 1 of this Quarterly Report.

Item 1A. Risk Factors

Information concerning certain risks and uncertainties appears in Part I, Item 1A “Risk Factors” of the Company’s 2007 Form 10-K. You should carefully consider these risks and uncertainties before making an investment decision with respect to shares of our Class A common stock. Such risks and uncertainties could materially adversely affect our business, financial condition or operating results.

During the period covered by this Quarterly Report, there have been no material changes from the risk factors previously disclosed in the Company’s 2007 Form 10-K or filings subsequently made with the SEC, except for the risk factor “Changes in the United States, global or regional economic conditions could adversely affect the profitability of our business” included in our 2007 Form 10-K, which is updated as follows:

Changes in the United States, global or regional economic conditions could adversely affect the profitability of our business.

The global economy is currently experiencing a significant contraction, with an almost unprecedented lack of availability of business and consumer credit. This current decrease and any future decrease in economic activity in the United States or in other regions of the world in which we do business could significantly and adversely affect our results of operations and financial condition in a number of ways. Any decline in economic conditions may reduce the performance of our theatrical and home entertainment releases and purchases of our licensed consumer products, thereby reducing our revenues and earnings. We may also experience increased returns by the retailers that purchase our home entertainment releases. Further, bankruptcies or similar events by retailers may cause us to incur bad debt expense at levels higher than historically experienced. In periods of generally increasing prices, or of increased price levels in a particular sector such as the energy sector, we may experience a shift in consumer demand away from the entertainment and consumer products we offer, which could also adversely affect our revenues and, at the same time, increase our costs.

28

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table shows Company repurchases of its Class A common stock for the three months ended September 30, 2008.

	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan or Program	Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plan or Program(2)
July 1–July 31, 2008	—	$	—	—	$	150,000,000
August 1–August 31, 2008	2,022,330	$	30.64	2,022,330	$	88,030,930
September 1–September 30, 2008	858,100	$	31.21	858,100	$	61,248,995
Total	2,880,430	$	30.81	2,880,430

⁽¹⁾ Does not include trades pending settlement as of the end of the respective period.

⁽²⁾ In July 2008, the Company’s Board of Directors approved a stock repurchase program pursuant to which the Company may repurchase up to an aggregate of $150 million of its outstanding stock.

Item 5. Other Information

Amendment and Restatement of Special Deferral Election Plan

On October 23, 2008, the Compensation Committee of the Board of Directors of the Company approved the amendment and restatement of the Company’s Special Deferral Election Plan (the “Plan”). The amendment and restatement was made generally for purposes of compliance with Section 409A of the Internal Revenue Code and did not involve any substantive changes to the previous version of the Plan. The Plan is available for executive officers and certain other highly compensated employees of the Company and its subsidiaries. The Plan generally permits eligible participants to defer up to 85% of their base salary and up to 100% of their annual incentive bonus or any special bonus or other incentive compensation which they earn. Each participant’s account under the Plan is credited with earnings, at periodic intervals, at a rate equal to the actual rate of return for such period of the investment fund or funds or index or indices selected by the participant from the range of investment vehicles offered under the Plan. Participants are permitted to designate the commencement date or event for distribution of their account balance under the Plan based on the available options under the Plan, including termination of employment, a specified date, a change in control of the Company or certain combinations of the foregoing. Each participant may also select the method of distribution in accordance with the options available under the Plan, including lump sum payment or installments over a period of up to 10 years.

The documents constituting the Plan, as amended and restated, are attached as Exhibits 10.1 and 10.2 and are incorporated by reference herein.

Time Sharing Agreement with Intellectual Ventures Management, LLC

On October 27, 2008, the Company entered into a Time Sharing Agreement for use of an aircraft that is owned by Intellectual Ventures Management, LLC (“IVM”), a company controlled by one of the Company’s directors, Nathan Myrhvold. Under this agreement, if Mr. Myrhvold uses the aircraft to attend Board meetings or other Company functions, the Company pays an hourly rate equal to two times the fuel cost, plus certain enumerated expenses such as landing fees, crew travel costs and catering.

The Time Sharing Agreement is attached as Exhibit 10.5 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.

Resignation of David Geffen as Director

On October 28, 2008, David Geffen, one of the Company’s directors and a significant stockholder, informed the Company that he was resigning as a director effective immediately.

29

Amended and Restated Employment Agreement with Ann Daly

On October 23, 2008, the Company’s Compensation Committee (the “Compensation Committee”) voted to approve an amended and restated employment agreement between the Company and Ann Daly (the “Restated Agreement”). The Restated Agreement amends and restates in its entirety the Company’s previous employment agreement with Ms. Daly, dated as of October 25, 2007 (the “Prior Agreement”).

Term. The Restated Agreement extends the term of Ms. Daly’s employment to December 31, 2013.

Title. Pursuant to the Restated Agreement, Ms. Daly’s title will remain Chief Operating Officer of the Company.

Salary. Under the Restated Agreement, Ms. Daly will have an annual base salary of $1,012,000.

Initial Award of Performance-Based Restricted Stock Units. The Restated Agreement provides that Ms. Daly will receive an award of performance-based restricted stock units having a grant-date value targeted at $9,000,000.

Annual Incentive Awards. Commencing in 2011, Ms. Daly will receive an annual equity award with a grant-date value of $500,000 in lieu of additional salary. In addition, subject in all instances to the discretion of the Compensation Committee, Ms. Daly will continue to be eligible to receive an annual cash or equity incentive award with a target value of $750,000. The actual incentive award received will depend on the Company’s performance.

Long-Term Equity Incentive Awards. Commencing in 2011, Ms. Daly will be eligible, subject to annual approval by the Compensation Committee, to receive annual equity incentive awards of restricted stock and stock options (or such other form of equity-based compensation as the Compensation Committee may determine) with a grant-date value targeted at $2,500,000.

In addition to the compensation described above, Ms. Daly is eligible for certain other benefits (such as reimbursement of business expenses).

Termination Events. As provided in the Prior Agreement, the Restated Agreement provides that the Company may terminate Ms. Daly’s employment during the employment period with or without cause (as defined in the Restated Agreement) and Ms. Daly may terminate her employment for good reason (as defined in the Restated Agreement).

If the Company terminates Ms. Daly’s employment other than for cause, incapacity or death, or Ms. Daly terminates her employment for good reason, the Company will generally continue her base salary (including, if employment terminates on or after January 1, 2011, the value of any equity awards made in lieu of Ms. Daly’s base salary) and benefits until expiration of the term of the Restated Agreement. Ms. Daly will also receive an annual cash amount equal to the average annual bonuses that have been paid to her during the three immediately preceding years until expiration of the term of the Restated Agreement. Moreover, all equity-based compensation held by Ms. Daly will generally accelerate vesting (with respect to grants having performance-based vesting criteria, on the basis that any mid-range or target goals have been achieved) and remain exercisable for the remainder of the term of the grant. In addition, if Ms. Daly’s employment is involuntarily terminated or she terminates her employment for good reason within 12 months following a change of control (as defined in the Restated Agreement), the Restated Agreement provides that the annual cash amounts described above will continue for the greater of (i) the remaining term of the Restated Agreement or (ii) two years.

In the event that Ms. Daly dies or becomes disabled during the term, the Restated Agreement provides for the receipt of continued salary (in the case of disability, at a rate equal to 50% of Ms. Daly’s base salary) and other benefits for a specified term. The Restated Agreement also provides that Ms. Daly will be entitled to receive or exercise a percentage of each equity award determined based on the length of time she was employed

30

prior to death or disability (in the case of awards having performance-based vesting criteria, subject to attainment of the applicable performance goals) and Ms. Daly will receive credit for the shorter of (A) an additional year of service or (B) 50% of the remaining term of the Restated Agreement. The exercisable portion of any equity award will remain exercisable for the remaining term of the grant.

Following the end of the term of the Restated Agreement (provided Ms. Daly’s employment has not earlier terminated), the Restated Agreement provides that Ms. Daly will be entitled to all equity-based compensation that has vested and, if she retires from the Company, her equity-based compensation that has not vested will become vested, provided that any such compensation will continue to be subject to the achievement of any applicable performance goals. All options and other similar awards will remain exercisable for the remaining original term of the grant. Ms. Daly will be considered to have retired from the Company if her employment with the Company terminates within 30 days following the end of the term of the Restated Agreement and, as of such date, she is 55 years old and the sum of her age and years of service with the Company is at least 70. In the event that an employment agreement between the Company and Jeffrey Katzenberg provides for vesting of Mr. Katzenberg’s equity-based compensation awards in connection with the expiration of such agreement on terms that are more favorable than provided in the Restated Agreement, Ms. Daly will generally be entitled to be treated similarly. If Ms. Daly does not retire following the end of the term of the Restated Agreement, her outstanding equity-based compensation awards will continue to vest during her continued employment in accordance with their terms and any new employment agreement between Ms. Daly and the Company.

If Ms. Daly’s employment is terminated by the Company for cause, she will not be entitled to any equity-based compensation that has not already vested, although she will be entitled to payment for any unpaid base salary and any additional non-contingent cash compensation earned prior to termination.

Change of control. In the event of a change of control, all unvested equity-based compensation held by Ms. Daly will remain unvested and continue to vest in accordance with its terms. However, unless outstanding awards are assumed or substituted for with new awards covering stock of a successor corporation in the event of a change of control, all such equity-based compensation will accelerate vesting (with respect to grants having performance-based vesting criteria, on the basis that any mid-range or target goals have been achieved) immediately prior to the change of control. In the event that, during the 12-month period following a change of control, Ms. Daly’s employment is terminated by the Company other than for cause or by her for good reason, all equity-based compensation held by Ms. Daly will accelerate vesting (with respect to grants having performance-based vesting criteria, on the basis that any mid-range or target goals have been achieved) and remain exercisable for the remainder of the term of the grant.

Miscellaneous. The Company has agreed to indemnify Ms. Daly to the fullest extent permitted by law against any claims or losses arising in connection with her service to the Company or any affiliate. In addition, the Company will indemnify Ms. Daly, on a fully grossed-up basis, for any tax imposed by Section 4999 of the Code on “excess parachute payments” (as defined in Section 280G of the Code) in connection with certain changes in control; provided, however, that if the “excess parachute payments” are no more than 10% greater than the amount that could be paid without causing tax liability under Section 4999, then the payments to Ms. Daly will be reduced such that no tax liability is incurred. If any payment due to Ms. Daly is subject to a six-month delay pursuant to Section 409A of the Code, the Company will pay interest on such delayed payments. Ms. Daly has agreed to non-competition, non-solicitation and confidentiality provisions in the Restated Agreement. In certain instances (e.g., the treatment of Ms. Daly’s outstanding equity awards upon a change of control), if any other Company executive officer is entitled to more favorable treatment than provided in the Restated Agreement, Ms. Daly will be entitled to be treated similarly.

The foregoing description of the Restated Agreement is qualified in its entirety by reference to the Restated Agreement, which is attached as Exhibit 10.8 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.

Items 3 and 4 are not applicable and have been omitted.

31

Item 6. Exhibits

Exhibit Number	Description
10.1	Special Deferral Election Plan
10.2	Special Deferral Election Plan—Adoption Agreement
10.3	Repurchase Agreement dated as of August 11, 2008 by and between the Company and The Wunderkinder Foundation, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on August 13, 2008
10.4	Time Sharing Agreement dated as of October 16, 2008 by and between the Company and Amblin’ Films, LLC incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on October 22, 2008
10.5	Time Sharing Agreement dated as of October 27, 2008 by and between the Company and Intellectual Ventures Management, LLC
10.6	Form of Restricted Stock Unit Award Agreement for Non-employee Directors (to be used for grants to Roger Enrico)
10.7	Form of Restricted Share Award Agreement
10.8	Amended and Restated Employment Agreement dated as of October 23, 2008 by and between DreamWorks Animation SKG, Inc. and Ann Daly
31.1	Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DREAMWORKS ANIMATION SKG, INC.
Date: October 28, 2008	By:	/S/    LEWIS W. COLEMAN
	Name:	Lewis W. Coleman
	Title:	President and Chief Financial Officer

33

EXHIBIT INDEX

Exhibit Number	Description
10.1	Special Deferral Election Plan
10.2	Special Deferral Election Plan—Adoption Agreement
10.3	Repurchase Agreement dated as of August 11, 2008 by and between the Company and The Wunderkinder Foundation, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on August 13, 2008
10.4	Time Sharing Agreement dated as of October 16, 2008 by and between the Company and Amblin’ Films, LLC incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on October 22, 2008
10.5	Time Sharing Agreement dated as of October 27, 2008 by and between the Company and Intellectual Ventures Management, LLC
10.6	Form of Restricted Stock Unit Award Agreement for Non-employee Directors (to be used for grants to Roger Enrico)
10.7	Form of Restricted Share Award Agreement
10.8	Amended and Restated Employment Agreement dated as of October 23, 2008 by and between DreamWorks Animation SKG, Inc. and Ann Daly
31.1	Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

34

EX-10.1

Exhibit 10.1

The CORPORATEplan for Retirement^SM

EXECUTIVE PLAN

BASIC PLAN DOCUMENT

IMPORTANT NOTE

This document has not been approved by the Department of Labor, the Internal Revenue Service or any other governmental entity. The Employer must determine whether the plan is subject to the Federal securities laws and the securities laws of the various states. The Employer may not rely on this document to ensure any particular tax consequences or to ensure that the Plan is “unfunded and maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees” under the Employee Retirement Income Security Act with respect to the Employer’s particular situation. Fidelity Management Trust Company, its affiliates and employees cannot and do not provide legal or tax advice or opinions in connection with this document. This document does not constitute legal or tax advice or opinions and is not intended or written to be used, and it cannot be used by any taxpayer, for the purposes of avoiding penalties that may be imposed on the taxpayer. This document must be reviewed by the Employer’s attorney prior to adoption.

CORPORATEplan for Retirement EXECUTIVE

BASIC PLAN DOCUMENT

ARTICLE 1
	ADOPTION AGREEMENT
ARTICLE 2
	DEFINITIONS
	2.01 - Definitions
ARTICLE 3
	PARTICIPATION
	3.01 - Date of Participation
	3.02 - Participation Following a Change in Status
ARTICLE 4
	CONTRIBUTIONS
	4.01 - Deferral Contributions
	4.02 - Matching Contributions
	4.03 - Employer Contributions
	4.04 - Election Forms
ARTICLE 5
	PARTICIPANTS’ ACCOUNTS
ARTICLE 6
	INVESTMENT OF ACCOUNTS
	6.01 - Manner of Investment
	6.02 - Investment Decisions, Earnings and Expenses
ARTICLE 7
	RIGHT TO BENEFITS
	7.01 - Retirement
	7.02 - Death
	7.03 - Separation from Service
	7.04 - Vesting after Partial Distribution
	7.05 - Forfeitures
	7.06 - Change in Control
	7.07 - Disability
	7.08 - Directors
ARTICLE 8
	DISTRIBUTION OF BENEFITS
	8.01 – Events Triggering and Form of Distributions
	8.02 - Notice to Trustee
	8.03 – Unforeseeable Emergency Withdrawals

i

ARTICLE 9
	AMENDMENT AND TERMINATION
	9.01 - Amendment by Employer
	9.02 - Termination
ARTICLE 10
	MISCELLANEOUS
	10.01 - Communication to Participants
	10.02 - Limitation of Rights
	10.03 - Nonalienability of Benefits
	10.04 - Facility of Payment
	10.05 – Plan Records
	10.06 - USERRA
	10.07 - Governing Law
ARTICLE 11
	PLAN ADMINISTRATION
	11.01 - Powers and Responsibilities of the Administrator
	11.02 - Claims and Review Procedures

ii

PREAMBLE

It is the intention of the Employer to establish herein an unfunded plan maintained solely for the purpose of providing deferred compensation for a select group of management or highly compensated employees as provided in ERISA. The Employer further intends that this Plan comply with Code section 409A, and the Plan is to be construed accordingly.

If the Employer has previously maintained the Plan described herein pursuant to a previously existing plan document or description, the Employer’s adoption of this Plan document is an amendment and complete restatement of, and supersedes, such previously existing document or description with respect to benefits accrued or to be paid on or after the effective date of this document (except to the extent expressly provided otherwise herein).

Article 1. Adoption Agreement.

Article 2. Definitions.

2.01. Definitions.

(a) Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:

(1) “Account” means an account established on the books of the Employer for the purpose of recording amounts credited to a Participant and any income, expenses, gains, or losses attributable thereto.

(2) “Active Participant” means a Participant who is eligible to accrue benefits under a plan (other than earnings on amounts previously deferred) within the 24-month period ending on the date the Participant becomes a Participant under Section 3.01. Notwithstanding the above, however, a Participant is not an Active Participant if he has been paid all amounts deferred under the plan, provided that he was, on and before the date of the last payment, ineligible to continue or to elect to continue to participate in the plan for periods after such last payment (other than through an election of a different time and form of payment with respect to the amounts paid).

(A) For purposes of Section 4.01(d), as used in the first paragraph of the definition of “Active Participant” above, “plan” means an account balance plan (or portion thereof) of the Employer or a Related Employer subject to Code section 409A pursuant to which the Participant is eligible to accrue benefits only if the Participant elects to defer compensation thereunder, and the “date the Participant becomes a Participant under Section 3.01” refers only to the date the Participant becomes a Participant with respect to Deferral Contributions.

(B) For purposes of Section 8.01(a)(2), as used in the first paragraph of the definition of “Active Participant” above, “plan” means an account balance plan (or portion thereof) of the Employer or a Related Employer subject to Code section 409A pursuant to which the Participant is eligible to accrue benefits without any election by the Participant to defer compensation thereunder, and the “date the Participant becomes a Participant under Section 3.01” refers only to the date the Participant becomes a Participant with respect to Matching or Employer Contributions.

1

(3) “Administrator” means the Employer adopting this Plan (but excluding Related Employers) or other person designated by the Employer in Section 1.01(c).

(4) “Adoption Agreement” means Article 1, under which the Employer establishes and adopts or amends the Plan and selects certain provisions of the Plan. The provisions of the Adoption Agreement are an integral part of the Plan.

(5) “Beneficiary” means the person or persons entitled under Section 7.02 to receive benefits under the Plan upon the death of a Participant.

(6) “Bonus” means any Performance-based Bonus or any Non-performance-based Bonus as listed and identified in the table in Section 1.05(a)(2) hereof.

(7) “Change in Control” means a change in control with respect to the applicable corporation, as defined in 26 CFR section 1.409A-3(i)(5). For purposes of this definition “applicable corporation” means:

(A) The corporation for which the Participant is performing services at the time of the change in control event;

(B) The corporation(s) liable for payment hereunder (but only if either the accrued benefit hereunder is attributable to the performance of service by the Participant for such corporation(s) or there is a bona fide business purpose for such corporation(s) to be liable for such payment and, in either case, no significant purpose of making such corporation(s) liable for such benefit is the avoidance of Federal income tax); or

(C) A corporate majority shareholder of one of the corporations described in (A) or (B) above or any corporation in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, ending in a corporation identified in (A) or (B) above.

(8) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

(9) “Compensation” means for purposes of Article 4:

(A) If the Employer elects Section 1.04(a), such term as defined in such Section 1.04(a).

(B) If the Employer elects Section 1.04(b), wages as defined in Code section 3401(a) and all other payments of compensation to an Employee by the Employer (in the course of the Employer’s trade or business) for which the Employer is required to furnish the Employee a written statement under Code sections 6041(d) and 6051(a)(3), excluding any items elected by the Employer in Section 1.04(b), reimbursements or other expense allowances, fringe benefits (cash and non-cash), moving expenses, deferred compensation and welfare benefits, but including amounts that are not includable in the gross income of the Employee under a salary reduction agreement by reason of the application of Code section 125, 132(f)(4), 402(e)(3), 402(h) or 403(b). Compensation shall be determined without regard to any rules under Code section 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code section 3401(a)(2)).

2

(C) If the Employer elects Section 1.04(c), any and all monetary remuneration paid to the Director by the Employer, including, but not limited to, meeting fees and annual retainers, and excluding items listed in Section 1.04(c).

For purposes of this Section 2.01(a)(9), Compensation shall also include amounts deferred pursuant to an election under Section 4.01.

(10) “Deferral Contribution” means a hypothetical contribution credited to a Participant’s Account as the result of the Participant’s election to reduce his Compensation in exchange for such credit, as described in Section 4.01.

(11) “Director” means a person, other than an Employee, who is elected or appointed as a member of the board of directors of the Employer, with respect to a corporation, or to an analogous position with respect to an entity that is not a corporation.

(12) “Disability” is described in Section 1.07(a)(2).

(13) “Employee” means any employee of the Employer.

(14) “Employer” means the employer named in Section 1.02(a) and any Related Employers listed in Section 1.02(b).

(15) “Employer Contribution” means a hypothetical contribution credited to a Participant’s Account under the Plan as a result of the Employer’s crediting of such amount, as described in Section 4.03.

(16) “Employment Commencement Date” means the date on which the Employee commences employment with the Employer.

(17) “ERISA” means the Employee Retirement Income Security Act of 1974, as from time to time amended.

(18) “Inactive Participant” means a Participant who is not an Employee or Director.

(19) “Matching Contribution” means a hypothetical contribution credited to a Participant’s Account under the Plan as a result of the Employer’s crediting of such amount, as described in Section 4.02.

(20) “Non-performance-based Bonus” means any Bonus listed under the column entitled “non-performance based” in Section 1.05(a)(2).

(21) “Participant” means any Employee or Director who participates in the Plan in accordance with Article 3 (or formerly participated in the Plan and has an amount credited to his Account).

(22) “Performance-based Bonus” means any Bonus listed under the column entitled “performance based” in Section 1.05(a)(2), which constitutes compensation, the amount of, or entitlement to, which is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months and which is further defined in 26 CFR section 1.409A-1(e).

(23) “Permissible Investment” means the investments specified by the Employer as available for hypothetical investment of Accounts. The Permissible Investments under the Plan are listed in the Service Agreement, and the provisions of the Service Agreement listing the Permissible Investments are hereby incorporated herein.

3

(24) “Plan” means the plan established by the Employer as set forth herein as a new plan or as an amendment to an existing plan, such establishment to be evidenced by the Employer’s execution of the Adoption Agreement, together with any and all amendments hereto.

(25) “Related Employer” means any employer other than the Employer named in Section 1.02(a), if the Employer and such other employer are members of a controlled group of corporations (as defined in Code section 414(b)) or trades or businesses (whether or not incorporated) under common control (as defined in Code section 414(c)).

(26) “Separation from Service” means the date the Participant retires or otherwise has a termination of employment (or a termination of the contract pursuant to which the Participant has provided services as a Director, for a Director Participant) with the Employer and all Related Employers, as further defined in 26 CFR section 1.409A-1(h); provided, however, that

(A) For purposes of this paragraph (26), the definition of “Related Employer” shall be modified as follows:

(i) In applying Code section 1563(a)(1), (2) and (3) for purposes of determining a controlled group of corporations under Code section 414(b), the phrase “at least 50%” shall be used instead of “at least 80 percent” each place “at least 80 percent” appears in Code section 1563(a)(1), (2) and (3); and

(ii) In applying 26 CFR section 1.414(c)-2 for purposes of determining trades or business (whether or not incorporated) under common control for purposes of Code section 414(c), the phrase “at least 50%” shall be used instead of “at least 80 percent” each place “at least 80 percent” appears in 26 CFR section 1.414(c)-2.

(B) In the event a Participant provides services to the Employer or a Related Employer as an Employee and a Director,

(i) The Employee Participant’s services as a Director are not taken into account in determining whether the Participant has a Separation from Service as an Employee; and

(ii) The Director Participant’s services as an Employee are not taken into account in determining whether the Participant has a Separation from Service as a Director

provided that this Plan is not aggregated with a plan subject to Code section 409A in which the Director Participant participates as an employee of the Employer or a Related Employer or in which the Employee Participant participates as a director (or a similar position with respect to a non-corporate entity) of the Employer or a Related Employer, as applicable, pursuant to 26 CFR section 1.409A-1(c)(2)(ii).

(27) “Service Agreement” means the agreement between the Employer and Trustee regarding the arrangement between the parties for recordkeeping services with respect to the Plan.

(28) “Specified Employee,” (unless defined by the Employer in a separate writing, in which case such writing is hereby incorporated herein) means a Participant who meets the requirements in 26 CFR section 1.409A-1(i) applying the default definition components provided in such regulation (those that would apply absent elections, as described in 26 CFR section 1.409A-1(i)(8)), including an identification date of December 31. In the event that such default definition components are applicable, the Employer has elected Section 1.01(b)(2) and, immediately prior to the date in Section 1.01(b)(2), the Plan applied an identification date (the “prior date”) other than the December 31, the prior date shall continue to apply, and December 31 shall not apply, until the date that is 12 months after the date in Section 1.01(b)(2).

4

(29) “Trust” means the trust created by the Employer, pursuant to the Trust agreement between the Employer and the Trustee, under which assets are held, administered, and managed, subject to the claims of the Employer’s creditors in the event of the Employer’s insolvency, until paid to Participants and their Beneficiaries as specified in the Plan.

(30) “Trust Fund” means the property held in the Trust by the Trustee.

(31) “Trustee” means the individual(s) or entity appointed by the Employer under the Trust agreement.

(32) “Unforeseeable Emergency” is as defined in 26 CFR section 1.409A-3(i)(3)(i).

(33) “Year of Service” is as defined in Section 7.03(b) for purposes of the elapsed time method and in Section 7.03(c) for purposes of the class year method.

(b) Pronouns used in the Plan are in the masculine gender but include the feminine gender unless the context clearly indicates otherwise.

Article 3. Participation.

3.01. Date of Participation. An Employee or Director becomes a Participant on the date such Employee’s or Director’s participation becomes effective (as described in Section 1.03).

3.02. Participation following a Change in Status.

(a) If a Participant ceases to be an Employee or Director and thereafter resumes the same status he had as a Participant during his immediately previous participation in the Plan (as an Employee if previously a Participant as an Employee and as a Director if previously a Participant as a Director), he will again become a Participant immediately upon resumption of such status, provided, however, that if such Participant is a Director, he is an eligible Director upon resumption of such status (as defined in Section 1.03(b)), and provided, further, that if such Participant is an Employee, he is an eligible Employee upon resumption of such status (as defined in Section 1.03(a)). Deferral Contributions to such Participant’s Account thereafter, if any, shall be subject to (1) or (2) below.

(1) If the Participant resumes such status during a period for which such Participant had previously made a valid deferral election pursuant to Section 4.01, he shall immediately resume such Deferral Contributions. Deferral Contributions applicable to periods thereafter shall be made pursuant to the election and other rules described in Section 4.01.

(2) If the Participant resumes such status after the period described in the first sentence of paragraph (1) of this Section 3.02, any Deferral Contributions with respect to such Participant shall be made pursuant to the election and other rules described in Section 4.01.

(b) When an individual who is a Participant due to his status as an eligible Employee (as defined in Section 1.03(a)) continues in the employ of the Employer or Related Employer but ceases to be an eligible Employee, the individual shall not receive an allocation of Matching or Employer Contributions for the period during which he is not an eligible Employee. Such Participant shall continue to make Deferral Contributions throughout the remainder of the applicable period (as described in Section 4.01) in which such change in status occurs, if, and as, applicable.

5

(c) When an individual who is a Participant due to his status as an eligible Director (as defined in Section 1.03(b)) continues his directorship with the Employer or a Related Employer but ceases to be an eligible Director, the individual shall not receive an allocation of Matching or Employer Contributions for the period during which he is not an eligible Director. Such Participant shall continue to make Deferral Contributions throughout the remainder of the applicable period (as described in Section 4.01) in which such change in status occurs, if, and as, applicable.

Article 4. Contributions.

4.01 Deferral Contributions. If elected by the Employer pursuant to Section 1.05(a) and/or 1.06(a), a Participant described in such applicable Section may elect to reduce his Compensation by a specified percentage or dollar amount. The Employer shall credit an amount to the Participant’s Account equal to the amount of such reduction. Except as otherwise provided in this Section 4.01, such election shall be effective to defer Compensation relating to all services performed in the calendar year beginning after the calendar year in which the Participant executes the election. Under no circumstances may a salary reduction agreement be adopted retroactively. If the Employer has elected to apply Section 1.05(a)(2), no amount will be deducted from Bonuses unless the Participant has made a separate deferral election applicable to such Bonuses. A Participant’s election to defer Compensation may be changed at any time before the last permissible date for making such election, at which time such election becomes irrevocable. Notwithstanding anything herein to the contrary, the conditions under which a Participant may make a deferral election as provided in the applicable salary reduction agreement are hereby incorporated herein and supersede any otherwise inconsistent Plan provision.

(a) Performance Based Bonus. With respect to a Performance-based Bonus, a separate election made pursuant to Section 1.05(a)(2) will be effective to defer such Bonus if made no later than 6 months before the end of the period during which the services on which such Performance-based Bonus is based are performed.

(b) Fiscal Year Bonus. With respect to a Bonus relating to a period of service coextensive with one or more consecutive fiscal years of the Employer, of which no amount is paid or payable during the service period, a separate election pursuant to Section 1.05(a)(2) will be effective to defer such Bonus if made no later than the close of the Employer’s fiscal year next preceding the first fiscal year in which the Participant performs any services for which such Bonus is payable.

(c) Cancellation of Salary Reduction Agreement.

(1) The Administrator may cancel a Participant’s salary reduction agreement pursuant to the provisions of 26 CFR section 1.409A-3(j)(4)(viii) in connection with the Participant’s Unforeseeable Emergency. To the extent required pursuant to the application of 26 CFR section 1.401(k)-1(d)(3) (or any successor thereto), a Participant’s salary reduction agreement shall be automatically cancelled.

(2) The Administrator may cancel a Participant’s salary reduction agreement pursuant to the provisions of 26 CFR section 1.409A-3(j)(4)(xii) in connection with the Participant’s disability. Such cancellation must occur by the later of the end of the Participant’s taxable year or the 15^th day of the third month following the date the Participant incurs a disability. For purposes of this paragraph (2), a disability is any medically determinable physical or mental impairment resulting in the Participant’s inability to perform the duties of his or her position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six months.

6

In no event may the Participant, directly or indirectly, elect such a cancellation. A cancellation pursuant to this subsection (c) shall apply only to Compensation not yet earned.

(d) Initial Deferral Election. Notwithstanding the above, if the Participant is not an Active Participant, the Participant may make an election to defer Compensation within 30 days after the Participant becomes a Participant, which election shall be effective with respect to Compensation payable for services performed during the calendar year (or other deferral period described in (a) or (b) above, as applicable) and after the date of such election. For Compensation that is earned based upon a specified performance period (e.g., an annual bonus) an election pursuant to this subsection (d) will be effective to defer an amount equal to the total amount of the Compensation for the performance period multiplied by the ratio of the number of days remaining in the performance period after the election over the total number of days in the performance period.

4.02. Matching Contributions. If so provided by the Employer in Section 1.05(b) and/or 1.06(b)(1), the Employer shall credit a Matching Contribution to the Account of each Participant entitled to such Matching Contribution. The amount of the Matching Contribution shall be determined in accordance with Section 1.05(b) and/or 1.06(b)(1), as applicable, provided, however, that the Matching Contributions credited to the Account of a Participant pursuant to Section 1.05(b)(2) shall be limited pursuant to (a) and (b) below:

(a) The sum of Matching Contributions made on behalf of a Participant pursuant to Section 1.05(b)(2) for any calendar year and any other benefits the Participant accrues pursuant to another plan subject to Code section 409A as a result of such Participant’s action or inaction under a qualified plan with respect to elective deferrals and other employee pre-tax contributions subject to the contribution restrictions under Code section 401(a)(30) or 402(g) shall not result in an increase in the amounts deferred under all plans subject to Code section 409A in which the Participant participates in excess of the limit with respect to elective deferrals under Code section 402(g)(1)(A), (B) and (C) in effect for the calendar year in which such action or inaction occurs; and

(b) The Matching Contributions made on behalf of a Participant pursuant to Section 1.05(b)(2) shall never exceed 100% of the matching amounts that would be provided under the qualified employer plan identified in Section 1.05(b)(2) absent any plan-based restrictions that reflect limits on qualified plan contributions under the Code.

4.03. Employer Contributions. If so provided by the Employer in Section 1.05(c)(1) and/or 1.06(b)(2), the Employer shall make an Employer Contribution to be credited to the Account of each Participant entitled thereto in the amount provided in such Section(s). If so provided by the Employer in Section 1.05(c)(2) and/or 1.06(b)(3), the Employer may make an Employer Contribution to be credited to the Account maintained on behalf of any Participant in such an amount as the Employer, in its sole discretion, shall determine, subject to the provisions of the applicable Section.

4.04. Election Forms. Notwithstanding anything herein to the contrary, the terms of an election form with respect to the conditions under which a Participant may make any election hereunder, as provided in such form (whether electronic or otherwise) are hereby incorporated herein and supersede any otherwise inconsistent Plan provision.

Article 5. Participants’ Accounts. The Administrator will maintain an Account for each Participant, reflecting hypothetical contributions credited to the Participant, along with hypothetical earnings, expenses, gains and losses, pursuant to the terms hereof. A hypothetical contribution shall be credited to the Account of a Participant on the date determined by the Employer and accepted by the Plan recordkeeper. The Administrator will maintain such other accounts and records as it deems appropriate to the discharge of its duties under the Plan.

7

Article 6. Investment of Accounts.

6.01. Manner of Investment. All amounts credited to the Accounts of Participants shall be treated as though invested and reinvested only in Permissible Investments.

6.02. Investment Decisions, Earnings and Expenses. Investments in which the Accounts of Participants shall be treated as invested and reinvested shall be directed by the Employer or by each Participant, or both, in accordance with Section 1.09. All dividends, interest, gains, and distributions of any nature that would be earned on a Permissible Investment will be credited to the Account as though reinvested in additional shares of that Permissible Investment. Expenses that would be attributable to such investments shall be charged to the Account of the Participant.

Article 7. Right to Benefits.

7.01. Retirement. If provided by the Employer in Section 1.08(e)(1), the Account of a Participant or an Inactive Participant who attains retirement eligibility prior to a Separation from Service will be 100% vested.

7.02. Death. If provided by the Employer in Section 1.08(e)(2), the Account of a Participant or former Participant who dies before the distribution of his entire Account will be 100% vested, provided that at the time of his death he is earning Years of Service.

A Participant may designate a Beneficiary or Beneficiaries, or change any prior designation of Beneficiary or Beneficiaries, by giving notice to the Administrator on a form designated by the Administrator. If more than one person is designated as the Beneficiary, their respective interests shall be as indicated on the designation form.

A copy of the death certificate or other sufficient documentation must be filed with and approved by the Administrator. If upon the death of the Participant there is, in the opinion of the Administrator, no designated Beneficiary for part or all of the Participant’s Account, such amount will be paid to his surviving spouse or, if none, to his estate (such spouse or estate shall be deemed to be the Beneficiary for purposes of the Plan). If a Beneficiary dies after benefits to such Beneficiary have commenced, but before they have been completed, and, in the opinion of the Administrator, no person has been designated to receive such remaining benefits, then such benefits shall be paid to the deceased Beneficiary’s estate.

A distribution to a Beneficiary of a Specified Employee is not considered to be a payment to a Specified Employee for purposes of Sections 1.07 and 8.01(e).

7.03. Separation from Service.

(a) General. If provided by the Employer in Section 1.08, and subject to Section 1.08(e)(2), if a Participant has a Separation from Service, he will be entitled to a benefit equal to (i) the vested percentage(s) of the value of the Matching and Employer Contributions credited to his Account, as adjusted for income, expense, gain, or loss, such percentage(s) determined in accordance with the vesting schedule(s) and methodology selected by the Employer in Section 1.08, and (ii) the value of the Deferral Contributions to his Account as adjusted for income, expense, gain, or loss. The amount payable under this Section 7.03 will be distributed in accordance with Article 8.

8

(b) Elapsed Time Vesting. Unless otherwise provided by the Employer in Section 1.08, vesting shall be determined based on the elapsed time method. For purposes of the elapsed time method, “Years of Service” means, with respect to any Participant or Inactive Participant, the number of whole years of his periods of service with the Employer and any Related Employers (as defined in Section 2.01(a)(26)(A)), subject to any exclusion elected by the Employer in Section 1.08(c). A Participant or Inactive Participant will receive credit for the aggregate of all time period(s) commencing with his Employment Commencement Date and ending on the date a break in service begins, unless any such years are excluded by Section 1.08(c). A Participant or Inactive Participant will also receive credit for any period of severance of less than 12 consecutive months. Fractional periods of a year will be expressed in terms of days.

A break in service is a period of severance of at least 12 consecutive months. A “period of severance” is a continuous period of time beginning on the date the Participant or Inactive Participant incurs a Separation from Service, or if earlier, the 12-month anniversary of the date on which the Participant or Inactive Participant was otherwise first absent from service.

Notwithstanding the above, the Employer shall comply with any service crediting rules to the extent required by applicable law.

(c) Class Year Vesting. If provided by the Employer in Section 1.08, a Participant’s or Inactive Participant’s vested percentage in the Matching Contributions and/or Employer Contributions portion(s) of his Account shall be determined pursuant to the class year method. Pursuant to such method, amounts attributable to the applicable contribution types are assigned to “class years” established in the records of the Plan. Such class years are years (calendar or non-calendar) to which the contribution is assigned by the Administrator, as described in the Service Agreement between the Trustee and the Employer. The Participant’s or Inactive Participant’s vested percentage in amounts attributable to a particular contribution is determined from the beginning of the applicable class year to the date the Participant or Inactive Participant incurs a Separation from Service. For purposes of the class year method, a Participant or Inactive Participant is credited with a Year of Service on the first day of each such class year.

7.04. Vesting after Partial Distribution. If a distribution from a Participant’s Account has been made to him at a time when his Account is less than 100% vested, the vesting schedule in Section 1.08 will thereafter apply only to amounts in his Account attributable to Matching Contributions and Employer Contributions credited after such distribution. The balance of his Account attributable to Matching Contributions and Employer Contributions immediately after such distribution will be subject to the following for the purpose of determining his interest therein.

At any relevant time prior to a forfeiture of any portion thereof under Section 7.05, a Participant’s nonforfeitable interest in the portion of his Account described in the sentence immediately above will be equal to P(AB + (RxD))-(RxD), where P is the nonforfeitable percentage at the relevant time determined under Section 1.08; AB is the account balance of such portion at the relevant time; D is the amount of the distribution; and R is the ratio of the account balance of such portion at the relevant time to the account balance of such portion after distribution. Following a forfeiture of any portion of such portion under Section 7.05 below, any balance with respect to such portion will remain fully vested and nonforfeitable.

7.05. Forfeitures. Once payments are to commence to a Participant or Inactive Participant hereunder, the portion of such Account subject to the same payment commencement date but not yet vested, if any, (determined by his vested percentage at such payment commencement date) will be forfeited by him

7.06. Change in Control. If the Employer has elected to apply Section 1.07(a)(3)(D), then, upon a Change in Control, notwithstanding any other provision of the Plan to the contrary, all Participant Accounts shall be 100% vested.

9

7.07. Disability. If the Employer has elected to apply Section 1.08(e)(3), then, upon the date a Participant incurs a Disability, as defined in Section 1.07(a)(2), notwithstanding any other provision of the Plan to the contrary, all Accounts of such Participant shall be 100% vested.

7.08. Directors. Notwithstanding any other provision of the Plan to the contrary, all Accounts of a Participant who is a Director shall be 100% vested at all times, including Accounts attributable to the Participant’s service as an Employee, if any.

Article 8. Distribution of Benefits.

8.01 Events Triggering, and Form of, Distributions.

(a) Events triggering the distribution of benefits and the form of such distributions are described in Section 1.07(a), pursuant to the Employer’s election and/or the Participant’s election, as applicable.

(1) With respect to the form and time of distribution of amounts attributable to a Deferral Contribution, a Participant election must be made no later than the time by which the Participant must elect to make a Deferral Contribution, as described in Section 4.01.

(2) With respect to the form and time of distribution of amounts attributable to Matching or Employer Contributions, a Participant election must be made no later than the time by which a Participant would be required to make a Deferral Contribution as described in Section 4.01 with respect to the calendar year for which the Matching and/or Employer Contributions are credited. For purposes of applying Section 4.01(d) “Active Participant” shall have the meaning assigned in Section 2.01(a)(2)(B).

(3) Notwithstanding anything herein to the contrary, an election choosing a distribution trigger and payment method pursuant to Section 1.07(a)(1) will only be effective with respect to amounts attributable to contributions credited to the Participant’s Account for the calendar year (or other deferral period described in 4.01(a) or (b)) to which such election relates. Amounts attributable to contributions credited to a Participant’s account prior to the effective date of any new election will not be affected and will be paid in accordance with the otherwise applicable election.

(b) If the Employer elects to permit a distribution election change pursuant to Section 1.07(b), then any such distribution election change must satisfy (1) through (3) below:

(1) Such election may not take effect until at least 12 months after the date on which such election is made.

(2) In the case of an election related to a payment not on account of Disability, death or the occurrence of an Unforeseeable Emergency, the payment with respect to which such election is made must be deferred for a period of not less than five years from the date such payment would otherwise have been paid (or in the case of installment payments, five years from the date the first amount was scheduled to be paid).

10

(3) Any election related to a payment at a specified time or pursuant to a fixed schedule may not be made less than 12 months prior to the date the payment is scheduled to be paid (or in the case of installment payments, 12 months prior to the date the first amount was scheduled to be paid).

With respect to any initial distribution election, a Participant shall in no event be permitted to make more than one distribution election change.

(c) A Participant’s entitlement to installments will not be treated as an entitlement to a series of separate payments.

(d) If the Plan does not provide for Plan-level payment triggers pursuant to Section 1.07(a)(3), and the Participant does not designate in the manner prescribed by the Administrator the method of distribution, and/or the distribution trigger (if and as required), such method of distribution shall be a lump sum at Separation from Service.

(e) Notwithstanding anything herein to the contrary, with respect to any Specified Employee, if the applicable payment trigger is Separation from Service, then payment shall not commence before the date that is six months after the date of Separation from Service (or, if earlier, the date of death of the Specified Employee, pursuant to Section 7.02). Payments to which a Specified Employee would otherwise be entitled during the first six months following the date of Separation from Service are delayed by six months.

(f) Notwithstanding anything herein to the contrary, the Administrator may, in its discretion, automatically pay out a Participant’s vested Account in a lump sum, provided that such payment satisfies the requirements in (1) through (3) below:

(1) Such payment results in the termination and liquidation of the entirety of the Participant’s interest under the plan (as defined in 26 CFR section 1.409A-1(c)(2)), including all agreements, methods, programs, or other arrangements with respect to which deferrals of compensation are treated as having been deferred under a single nonqualified deferred compensation plan under 26 CFR section 1.409A-1(c)(2);

(2) Such payment is not greater than the applicable dollar amount under Code section 402(g)(1)(B); and

(3) Such exercise of Administrator discretion is evidenced in writing no later than the date of such payment.

(g) Notwithstanding anything herein to the contrary, the Administrator may, in its discretion, delay a payment otherwise required hereunder to a date after the designated payment date due to any of the circumstances described in (1) through (4) below, provided that the Administrator treats all payments to similarly situated Participants on a reasonably consistent basis.

(1) In the event the Administrator reasonably anticipates that, if the payment were made as scheduled, the Employer’s deduction with respect to such payment would not be permitted due to the application of Code section 162(m), provided the delay complies with the conditions in 26 CFR section 1.409A-2(b)(7)(i).

(2) In the event the Administrator reasonably anticipates that the making of such payment will violate Federal securities laws or other applicable law, provided the delay complies with the conditions in 26 CFR section 1.409A-2(b)(7)(ii).

(3) Upon such other events and conditions as the Commissioner of the Internal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.

11

(4) Upon a change in control event, provided the delay complies with conditions in 26 CFR section 1.409A-3(i)(5)(iv).

(h) Notwithstanding anything herein to the contrary, the Administrator may provide an election to change the time or form of a payment hereunder to satisfy the requirements of the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended, 38 USC sections 4301 through 4344.

8.02. Notice to Trustee. The Administrator will provide direction to the Trustee, as provided in the Trust agreement, whenever any Participant or Beneficiary is entitled to receive benefits under the Plan. The Administrator’s notice shall indicate the form, amount and frequency of benefits that such Participant or Beneficiary shall receive.

8.03. Unforeseeable Emergency Withdrawals. Notwithstanding anything herein to the contrary, a Participant may apply to the Administrator to withdraw some or all of his Account if such withdrawal is made on account of an Unforeseeable Emergency as determined by the Administrator in accordance with the requirements of and subject to the limitations provided in 26 CFR section 1.409A-3(i)(3).

Article 9. Amendment and Termination.

9.01 Amendment by Employer. The Employer reserves the authority to amend the Plan in its discretion. Any such amendment notwithstanding, no Participant’s Account shall be reduced by such amendment below the amount to which the Participant would have been entitled if he had voluntarily left the employ of the Employer immediately prior to the date of the change.

9.02. Termination. The Employer has no obligation or liability whatsoever to maintain the Plan for any length of time and may terminate the Plan at any time by written notice delivered to the Trustee without any liability hereunder for any such discontinuance or termination. Such termination shall comply with 26 CFR section 1.409A-3(j)(4)(ix) and other applicable guidance.

Article 10. Miscellaneous.

10.01. Communication to Participants. The Plan will be communicated to all Participants by the Employer promptly after the Plan is adopted.

10.02. Limitation of Rights. Neither the establishment of the Plan and the Trust, nor any amendment thereof, nor the creation of any fund or account, nor the payment of any benefits, will be construed as giving to any Participant or other person any legal or equitable right against the Employer, Administrator or Trustee, except as provided herein; in no event will the terms of employment or service of any individual be modified or in any way affected hereby.

10.03. Nonalienability of Benefits. The benefits provided hereunder will not be subject to alienation, assignment, garnishment, attachment, execution or levy of any kind, either voluntarily or involuntarily, and any attempt to cause such benefits to be so subjected will not be recognized, except to such extent as may be required by law and as provided pursuant to a domestic relations order (defined in Code section 414(p)(1)(B)), as determined by the Administrator. Pursuant to a domestic relations order, payments may be accelerated to a time sooner, and pursuant to a schedule more rapid, than the time and schedule applicable in the absence of the domestic relations order, provided that such payment pursuant to such order is not made to the Participant and provided further that this provision shall not be construed to provide the Participant discretion regarding whether such payment time or schedule will be accelerated.

12

10.04. Facility of Payment. In the event the Administrator determines, on the basis of medical reports or other evidence satisfactory to the Administrator, that the recipient of any benefit payments under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity or other incapacity, the Administrator may disburse such payments, or direct the Trustee to disburse such payments, as applicable, to a person or institution designated by a court which has jurisdiction over such recipient or a person or institution otherwise having the legal authority under State law for the care and control of such recipient. The receipt by such person or institution of any such payments shall be complete acquittance therefore, and any such payment to the extent thereof, shall discharge the liability of the Trust for the payment of benefits hereunder to such recipient.

10.05. Plan Records. The Administrator shall maintain the records of the Plan on a calendar-year basis.

10.06. USERRA. Notwithstanding anything herein to the contrary, the Administrator shall permit any Participant election and make any payments hereunder required by the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended, 38 USC 4301-4334.

10.07. Governing Law. The Plan and the accompanying Adoption Agreement will be construed, administered and enforced according to ERISA, and to the extent not preempted thereby, the laws of the State in which the Employer has its principal place of business, without regard to the conflict of laws principles of such State.

Article 11. Plan Administration.

11.01. Powers and Responsibilities of the Administrator. The Administrator has the full power and the full responsibility to administer the Plan in all of its details, subject, however, to the applicable requirements of ERISA. The Administrator’s powers and responsibilities include, but are not limited to, the following:

(a) To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan;

(b) To interpret the Plan, its interpretation thereof in good faith to be final and conclusive on all persons claiming benefits under the Plan;

(c) To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;

(d) To administer the claims and review procedures specified in Section 11.02;

(e) To compute the amount of benefits which will be payable to any Participant, former Participant or Beneficiary in accordance with the provisions of the Plan;

(f) To determine the person or persons to whom such benefits will be paid;

(g) To authorize the payment of benefits;

(h) To appoint such agents, counsel, accountants, and consultants as may be required to assist in administering the Plan; and

(i) By written instrument, to allocate and delegate its responsibilities, including the formation of an administrative committee to administer the Plan.

13

11.02. Claims and Review Procedures.

(a) Claims Procedure. If any person believes he is being denied any rights or benefits under the Plan, such person may file a claim in writing with the Administrator. If any such claim is wholly or partially denied, the Administrator will notify such person of its decision in writing. Such notification will contain (i) specific reasons for the denial, (ii) specific reference to pertinent Plan provisions, (iii) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or information is necessary, and (iv) information as to the steps to be taken if the person wishes to submit a request for review, including a statement of the such person’s right to bring a civil action under ERISA section 502(a) following as adverse determination upon review. Such notification will be given within 90 days after the claim is received by the Administrator (or within 180 days, if special circumstances require an extension of time for processing the claim, and if written notice of such extension and circumstances is given to such person within the initial 90-day period).

If the claim concerns disability benefits under the Plan, the Plan Administrator must notify the claimant in writing within 45 days after the claim has been filed in order to deny it. If special circumstances require an extension of time to process the claim, the Plan Administrator must notify the claimant before the end of the 45-day period that the claim may take up to 30 days longer to process. If special circumstances still prevent the resolution of the claim, the Plan Administrator may then only take up to another 30 days after giving the claimant notice before the end of the original 30-day extension. If the Plan Administrator gives the claimant notice that the claimant needs to provide additional information regarding the claim, the claimant must do so within 45 days of that notice.

(b) Review Procedure. Within 60 days after the date on which a person receives a written notice of a denied claim (or, if applicable, within 60 days after the date on which such denial is considered to have occurred), such person (or his duly authorized representative) may (i) file a written request with the Administrator for a review of his denied claim and of pertinent documents and (ii) submit written issues and comments to the Administrator. This written request may include comments, documents, records, and other information relating to the claim for benefits. The claimant shall be provided, upon the claimant’s request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits. The review will take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The Administrator will notify such person of its decision in writing. Such notification will be written in a manner calculated to be understood by such person and will contain specific reasons for the decision as well as specific references to pertinent Plan provisions. The decision on review will be made within 60 days after the request for review is received by the Administrator (or within 120 days, if special circumstances require an extension of time for processing the request, such as an election by the Administrator to hold a hearing, and if written notice of such extension and circumstances is given to such person within the initial 60-day period). The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the determination on review.

If the initial claim was for disability benefits under the Plan and has been denied by the Plan Administrator, the claimant will have 180 days from the date the claimant received notice of the claim’s denial in which to appeal that decision. The review will be handled completely independently of the findings and decision made regarding the initial claim and will be processed by an individual who is not a subordinate of the individual who denied the initial claim. If the claim requires medical judgment, the individual handling the appeal will consult with a medical professional whom was not consulted regarding the initial claim and who is not a subordinate of anyone consulted regarding the initial claim and identify that medical professional to the claimant.

14

The Plan Administrator shall provide the claimant with written notification of a plan’s benefit determination on review. In the case of an adverse benefit determination, the notification shall set forth, in a manner calculated to be understood by the claimant – the specific reason or reasons for the adverse determinations, reference to the specific plan provisions on which the benefit determination is based, a statement that the claimant is entitled to receive, upon the claimant’s request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits.

15

EX-10.2

Exhibit 10.2

The CORPORATEplan for Retirement^SM

EXECUTIVE PLAN

Adoption Agreement

IMPORTANT NOTE

This document has not been approved by the Department of Labor, the Internal Revenue Service or any other governmental entity. An Employer must determine whether the plan is subject to the Federal securities laws and the securities laws of the various states. An Employer may not rely on this document to ensure any particular tax consequences or to ensure that the Plan is “unfunded and maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees” under the Employee Retirement Income Security Act with respect to the Employer’s particular situation. Fidelity Management Trust Company, its affiliates and employees cannot and do not provide legal or tax advice or opinions in connection with this document. This document does not constitute legal or tax advice or opinions and is not intended or written to be used, and it cannot be used by any taxpayer, for the purposes of avoiding penalties that may be imposed on the taxpayer. This document must be reviewed by the Employer’s attorney prior to adoption.

ADOPTION AGREEMENT

ARTICLE 1

1.01 PLAN INFORMATION

(a) Name of Plan:

This is the Dreamworks Animation SKG, Inc. Special Deferral Election Plan (the “Plan”).

(b) Plan Status (Check one.):

(1) Adoption Agreement effective date: 11/15/2008.

(2) The Adoption Agreement effective date is (Check (A) or check and complete (B)):

(A)  ¨  A new Plan effective date                 .

(B)  þ  An amendment and restatement of the Plan. The original effective date of the Plan was: 7/1/2007

(c) Name of Administrator, if not the Employer:

1.02 EMPLOYER

(a) Employer Name: DreamWorks Animation SKG, Inc.                                                                                                                  

(b) The term “Employer” includes the following Related Employer(s)

(as defined in Section 2.01(a)(25)) participating in the Plan:

DreamWorks, Inc.

DreamWorks Post Production LLC

DreamWorks Animation LLC

Pacific Data Images, Inc.

Pacific Data Images LLC

Pacific Productions LLC

Dreamworks Animation Home Entertainment, Inc.

DWA Finance I L.L.C.

DreamWorks Animation Home Entertainment, L.L.C.

DreamWorks Animation International Services, Inc.

DreamWorks Animation Live Theatrical Productions LLC

Page 1

1.03 COVERAGE

(Check (a) and/or (b).)

(a)  ¨  The following Employees are eligible to participate in the Plan (Check (1) or (2)):

          (1)  ¨  Only those Employees designated in writing by the Employer, which writing is hereby incorporated herein.

          (2)  ¨  Only those Employees in the eligible class described below:

(b)  ¨  The following Directors are eligible to participate in the Plan (Check (1) or (2)):

          (1)  ¨  Only those Directors designated in writing by the Employer, which writing is hereby incorporated herein.

          (2)  ¨  All Directors, effective as of the later of the date in 1.01(b) or the date the Director becomes a Director.

          (Note: A designation in Section 1.03(a)(1) or Section 1.03(b)(1) or a description in

          Section 1.03(a)(2) must include the effective date of such participation.)

1.04 COMPENSATION

(If Section 1.03(a) is selected, select (a) or (b). If Section 1.03(b) is selected, complete (c))

    For purposes of determining all contributions under the Plan:

(a)  ¨  Compensation shall be as defined, with respect to Employees, in the

                                                                    Plan maintained by the Employer:

          (1)  ¨  to the extent it is in excess of the limit imposed under Code section 401(a)(17).

          (2)  ¨  notwithstanding the limit imposed under Code section 401(a)(17).

Page 2

(b)  þ  Compensation shall be as defined in Section 2.01(a)(9) with respect to Employees (Check (1),

            and/or (2) below, if, and as, appropriate):

              (1)  þ  but excluding the following:

                          Overtime Pay, Commissions, Automobile Allowance, Any item of compensation

                          payable in stock of the Employer.

              (2)  ¨  but excluding bonuses, except those bonuses listed in the table in Section 1.05(a)(2).

(c)  ¨  Compensation shall be as defined in Section 2.01(a)(9)(c) with respect to Directors, but excluding the following:

1.05 CONTRIBUTIONS ON BEHALF OF EMPLOYEES

(a) Deferral Contributions (Complete all that apply):

(1)  þ Deferral Contributions. Subject to any minimum or maximum deferral amount provided below, the Employer shall make a Deferral Contribution in accordance with, and subject to, Section 4.01 on behalf of each Participant who has an executed salary reduction agreement in effect with the Employer for the applicable calendar year (or portion of the applicable calendar year).

Deferral Contributions Type of Compensation	Dollar Amount		% Amount
	Min	Max	Min	Max
Base Salary			0	85

(Note: With respect to each type of Compensation, list the minimum and maximum dollar amounts or percentages as whole dollar amounts or whole number percentages.)

(2)  þ Deferral Contributions with respect to Bonus Compensation only. The Employer requires Participants to enter into a special salary reduction agreement to make Deferral Contributions with respect to one or more Bonuses, subject to minimum and maximum deferral limitations, as provided in the table below.

Page 3

Deferral Contributions Type of Bonus	Treated As		Dollar Amount		% Amount
	Performance Based	Non-Performance Based	Min	Max	Min	Max
Incentive Bonus	Yes				0	100
Other Bonus Compensation		Yes			0	100

(Note: With respect to each type of Bonus, list the minimum and maximum dollar amounts or percentages as whole dollar amounts or whole number percentages. In the event a bonus identified as a Performance-based Bonus above does not constitute a Performance-based Bonus with respect to any Participant, such Bonus will be treated as a Non-Performance-based Bonus with respect to such Participant.)

(b) Matching Contributions (Choose (1) or (2) below, and (3) below, as applicable):

(1)  ¨ The Employer shall make a Matching Contribution on behalf of each Employee Participant in an amount described below:

     (A)   ¨       % of the Employee Participant’s Deferral Contributions for the calendar year.

     (B)   ¨ The amount, if any, declared by the Employer in writing, which writing is hereby incorporated herein.

     (C)   ¨ Other:                                                                                                                                                            

(2)  ¨ Matching Contribution Offset. For each Employee Participant who has made elective contributions (as defined in 26 CFR section 1.401(k)-6 (“QP Deferrals”)) of the maximum permitted under Code section 402(g), or the maximum permitted under the terms of the                                                   Plan (the “QP”), to the QP, the Employer shall make a Matching Contribution in an amount equal to (A) minus (B) below:

      (A) The matching contributions (as defined in 26 CFR section 1.401(m)-1(a)(2) (“QP Match”)) that the Employee Participant would have received under the QP on the sum of the Deferral Contributions and the Participant’s QP Deferrals, determined as though—

• no limits otherwise imposed by the tax law applied to such QP match; and

• the Employee Participant’s Deferral Contributions had been made to the QP.

      (B) The QP Match actually made to such Employee Participant under the QP for the applicable calendar year.

Page 4

Provided, however, that the Matching Contributions made on behalf of any Employee Participant pursuant to this Section 1.05(b)(2) shall be limited as provided in Section 4.02 hereof.

(3)  ¨ Matching Contribution Limits (Check the appropriate box (es)):

     (A)   ¨ Deferral Contributions in excess of       % of the Employee Participant’s Compensation for the calendar

                year shall not be considered for Matching Contributions.

     (B)   ¨ Matching Contributions for each Employee Participant for each calendar year shall be limited to $            .

(c) Employer Contributions

(1)  ¨ Fixed Employer Contributions. The Employer shall make an Employer Contribution on behalf of each Employee Participant in an amount determined as described below:

(2)  þ Discretionary Employer Contributions. The Employer may make Employer Contributions to the accounts of Employee Participants in any amount (which amount may be zero), as determined by the Employer in its sole discretion from time to time in a writing, which is hereby incorporated herein.

1.06 CONTRIBUTIONS ON BEHALF OF DIRECTORS

    (a)  ¨ Director Deferral Contributions

The Employer shall make a Deferral Contribution in accordance with, and subject to, Section 4.01 on behalf of each Director Participant who has an executed deferral agreement in effect with the Employer for the applicable calendar year (or portion of the applicable calendar year), which deferral agreement shall be subject to any minimum and/or maximum deferral amounts provided in the table below.

Deferral Contributions Type of Compensation	Dollar Amount		% Amount
	Min	Max	Min	Max

Page 5

(Note: With respect to each type of Compensation, list the minimum and maximum dollar amounts or percentages as whole dollar amounts or whole number percentages.)

(b) Matching and Employer Contributions:

(1)  ¨ Matching Contributions. The Employer shall make a Matching Contribution on behalf of each Director Participant in an amount determined as described below:

(2)  ¨ Fixed Employer Contributions. The Employer shall make an Employer Contribution on behalf of each Director Participant in an amount determined as described below:

(3)  ¨ Discretionary Employer Contributions. The Employer may make Employer Contributions to the accounts of Director Participants in any amount (which amount may be zero), as determined by the Employer in its sole discretion from time to time, in a writing, which is hereby incorporated herein.

1.07 DISTRIBUTIONS

The form and timing of distributions from the Participant’s vested Account shall be made consistent with the elections in this Section 1.07.

(a)(1)   Distribution options to be provided to Participants

Page 6

	(A) Specified Date	(B) Specified Age	(C) Separation From Service	(D) Earlier of Separation or Age	(E) Earlier of Separation or Specified Date	(F) Disability	(G) Change in Control	(H) Death
Deferral Contribution	¨ Lump Sum ¨ Installments	¨ Lump Sum ¨ Installments	¨ Lump Sum ¨ Installments	¨ Lump Sum ¨ Installments	¨ Lump Sum ¨ Installments	¨ Lump Sum ¨ Installments	¨ Lump Sum	¨ Lump Sum ¨ Installments
Matching Contributions	¨ Lump Sum ¨ Installments	¨ Lump Sum ¨ Installments	¨ Lump Sum ¨ Installments	¨ Lump Sum ¨ Installments	¨ Lump Sum ¨ Installments	¨ Lump Sum ¨ Installments	¨ Lump Sum	¨ Lump Sum ¨ Installments
Employer Contributions	¨ Lump Sum ¨ Installments	¨ Lump Sum ¨ Installments	¨ Lump Sum ¨ Installments	¨ Lump Sum ¨ Installments	¨ Lump Sum ¨ Installments	¨ Lump Sum ¨ Installments	¨ Lump Sum	¨ Lump Sum ¨ Installments

(Note: If the Employer elects (F), (G), or (H) above, the Employer must also elect (A), (B), (C), (D), or (E) above, and the Participant must also elect (A), (B), (C), (D), or (E) above. In the event the Employer elects only a single payment trigger and/or payment method above, then such single payment trigger and/or payment method shall automatically apply to the Participant. If the employer elects to provide for payment upon a specified date or age, and the employer applies a vesting schedule to amounts that may be subject to such payment trigger(s), the employer must apply a minimum deferral period, the number of years of which must be greater than the number of years required for 100% vesting in any such amounts. If the employer elects to provide for payment upon disability and/or death, and the employer applies a vesting schedule to amounts that may be subject to such payment trigger, the employer must also elect to apply 100% vesting in any such amounts upon disability and/or death.)

(2)	¨	A Participant incurs a Disability when the Participant (Check at least one if Section 1.07(a)(1)(F) or if Section 1.08(e)(3) is elected):
		(A)		¨	is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
		(B)		¨	is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Employer.
		(C	)	¨	is determined to be totally disabled by the Social Security Administration or the Railroad Retirement Board.

Page 7

		(D)	¨		is determined to be disabled pursuant to the following disability insurance program: __________ the definition of disability under which complies with the requirements in regulations under Code section 409A.
				(Note: If more than one box above is checked, then the Participant will have a Disability if he satisfies at least one of the descriptions corresponding to one of such checked boxes.)
(3)	¨	Regardless of any payment trigger and, as applicable, payment method, to which the Participant would otherwise be subject pursuant to (1) above, the first to occur of the following Plan-level payment triggers will cause payment to the Participant commencing pursuant to Section 1.07(c)(1) below in a lump sum, provided such Plan-level payment trigger occurs prior to the payment trigger to which the Participant would otherwise be subject.

Payment Trigger
(A)	¨	Separation from Service prior to: ________________________________________
(B)	¨	Separation from Service
(C)	¨	Death
(D)	¨	Change in Control

    (b) Distribution Election Change

A Participant

(1) þ        shall

(2) ¨        shall not

be permitted to modify a scheduled distribution election in accordance with Section 8.01(b) hereof.

    (c) Commencement of Distributions

(1) Each lump sum distribution and the first distribution in a series of installment payments (if applicable) shall commence as elected in (A), (B) or (C) below:

(A) þ	Monthly on the 15th day of the month which day next follows the applicable triggering event described in 1.07(a).
(B) ¨	Quarterly on the _____ day of the following months ____________, ______________, _______________, or____________ (list one month in each calendar quarter) which day next follows the applicable triggering event described in 1.07(a).
(C) ¨	Annually on the _____ day of ____________ (month) which day next follows the applicable triggering event described in 1.07(a).

Page 8

(Note: Notwithstanding the above: a six-month delay shall be imposed with respect to certain distributions to Specified Employees; a Participant who chooses payment on a Specified Date will choose a month, year or quarter (as applicable) only, and payment will be made on the applicable date elected in (A), (B) or (C) above that falls within such month, year or quarter elected by the Participant.)

(2) The commencement of distributions pursuant to the events elected in Section 1.07(a)(1) and Section 1.07(a)(3) shall be modified by application of the following:

(A)	¨	Separation from Service Event Delay – Separation from Service will be treated as not having occurred for ____ months after the date of such event.
(B)	¨	Plan Level Delay – all distribution events (other than those based on Specified Date or Specified Age) will be treated as not having occurred for _____ days (insert number of days but not more than 30).

(d) Installment Frequency and Duration

If installments are available under the Plan pursuant to Section 1.07(a), a Participant shall be permitted to elect that the installments will be paid (Complete 1 and 2 below):

(1) at the following intervals:

(A)	þ	Monthly commencing on the day elected in Section 1.07(c)(1).
(B)	¨	Quarterly commencing on the day elected in Section1.07(c)(1) (with payments made at three-month intervals thereafter).
(C)	þ	Annually commencing on the day elected in Section 1.07(c)(1).

(2) over the following term(s) (Complete either (A) or (B)):

(A)	þ	Any term of whole years between 2 (minimum of 1) and 10 (maximum of 30).
(B)	¨	Any of the whole year terms selected below.

Page 9

¨ 1	¨ 2	¨ 3	¨ 4	¨ 5	¨ 6
¨ 7	¨ 8	¨ 9	¨ 10	¨ 11	¨ 12
¨ 13	¨ 14	¨ 15	¨ 16	¨ 17	¨ 18
¨ 19	¨ 20	¨ 21	¨ 22	¨ 23	¨ 24
¨ 25	¨ 26	¨ 27	¨ 28	¨ 29	¨ 30

(Note: Only elect a term of one year if Section 1.07(d)(1)(A) and/or Section 1.07(d)(1)(B) is elected above.)

(e) Conversion to Lump Sum

¨ Notwithstanding anything herein to the contrary , if the Participant’s vested Account at the time such Account becomes payable to him hereunder does not exceed $             distribution of the Participant’s vested Account shall automatically be made in the form of a single lump sum at the time prescribed in Section 1.07(c)(1).

(f) Distribution Rules Applicable to Pre-effective Date Accruals

¨ Benefits accrued under the Plan (subject to Code section 409A) prior to the date in Section 1.01(b)(1) above are subject to distribution rules not described in Section 1.07(a) through (e), and such rules are described in Attachment A Re: PRE EFFECTIVE DATE ACCRUAL DISTRIBUTION RULES.

1.08 VESTING SCHEDULE

(a)	(1)	The Participant’s vested percentage in Matching Contributions elected in Section 1.05(b) shall be based upon the following schedule and unless Section 1.08(a)(2) is checked below will be based on the elapsed time method as described in Section 7.03(b).
	(2)	¨ Vesting shall be based on the class year method as described in Section 7.03(c).
(b)	(1)	The Participant’s vested percentage in Employer Contributions elected in Section 1.05(c) shall be based upon the following schedule and unless Section 1.08(b)(2) is checked below will be based on the elapsed time method as described in Section 7.03(b).

Years of Service	Vesting %
0	100
1	100

	(2)	¨	Vesting shall be based on the class year method as described in Section 7.03(c).
(c)	¨     Years of Service shall exclude (Check one.):

Page 10

(1) ¨ for new plans, service prior to the Effective Date as defined in Section 1.01(b)(2)(A).

(2) ¨ for existing plans converting from another plan document, service prior to the original Effective Date as defined in Section 1.01(b)(2)(B).

(Note: Do not elect to apply this Section 1.08(c) if vesting is based only on the class year method.)

(d) ¨ Notwithstanding anything to the contrary herein, a Participant will forfeit his Matching Contributions and Employer       Contributions (regardless of whether vested) upon the occurrence of the following event(s):

________________________________________________________________________

________________________________________________________________________

(Note: Contributions with respect to Directors, which are 100% vested at all times, are subject to the rule in this subsection (d).)

(e) A Participant will be 100% vested in his Matching Contributions and Employer Contributions upon (Check the appropriate box(es)):

(1) ¨ Retirement eligibility is the date the Participant attains age __ and completes

                    __ Years of Service, as defined in Section 7.03(b).

(2) ¨ Death.

(3) ¨ The date on which the Participant becomes disabled, as determined under Section 1.07(a)(2).

(Note: Participants will automatically vest upon Change in Control if Section 1.07(a)(1)(G) is elected.)

(f) ¨ Years of Service in Section 1.08 (a)(1) and Section 1.08 (b)(1) shall include service with the following employers:

________________________________________________________________________

________________________________________________________________________

1.09 INVESTMENT DECISIONS

A Participant’s Account shall be treated as invested in the Permissible Investments as directed by the Participant unless otherwise provided below:

________________________________________________________________________

Page 11

1.10 ADDITIONAL PROVISIONS

The Employer may elect Option below and complete the Superseding Provisions Addendum to describe overriding provisions that are not otherwise reflected in this Adoption Agreement.

þ The Employer has completed the Superseding Provisions Addendum to reflect the provisions of the Plan that supersede provisions of this Adoption Agreement and/or the Basic Plan Document.

Page 12

EXECUTION PAGE

(Fidelity’s Copy)

IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed this 28^th day of October, 2008.

Employer	DreamWorks Animation SKG, Inc.
By	/s/ Katherine Kendrick
Title	General Counsel

Page 13

AMENDMENT EXECUTION PAGE

(Fidelity’s Copy)

Plan Name:	Dreamworks Animation SKG, Inc. Special Deferral Election Plan (the “Plan”)
Employer:	DreamWorks Animation SKG, Inc.

(Note: These execution pages are to be completed in the event the Employer modifies any prior election(s) or makes a new election(s) in this Adoption Agreement. Attach the amended page(s) of the Adoption Agreement to these execution pages.)

The following section(s) of the Plan are hereby amended effective as of the date(s) set forth below:

Section Amended Effective Date

IN WITNESS WHEREOF, the Employer has caused this Amendment to be executed on the date below.

Employer:	DreamWorks Animation SKG, Inc.
By:	/s/ Katherine Kendrick
Title:	General Counsel
Date:	October 28, 2008

Page 14

ATTACHMENT A

Re: PRE EFFECTIVE DATE ACCRUAL DISTRIBUTION RULES

Plan Name: Dreamworks Animation SKG, Inc. Special Deferral Election Plan (the “Plan”)

Page 15

ATTACHMENT B

Re: SUPERSEDING PROVISIONS for

Plan Name: Dreamworks Animation SKG, Inc. Special Deferral Election Plan (the “Plan”)

(a) Superseding Provision(s) – The following provisions supersede other provisions of this Adoption Agreement and/or the Basic Plan Document as described below:

1. Section 1.03 of the Adoption Agreement in effect for the Plan is hereby amended in its entirety to read as follows and shall supersede any provision to the contrary in the Adoption Agreement or the Plan:

“Only management personnel and other highly compensated employees of the Employer or the other Related Employers participating in the Plan shall be eligible for participation in the Plan. The Administrator shall have the discretionary authority to select the actual participants in the Plan.”

2. Section 1.07(a)(1) of the Adoption Agreement in effect for the Plan is hereby amended in its entirety to read as follows and shall supersede any provision to the contrary in the Adoption Agreement or the Plan:

                “(1) The form and timing of distributions from the Participant’s vested Account shall be made consistent with the following elections available to the Participant:

A. Permissible Distribution Events

(A) Separation from Service;

(B) A specified date elected by the Participant, provided such date must be at least one year after the date the deferred amount subject to such election would have been paid to Participant in cash in the absence of the deferral election,

(C) The earlier of Separation from Service or an elected date,

(D) The earlier of Separation from Service or a Change in Control,

(E) The earlier of an elected date or a Change in Control, or

(F) The earliest of Separation from Service, an elected date or a Change in Control.

Page 16

B. Form of Distribution:

(A) Lump sum

(B) Annual installments over a period not to exceed ten (10) years

(C) Monthly installments over a period not to exceed one hundred twenty (120) months.

                              However, if the applicable distribution event is a Change in Control, then such distribution shall only be made in the form of a lump sum.”

3. Section 1.07(a)(3) of the Adoption Agreement in effect for the Plan is hereby amended in its entirety to read as follows and shall supersede any provision to the contrary in the Adoption Agreement or the Plan:

“Should the Participant die before the entire aggregate balance of his or her vested Account under the Plan is distributed, then the unpaid aggregate balance of that Account shall be paid in a lump sum to his or her designated Beneficiary(ies) under the Plan, whether the Participant’s death occurs before or after one or more distributions are made from that Account pursuant to the distribution event or events elected by the Participant in accordance with Section 1.07(a)(1). Such payment shall be made as soon as administratively practical following the Participant’s death, but in no event later than the later of (i) the end of the calendar year in which the Participant’s death occurs or (ii) the fifteenth (15th) day of the third (3rd) calendar month following the date of the Participant’s death.”

4. Section 1.07(e) of the Adoption Agreement is hereby amended in its entirety to read as follows and shall supersede any provision to the contrary in the Adoption Agreement or the Plan:

“If the aggregate balance of the Participant’s Account is not greater than the applicable dollar amount in effect under Code Section 402(g)(1)(B) at the time of the Participant’s Separation from Service and the Participant is not otherwise at that time participating in any other non-qualified elective account balance plan subject to Code Section 409A and maintained by the Employer or one or more Related Employers, then that balance shall be distributed to the Participant in a lump sum distribution on the fifteenth (15th) day of the month that next follows the date of such Separation from Service or as soon as administratively practical thereafter, whether or not the Participant elected that form of distribution or distribution event, but in no event later than the later of (i) the end of the calendar year in which such Separation from Service occurs or (ii) the fifteenth (15th) day of the third (3rd) calendar month following the date of such Separation from Service.”

5. There is hereby added to the end of Section 9.01 of the Plan the following limitation:

“In addition, no such amendment authorized by the Employer shall affect the distribution provisions in effect for the Participant’s Account, and all amounts deferred prior to the date of any such amendment shall continue to become due and payable in accordance with the distribution provisions of Articles 1 and 8 of the Plan as in effect immediately prior to such amendment.”

6. Except as modified by this Plan Amendment, all the terms and provisions of the Plan, including (without limitation) the Adoption Agreement, shall continue in full force and effect.

Page 17

EX-10.5

Exhibit 10.5

AIRCRAFT TIME SHARING AGREEMENT

This Aircraft Time Sharing Agreement (“Agreement”) is made and entered into as of the 27th day of October, 2008, by and between INTELLECTUAL VENTURES MANAGEMENT, L.L.C., a Washington limited liability company (“IVM”), and DREAMWORKS ANIMATION SKG, INC., a Delaware corporation (“DWA”).

WHEREAS, IVM, a company engaged primarily in the business of managing private equity investment funds, is the lessee and operator of one Gulfstream Aerospace Model G-V aircraft bearing Federal Aviation Administration Registration No. N5000X and Manufacturer’s Serial No. 611 (“the Aircraft”) and owned by Teratorn, LLC (the “Aircraft Owner”); and

WHEREAS, DWA, from time to time, desires use of the Aircraft for its own account solely for the carriage of one or more DWA officials, employees and guests traveling on DWA business; and

WHEREAS, IVM desires to make the Aircraft available to DWA for the above operations on a time sharing basis in accordance with § 91.501 of the Federal Aviation Regulations, 14 CFR § 91.501.

NOW, THEREFORE, in consideration of the mutual covenants herein set forth, the parties agree as follows:

1. Provision of the Aircraft. IVM agrees to provide the Aircraft to and operate the Aircraft for DWA on a time sharing basis in accordance with the provisions of §§ 91.501(b)(6), 91.501(c)(1) and 91.501(d) of the Federal Aviation Regulations (FARs) for the period commencing upon execution of this Agreement and terminating upon permanent cessation of IVM’s operation of the Aircraft, unless earlier terminated pursuant to Paragraph 15 below or by mutual agreement of the parties.

2. Reimbursement of Expenses. For each flight conducted under this Agreement, DWA shall pay to IVM the amount invoiced to DWA by IVM for such flight, provided that in no case shall such amount exceed the sum of the expenses set forth in subparagraphs (a)-(j) below:

(a) Fuel, oil, lubricants, and other additives;

(b) Travel expenses of the crew, including food, lodging, and ground transportation;

(c) Hangar and tie-down costs away from the Aircraft’s base of operation;

(d) Insurance obtained for the specific flight;

(e) Landing fees, airport taxes, and similar assessments;

(f) Customs, foreign permit, and similar fees directly related to the flight;

(g) In-flight food and beverages;

(h) Passenger ground transportation;

(i) Flight planning and weather contract services; and

(j) An additional charge equal to one hundred percent (100%) of the expenses listed in subparagraph (a) above.

3. Invoicing and Payment. All payments to be made to IVM by DWA hereunder shall be paid in the manner set forth in this Paragraph 3. IVM will pay to suppliers, employees, contractors and governmental entities all expenses related to the operation of the Aircraft hereunder in the ordinary course. As to each flight operated hereunder, IVM shall provide to DWA an invoice for the charges specified in Paragraph 2 of this Agreement (plus air transportation excise taxes, as applicable, imposed by the Internal Revenue Code), such invoice to be issued within thirty (30) days after the completion of each such flight. DWA shall pay IVM the full amount of such invoice within thirty (30) days of the date of the invoice. In the event IVM has not received supplier invoices for reimbursable charges relating to such flight prior to such invoicing, IVM shall issue supplemental invoice(s) for such charge(s) to DWA, and DWA shall pay such charge(s) within thirty (30) days of the date of each supplemental invoice.

4. Flight Requests. DWA (or its official) will provide IVM with flight requests and proposed flight schedules as far in advance as possible. Flight requests shall be in a form, whether oral or written, mutually convenient to and agreed upon by the parties. DWA shall provide at least the following information for each proposed flight reasonably in advance of the desired departure time as required by IVM or its flight crew:

(a) departure point;

(b) destination;

(c) proposed date and time of flight;

(d) number and identity of anticipated passengers;

(e) nature and extent of baggage and/or cargo to be carried;

(f) proposed date and time of return flight, if any; and

(g) any other information concerning the proposed flight that may be pertinent to or required by IVM or its flight crew.

5. Aircraft Scheduling. IVM shall have final authority over all scheduling of the Aircraft, including determination of whether the Aircraft can be made available for a particular flight, provided however that IVM will use reasonable efforts to accommodate DWA’s requests.

6. Aircraft Maintenance. IVM shall be solely responsible for securing all maintenance (including scheduled and unscheduled maintenance, preventive maintenance, and required or otherwise necessary inspections) of the Aircraft, and shall take such requirements into account in scheduling the Aircraft. Performance of maintenance or inspection shall not be postponed for the purpose of scheduling the Aircraft to accommodate DWA’s request unless such maintenance or inspection can safely be conducted at a later time in compliance with applicable laws, regulations and requirements, and such postponement is consistent with the sound discretion of the pilot-in-command.

7. Flight Crew. IVM shall employ, pay for and provide a qualified flight crew for all flight operations under this Agreement.

8. Operational Authority and Control. IVM shall be responsible for all aspects of the physical and technical operation of the Aircraft and the safe performance of all flights, and shall retain full authority and control including exclusive operational control and possession of the Aircraft, at all times during

2

flights operated under this Agreement. In accordance with applicable FARs, the qualified flight crew provided by IVM will exercise all required and/or appropriate duties and responsibilities in regard to the safety of each flight conducted hereunder. The pilot-in-command shall have absolute discretion in all matters concerning preparation of the Aircraft for flight and the flight itself, the load carried and its distribution, the decision whether or not a flight shall be undertaken, the route to be flown, the place where landings shall be made, and all other matters relating to operation of the Aircraft. DWA specifically agrees that the flight crew shall have final and complete authority to delay or cancel any flight for any reason or condition that in the sole judgment of the pilot-in-command could compromise the safety of the flight, and to take any other action that in the sole judgment of the pilot-in-command is necessitated by considerations of safety. No such action of the pilot-in-command shall create or support any liability to DWA or any other person for loss, injury, damage or delay. The parties further agree that IVM shall not be liable for delay or failure to furnish the Aircraft and crew pursuant to this Agreement when such failure is caused by government regulation or authority, mechanical difficulty or breakdown, war, civil commotion, strike or labor dispute, weather condition, act of God, or other circumstance beyond IVM’s control.

9. Insurance.

(a)(i) IVM will maintain, or cause to be maintained in full force at all times by the Aircraft Owner, with respect to the Aircraft, and all operations direct or incidental to the operation thereof, insurance with carriers acceptable to DWA meeting the terms and limits specified in this section.

(a)(ii) Comprehensive Aircraft Liability Insurance – Comprehensive Aircraft Liability Insurance including bodily injury (including passengers) and property damage liability with a combined single limit of not less then $250,000,000 each occurrence. Such liability policies shall name DWA and its affiliates (or their equivalents as respects joint ventures, partnerships, LLCs or other organizational structures) as additional insureds (the “Additional Insureds”), as their respective interests may appear, and shall include cross liability and a clause stating that such insurance is primary with respect to the Aircraft, or substitute or replacement aircraft used in performing this Agreement, and such insurance shall not be contributory with or excess over any insurance carried by DWA, its related entities and the Additional Insureds.

(a)(iv) Aircraft Hull Insurance – Aircraft hull insurance covering the Aircraft hull, engines and equipment against “All Risks” of loss or damage for the actual market replacement value of the Aircraft. Such insurance shall contain by endorsement a waiver of subrogation in favor of the Additional Insureds.

(a)(v) Certificate of Insurance – IVM shall provide the Additional Insureds with a certificate of insurance complying with the previsions contained in paragraphs (a)(ii) through (a)(iv) above. Such certificate of insurance shall also provide that, in the event of a cancellation or material change in policy with respect to the Aircraft for which the certificate is issued which would adversely affect the interest of such Additional Insureds, the insurers agree to provide 30 days (10 days for non-payment or seven days or less as respects War Risk) prior written notice to the certificate holder.

3

(a)(vi) War Risk Insurance – IVM will maintain War Risk and Allied Risk Perils Insurance including all coverage or limits outlined under aviation regulations of the countries where operations may occur or as provided by the United States Government.

(b) IVM shall use reasonable efforts to procure such additional insurance coverages as DWA may request naming DWA as an insured; provided, that the cost of such additional insurance shall be borne by DWA pursuant to Paragraph 2(d) hereof.

(c) Notwithstanding the obligations set forth in subparagraphs (a) and (b) of this Paragraph 9, IVM shall indemnify DWA and hold it harmless against all liabilities, obligations, losses, damages, penalties, actions, costs, expenses, taxes, fees, levies and reasonable attorneys’ fees and expenses of any nature which may be imposed on, incurred by or asserted against DWA caused by or arising out of any flight operated under this Agreement. Such indemnification shall be on a “grossed up” basis taking into account tax liability, if any, of DWA resulting from payments made by IVM to DWA or on DWA’s behalf under this subparagraph. The provisions of this subparagraph shall survive the termination of this Agreement.

10. Warranties. DWA warrants that:

(a) It will use the Aircraft under this Agreement only for its own account and solely for the carriage of DWA officials, employees and guests traveling on DWA business, and will not use the Aircraft for the purpose of providing transportation of passengers or cargo for compensation or hire;

(b) It will not permit any lien, security interest or other charge or encumbrance to attach against the Aircraft as a result of its actions or inactions, and shall not convey, mortgage, assign, lease or in any way alienate the Aircraft or IVM’s rights hereunder; and

(c) Throughout the term of this Agreement, it will abide by and conform to all laws, rules and regulations as may from time to time be in effect relating in any way to the operation or use of the Aircraft under this Agreement.

IVM warrants that:

Throughout the term of this Agreement, it will abide by and conform to all laws, rules and regulations as may from time to time be in effect relating in any way to the operation or use of the Aircraft under this Agreement.

11. Base of Operations. DWA acknowledges that the base of operations of the Aircraft may be changed temporarily or permanently by IVM without notice to DWA.

4

12. Notices and Communications. All notices and other communications under this Agreement shall be in writing (except as permitted in Paragraph 4), shall be deemed to have been duly given upon confirmation of delivery by electronic or manual means, and shall be addressed as follows:

If to IVM:	If to DWA:
Intellectual Ventures Management, L.L.C.	DreamWorks Animation SKG, Inc.
Attn: General Counsel	Attn: General Counsel
227 Bellevue Way, PMB 502	1000 Flower Street
Bellevue, Washington 98004	Glendale, California 91201

or to such other person or address as either party may from time to time designate in writing to the other party.

13. Further Acts. IVM and DWA shall from time to time perform such other and further acts and execute such other and further instruments as may be required by law or may be necessary (i) to carry out the intent and purpose of this Agreement, and (ii) to establish, maintain or protect the respective rights and remedies of the other party.

14. Successors and Assigns. Neither this Agreement nor any party’s interest herein shall be assignable to any other party. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their representatives and their successors.

15. Termination. Either party may terminate this Agreement for any reason upon written notice to the other, such termination to become effective thirty (30) days from the date of the notice; provided, that this Agreement may be terminated as a result of a breach by either party of its obligations under this Agreement on ten (10) days’ written notice by the non-breaching party to the breaching party; and provided further, that this Agreement may be terminated on such shorter notice as may be required to comply with applicable laws, regulations or insurance requirements.

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

17. Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions shall not be affected or impaired.

18. Amendment or Modification. This Agreement supersedes and replaces any previous agreement between the parties hereto concerning the subject matter hereof, constitutes the entire agreement between the parties with respect to that subject matter, and is not intended to confer upon any person or entity any rights or remedies not expressly granted herein. This Agreement may be amended or modified only in writing duly executed by both parties hereto.

5

19. TRUTH IN LEASING STATEMENT PURSUANT TO SECTION 91.23 OF THE FEDERAL AVIATION REGULATIONS:

(a) INTELLECTUAL VENTURES MANAGEMENT, L.L.C. CERTIFIES THAT THE AIRCRAFT HAS BEEN INSPECTED AND MAINTAINED WITHIN THE 12-MONTH PERIOD PRECEDING THE DATE OF THIS AGREEMENT IN ACCORDANCE WITH THE PROVISIONS OF PART 91 OF THE FEDERAL AVIATION REGULATIONS, AND THAT ALL APPLICABLE REQUIREMENTS FOR THE AIRCRAFT’S MAINTENANCE AND INSPECTION THEREUNDER HAVE BEEN MET AND ARE VALID FOR THE OPERATIONS TO BE CONDUCTED UNDER THIS AGREEMENT.

(b) INTELLECTUAL VENTURES MANAGEMENT, L.L.C. AGREES, CERTIFIES AND ACKNOWLEDGES THAT WHENEVER THE AIRCRAFT IS OPERATED UNDER THIS AGREEMENT, INTELLECTUAL VENTURES MANAGEMENT, L.L.C. SHALL BE KNOWN AS, CONSIDERED, AND SHALL IN FACT BE THE OPERATOR OF THE AIRCRAFT, AND THAT INTELLECTUAL VENTURES MANAGEMENT, L.L.C. UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS.

(c) THE PARTIES UNDERSTAND THAT AN EXPLANATION OF FACTORS AND PERTINENT FEDERAL AVIATION REGULATIONS BEARING ON OPERATIONAL CONTROL CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE. DREAMWORKS ANIMATION SKG, INC. FURTHER CERTIFIES THAT IT WILL SEND, OR CAUSE TO BE SENT, A TRUE COPY OF THIS AGREEMENT TO: FEDERAL AVIATION ADMINISTRATION, AIRCRAFT REGISTRATION BRANCH, ATTN. TECHNICAL SECTION (AVN-450), P.O. BOX 25724, OKLAHOMA CITY, OKLAHOMA 73125, WITHIN 24 HOURS AFTER ITS EXECUTION, AS REQUIRED BY SECTION 91.23(c)(1) OF THE FEDERAL AVIATION REGULATIONS.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

INTELLECTUAL VENTURES MANAGEMENT, L.L.C.		DREAMWORKS ANIMATION SKG, INC.
By: x	/s/ Nathan P. Myhrvold	By: x	/s/ Lewis Coleman
Name:	Nathan P. Myhrvold	Name:	Lewis Coleman
Title:	CEO	Title:	President and CFO

6

EX-10.6

Exhibit 10.6

[FORM OF RESTRICTED STOCK UNIT AWARD AGREEMENT

FOR NON-EMPLOYEE DIRECTORS]

RESTRICTED STOCK UNIT AWARD AGREEMENT UNDER THE DREAMWORKS ANIMATION SKG, INC., 2008 OMNIBUS INCENTIVE COMPENSATION PLAN, dated as of «Month» «Day», «Year», between DreamWorks Animation SKG, Inc. (the “Company”), a Delaware corporation, and «First» «Last».

This Restricted Stock Unit Award Agreement (the “Award Agreement”) sets forth the terms and conditions of an award of «Restricted_Shares» restricted stock units (the “Award”) that are subject to the terms and conditions specified herein (“RSUs”) and that are granted to you under the DreamWorks Animation SKG, Inc. 2008 Omnibus Incentive Compensation Plan (the “Plan”). This Award constitutes an unfunded and unsecured promise of the Company to deliver (or cause to be delivered) to you, subject to the terms of this Award Agreement, a share of the Company’s Class A Common Stock, $0.01 par value (“Share”), as set forth in Section 3 below.

THIS AWARD IS SUBJECT TO ALL TERMS AND CONDITIONS OF THE PLAN AND THIS AWARD AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE DISPUTE RESOLUTION PROVISIONS SET FORTH IN SECTION 9. BY SIGNING YOUR NAME BELOW, YOU WILL HAVE CONFIRMED YOUR ACCEPTANCE OF THE TERMS AND CONDITIONS OF THIS AWARD AGREEMENT.

SECTION 1. The Plan. This Award is made pursuant to the Plan, all the terms of which are hereby incorporated in this Award Agreement. In the event of any conflict between the terms of the Plan and the terms of this Award Agreement, the terms of this Award Agreement shall govern.

SECTION 2. Definitions. Capitalized terms used in this Award Agreement that are not defined in this Award Agreement have the meanings as used or defined in the Plan. As used in this Award Agreement, “Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and other interpretive guidance promulgated thereunder, as in effect from time to time.

SECTION 3. Vesting and Delivery. (a) Your rights with respect to the RSUs subject to this Award Agreement shall be fully vested upon the date of grant of the RSUs (such date, the “Vesting Date”).

(b) Notwithstanding the occurrence of the Vesting Date and the reference in Section 3 of the letter agreement between you and the Company, dated July 24, 2008 (the “Letter Agreement”), to the survival of Paragraph 26 of the Prior Agreement (as defined in the Letter Agreement), the Company shall not deliver the Shares with respect to the RSUs to you until the termination of your service as a director of the Company and its Affiliates, provided that such termination constitutes a “separation from service” within the meaning of Section 409A. In such event, you will be entitled to delivery of one Share for each RSU awarded to you pursuant to this Award Agreement within 10 days following the termination of your service as of a director of the Company and its Affiliates.

SECTION 4. Voting Rights; Dividend Equivalents. Prior to the date on which Shares are delivered to you in settlement of the RSUs pursuant to this Award Agreement, you shall not be entitled to exercise any voting rights with respect to the Shares underlying such RSUs and shall not be entitled to receive dividends or other distributions with respect to such Shares.

SECTION 5. Non-Transferability of RSUs. Unless otherwise provided by the Committee in its sole discretion, RSUs may not be sold, assigned, alienated, transferred, pledged, attached or otherwise encumbered except as provided in Section 9(a) of the Plan. Any purported sale, assignment, alienation, transfer, pledge, attachment or other encumbrance of an RSU in violation of the provisions of this Section 5 and Section 9(a) of the Plan shall be void.

SECTION 6. Withholding, Consents and Legends. (a) Withholding. The delivery of Shares pursuant to Section 3 is conditioned on satisfaction of any applicable withholding taxes in accordance with Section 9(d) of the Plan. In the event that there is withholding tax liability in connection with the settlement of RSUs, you may satisfy, in whole or in part, any withholding tax liability by having the Company withhold from the number of Shares you would be entitled to receive upon settlement of the RSUs, a number of Shares having a Fair Market Value (which shall either have the meaning set forth in the Plan or shall have such other meaning as determined by the Company in accordance with applicable withholding requirements) equal to such withholding tax liability.

(b) Consents. Your rights in respect of the RSUs are conditioned on the receipt to the full satisfaction of the Committee of any required consents that the Committee may determine to be necessary or advisable (including, without limitation, your consenting to the Company’s supplying to any third-party recordkeeper of the Plan such personal information as the Committee deems advisable to administer the Plan).

(c) Legends. The Company may affix to certificates for Shares issued pursuant to this Award Agreement any legend that the Committee determines to be necessary or advisable (including to reflect any restrictions to which you may be subject under any applicable securities laws). The Company may advise the transfer agent to place a stop order against any legended Shares.

SECTION 7. Successors and Assigns of the Company. The terms and conditions of this Award Agreement shall be binding upon and shall inure to the benefit of the Company and its successors and assigns.

SECTION 8. Committee Discretion. The Committee shall have full and plenary discretion with respect to any actions to be taken or determinations to be made in connection with this Award Agreement, and its determinations shall be final, binding and conclusive.

2

SECTION 9. Dispute Resolution. (a) Jurisdiction and Venue. You and the Company irrevocably submit to the exclusive jurisdiction of (i) the United States District Court for the District of Delaware and (ii) the courts of the State of Delaware for the purposes of any suit, action or other proceeding arising out of this Award Agreement or the Plan. You and the Company agree to commence any such action, suit or proceeding either in the United States District Court for the District of Delaware or, if such suit, action or other proceeding may not be brought in such court for jurisdictional reasons, in the courts of the State of Delaware. You and the Company further agree that service of any process, summons, notice or document by U.S. registered mail to the other party’s address set forth below shall be effective service of process for any action, suit or proceeding in Delaware with respect to any matters to which you have submitted to jurisdiction in this Section 9(a). You and the Company irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Award Agreement or the Plan in (A) the United States District Court for the District of Delaware or (B) the courts of the State of Delaware, and hereby and thereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

(b) Waiver of Jury Trial. You and the Company hereby waive, to the fullest extent permitted by applicable law, any right either of you may have to a trial by jury in respect to any litigation directly or indirectly arising out of, under or in connection with this Award Agreement or the Plan.

(c) Confidentiality. You hereby agree to keep confidential the existence of, and any information concerning, a dispute described in this Section 9, except that you may disclose information concerning such dispute to the court that is considering such dispute or to your legal counsel (provided that such counsel agrees not to disclose any such information other than as necessary to the prosecution or defense of the dispute).

3

SECTION 10. Notice. All notices, requests, demands and other communications required or permitted to be given under the terms of this Award Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three business days (meaning a day that is not a Saturday, a Sunday or a day on which banking institutions are legally permitted to be closed in the City of New York) after they have been mailed by U.S. registered mail, return receipt requested, postage prepaid, addressed to the other party as set forth below:

If to the Company:	DreamWorks Animation SKG, Inc. 1000 Flower Street Glendale, CA 91201 Attention: General Counsel Telecopy :
If to you:	«First» «Last» «Street» «Unit» «City», «State» «Postal_Code»

The parties may change the address to which notices under this Award Agreement shall be sent by providing written notice to the other in the manner specified above.

SECTION 11. Headings. Headings are given to the Sections and subsections of this Award Agreement 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 this Award Agreement or any provision thereof.

SECTION 12. Amendment of this Award Agreement. The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate this Award Agreement prospectively or retroactively; provided, however, that, except as set forth in Section 13(d) of this Award Agreement, any such waiver, amendment, alteration, suspension, discontinuance, cancelation or termination that would materially and adversely impair your rights under this Award Agreement shall not to that extent be effective without your consent (it being understood, notwithstanding the foregoing proviso, that this Award Agreement and the RSUs shall be subject to the provisions of Section 7(c) of the Plan).

SECTION 13. Section 409A. (a) It is intended that the provisions of this Award Agreement comply with Section 409A, and all provisions of this Award Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.

(b) Neither you nor any of your creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A) payable under this Award Agreement to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A, any deferred compensation (within the meaning of Section 409A) payable to you or for your benefit under this Award Agreement may not be reduced by, or offset against, any amount owing by you to the Company or any of its Affiliates.

(c) If, at the time of your separation from service (within the meaning of Section 409A), (i) you shall be a specified employee (within the meaning of Section 409A and using the identification methodology selected by the Company from time to time) and (ii) the Company shall make a good faith determination that an amount payable

4

hereunder constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then the Company shall not pay such amount on the otherwise scheduled payment date but shall instead pay it, without interest, on the first business day after such six-month period.

(d) Notwithstanding any provision of this Award Agreement to the contrary, in light of the uncertainty with respect to the proper application of Section 409A, the Company reserves the right to make amendments to this Award Agreement as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A. In any case, you shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on you or for your account in connection with this Award Agreement (including any taxes and penalties under Section 409A), and neither the Company nor any of its Affiliates shall have any obligation to indemnify or otherwise hold you harmless from any or all of such taxes or penalties.

SECTION 14. Counterparts. This Award Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

IN WITNESS WHEREOF, the parties have duly executed this Award Agreement as of the date first written above.

DREAMWORKS ANIMATION SKG, INC.,
	by
		Name:
		Title:
«FIRST» «LAST»

5

EX-10.7

Exhibit 10.7

[FORM OF RESTRICTED SHARE AWARD AGREEMENT

(TIME VESTED AND DOUBLE TRIGGER)]

RESTRICTED SHARE AWARD AGREEMENT UNDER THE DREAMWORKS ANIMATION SKG, INC., 2008 OMNIBUS INCENTIVE COMPENSATION PLAN dated as of «Month» «Day», «Year», between DreamWorks Animation SKG, Inc. (the “Company”), a Delaware Corporation, and «First» «Last».

This Restricted Share Award Agreement (the “Award Agreement”) sets forth the terms and conditions of an award of «Restricted_Shares» shares (the “Award”) of the Company’s Class A Common Stock, $0.01 par value, that are subject to certain restrictions on transfer and risks of forfeiture and other terms and conditions specified herein (“Restricted Shares”) and that are granted to you under the DreamWorks Animation SKG, Inc. 2008 Omnibus Incentive Compensation Plan (the “Plan”).

THIS AWARD IS SUBJECT TO ALL TERMS AND CONDITIONS OF THE PLAN AND THIS AWARD AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE DISPUTE RESOLUTION PROVISIONS SET FORTH IN SECTION 10. BY SIGNING YOUR NAME BELOW, YOU WILL HAVE CONFIRMED YOUR ACCEPTANCE OF THE TERMS AND CONDITIONS OF THIS AWARD AGREEMENT.

SECTION 1. The Plan. This Award is made pursuant to the Plan, all the terms of which are hereby incorporated in this Award Agreement. In the event of any conflict between the terms of the Plan and the terms of this Award Agreement, the terms of this Award Agreement shall govern. In the event of any conflict between the terms of this Award Agreement and the terms of any individual employment agreement between you and the Company or any of its Affiliates (an “Employment Agreement”), the terms of your Employment Agreement will govern.

SECTION 2. Definitions. Capitalized terms used in this Award Agreement that are not defined in this Award Agreement have the meanings as used or defined in the Plan. As used in this Award Agreement, the following terms have the meanings set forth below:

“Business Day” means a day that is not a Saturday, a Sunday or a day on which banking institutions are legally permitted to be closed in the City of New York.

“Cause” (a) shall have the meaning set forth in your Employment Agreement or (b) if there is no definition set forth in your Employment Agreement or if you do not have an Employment Agreement, shall mean the occurrence of any of the following events:

(i) your fraud, misappropriation, embezzlement or misuse of funds or property belonging to the Company;

(ii) your failure, following notice from the Company, to substantially perform your duties to the Company (other than as a result of incapacity due to physical or mental illness);

(iii) your conviction of, or entry of a plea of guilty or nolo contendre to, a felony or a crime involving moral turpitude;

(iv) any willful act, or failure to act, by you in bad faith to the material detriment of the Company; or

(v) your material non-compliance with established Company 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).

“Change of Control” (a) shall have the meaning set forth in your Employment Agreement or (b) if there is no definition set forth in your Employment Agreement or if you do not have an Employment Agreement, shall have the meaning set forth in the Plan.

“Good Reason” (a) shall have the meaning set forth in your Employment Agreement or (b) if there is no definition set forth in your Employment Agreement or if you do not have an Employment Agreement, shall mean the occurrence of either of the following events:

(i) a change of your principal place of employment to a location more than 50 miles from your principal place of employment immediately prior to the change; or

(ii) a reduction of more than 10% in your annual base salary, other than a reduction that is consistent and proportional with an overall reduction in the base salaries of all similarly situated employees of the Company.

“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and other interpretive guidance promulgated thereunder, as in effect from time to time.

“Vesting Date” means the date on which your rights with respect to all or a portion of the Restricted Shares subject to this Award Agreement may become fully vested, and the restrictions set forth in this Award Agreement may lapse, as provided in Sections 3(a) or 3(b) of this Award Agreement.

SECTION 3. Vesting and Delivery. (a) Regularly Scheduled Vesting. On each Vesting Date set forth below, your rights with respect to the number of Restricted Shares that corresponds to such Vesting Date, as specified in the chart below, shall become vested, and the restrictions set forth in this Award Agreement shall lapse, provided that you must be actively employed by the Company or an Affiliate on the relevant Vesting Date, except as (A) otherwise determined by the Committee in its sole discretion, or (B) as otherwise provided in your Employment Agreement.

2

Vesting Date	Aggregate Percentage Vested	Aggregate Number of Restricted Shares Subject to Vesting
«Vesting_Date_1»	25	«RSU1»
«Vesting_Date_2»	50	«RSU2»
«Vesting_Date_3»	75	«RSU3»
«Vesting_Date_4»	100	«RSU4»

(b) Vesting following a Change of Control. Subject to the last sentence of this Section 3(b) and to the procedures set forth herein, if, during the one-year period following a Change of Control, your employment is terminated by the Company without Cause or you terminate your employment for Good Reason, then your rights with respect to any then-unvested Restricted Shares shall become immediately vested. In such event, the date of such termination of your employment shall be considered a Vesting Date hereunder. Notwithstanding any provision of this Award Agreement to the contrary, you will not be entitled to terminate your employment for Good Reason for purposes of this Award Agreement as the result of any event specified in clause (i) or (ii) of the definition of Good Reason unless, within ninety (90) days following the occurrence of such event, you give the Company written notice of the occurrence of such event, which notice sets forth the exact nature of the event and the conduct required to cure such event. The Company shall have thirty (30) days from the receipt of such notice within which to cure (such period, the “Cure Period”). If, during the Cure Period, such event is remedied, then you will not be permitted to terminate your employment for Good Reason as a result of such event. If, at the end of the Cure Period, the event that constitutes Good Reason has not been remedied, you will be entitled to terminate your employment for Good Reason during the sixty (60) day period that follows the end of the Cure Period. Notwithstanding the foregoing, in the event that your Employment Agreement specifically provides for vesting of any then-unvested Restricted Shares upon or following a Change of Control, the terms of your Employment Agreement will govern.

(c) Delivery of Shares. On or following the date of this Award Agreement, certificates issued in respect of Restricted Shares shall be registered in your name and deposited by you, 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, if any, as your rights with respect to such Restricted Shares become vested. Upon the vesting of your rights with respect to such Restricted Shares, the Company or other custodian, as applicable, shall deliver such certificates to you or your legal representative.

3

(d) Change of Control under the Plan. For the avoidance of doubt, pursuant to Section 8 of the Plan, in the event of a Change of Control, unless provision is made in connection with such Change of Control for (i) assumption of this Award or (ii) substitution for the Restricted Shares of new restricted shares 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 subject thereto, all outstanding Restricted Shares that you hold shall automatically vest as of immediately prior to such Change of Control.

SECTION 4. Forfeiture of Restricted Shares. Unless the Committee determines otherwise, and except as otherwise provided in Section 3 of this Award Agreement or in your Employment Agreement, if your rights with respect to any Restricted Shares awarded to you pursuant to this Award Agreement have not become vested prior to the date on which your employment with the Company and its Affiliates terminates, your rights with respect to such Restricted Shares shall immediately terminate, and you will be entitled to no further payments or benefits with respect thereto.

SECTION 5. Voting Rights; Dividend Equivalents. Prior to the date on which your rights with respect to a Restricted Share have become vested, you shall not be entitled to exercise any voting rights with respect to such Restricted Share and shall not be entitled to receive dividends or other distributions with respect thereto.

SECTION 6. Non-Transferability of Restricted Shares. Unless otherwise provided by the Committee in its discretion, Restricted Shares may not be sold, assigned, alienated, transferred, pledged, attached or otherwise encumbered except as provided in Section 9(a) of the Plan. Any purported sale, assignment, alienation, transfer, pledge, attachment or other encumbrance of Restricted Shares in violation of the provisions of this Section 6 and Section 9(a) of the Plan shall be void.

SECTION 7. Withholding, Consents and Legends. (a) Withholding. The delivery of Share certificates pursuant to Section 3(c) is conditioned on satisfaction of any applicable withholding taxes in accordance with Section 9(d) of the Plan. In the event that there is withholding tax liability in connection with the vesting of Restricted Shares, you may satisfy, in whole or in part, any withholding tax liability by having the Company withhold from the number of Restricted Shares you would be entitled to receive, a number of Shares having a Fair Market Value (which shall either have the meaning set forth in the Plan or shall have such other meaning as determined by the Company in accordance with applicable withholding requirements) equal to such withholding tax liability.

(b) Consents. Your rights in respect of the Restricted Shares are conditioned on the receipt to the full satisfaction of the Committee of any required consents that the Committee may determine to be necessary or advisable (including, without limitation, your consenting to the Company’s supplying to any third-party recordkeeper of the Plan such personal information as the Committee deems advisable to administer the Plan).

4

(c) Legends. The Company may affix to certificates for Shares issued pursuant to this Award Agreement any legend that the Committee determines to be necessary or advisable (including to reflect any restrictions to which you may be subject under any applicable securities laws). The Company may advise the transfer agent to place a stop order against any legended Shares.

SECTION 8. Successors and Assigns of the Company. The terms and conditions of this Award Agreement shall be binding upon and shall inure to the benefit of the Company and its successors and assigns.

SECTION 9. Committee Discretion. The Committee shall have full and plenary discretion with respect to any actions to be taken or determinations to be made in connection with this Award Agreement, and its determinations shall be final, binding and conclusive.

SECTION 10. Dispute Resolution. (a) Jurisdiction and Venue. Notwithstanding any provision in your Employment Agreement, you and the Company irrevocably submit to the exclusive jurisdiction of (i) the United States District Court for the District of Delaware and (ii) the courts of the State of Delaware for the purposes of any suit, action or other proceeding arising out of this Award Agreement or the Plan. You and the Company agree to commence any such action, suit or proceeding either in the United States District Court for the District of Delaware or, if such suit, action or other proceeding may not be brought in such court for jurisdictional reasons, in the courts of the State of Delaware. You and the Company further agree that service of any process, summons, notice or document by U.S. registered mail to the other party’s address set forth below shall be effective service of process for any action, suit or proceeding in Delaware with respect to any matters to which you have submitted to jurisdiction in this Section 10(a). You and the Company irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Award Agreement or the Plan in (A) the United States District Court for the District of Delaware or (B) the courts of the State of Delaware, and hereby and thereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

(b) Waiver of Jury Trial. You and the Company hereby waive, to the fullest extent permitted by applicable law, any right either of you may have to a trial by jury in respect to any litigation directly or indirectly arising out of, under or in connection with this Award Agreement or the Plan.

(c) Confidentiality. You hereby agree to keep confidential the existence of, and any information concerning, a dispute described in this Section 10, except that you may disclose information concerning such dispute to the court that is considering such dispute or to your legal counsel (provided that such counsel agrees not to disclose any such information other than as necessary to the prosecution or defense of the dispute).

5

SECTION 11. Notice. All notices, requests, demands and other communications required or permitted to be given under the terms of this Award Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three Business Days after they have been mailed by U.S. registered mail, return receipt requested, postage prepaid, addressed to the other party as set forth below:

If to the Company:	DreamWorks Animation SKG, Inc.
	1000 Flower Street
	Glendale, CA 91201
	Attention: General Counsel
	Telecopy :
If to you:	«First» «Last»
	«Street» «Unit»
	«City», «State» «Postal_Code»

The parties may change the address to which notices under this Award Agreement shall be sent by providing written notice to the other in the manner specified above.

SECTION 12. Headings. Headings are given to the Sections and subsections of this Award Agreement 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 this Award Agreement or any provision thereof.

SECTION 13. Amendment of this Award Agreement. The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate this Award Agreement prospectively or retroactively; provided, however, that, except as set forth in Section 14(d) of this Award Agreement, any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely impair your rights under this Award Agreement shall not to that extent be effective without your consent (it being understood, notwithstanding the foregoing proviso, that this Award Agreement and the Restricted Shares shall be subject to the provisions of Section 7(c) of the Plan).

SECTION 14. Section 409A. (a) It is intended that the provisions of this Award Agreement comply with Section 409A, and all provisions of this Award Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.

(b) Neither you nor any of your creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A) payable under this Award Agreement to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A, any deferred compensation (within the meaning of Section 409A) payable to you or for your benefit under this Award Agreement may not be reduced by, or offset against, any amount owing by you to the Company or any of its Affiliates.

6

(c) If, at the time of your separation from service (within the meaning of Section 409A), (i) you shall be a specified employee (within the meaning of Section 409A and using the identification methodology selected by the Company from time to time) and (ii) the Company shall make a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then the Company shall not pay such amount on the otherwise scheduled payment date but shall instead pay it, without interest (except as otherwise provided in your Employment Agreement), on the first business day after such six-month period.

(d) Notwithstanding any provision of this Award Agreement to the contrary, in light of the uncertainty with respect to the proper application of Section 409A, the Company reserves the right to make amendments to this Award Agreement as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A. In any case, you shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on you or for your account in connection with this Award Agreement (including any taxes and penalties under Section 409A), and neither the Company nor any of its Affiliates shall have any obligation to indemnify or otherwise hold you harmless from any or all of such taxes or penalties.

SECTION 15. Counterparts. This Award Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

IN WITNESS WHEREOF, the parties have duly executed this Award Agreement as of the date first written above.

DREAMWORKS ANIMATION SKG, INC.,
	by
		Name:
		Title:
«FIRST» «LAST»

7

EX-10.8

Exhibit 10.8

DREAMWORKS ANIMATION SKG, INC.

1000 FLOWER STREET

GLENDALE, CA 91201

October 23, 2008

Ann Daly

c/o Munger, Tolles & Olsen LLP

355 South Grand Avenue

35^th Floor

Los Angeles, CA 90071

Attn: Rob Knauss

Dear Ann:

Reference is made to that certain executed Employment Agreement, dated as of October 25, 2007, between DreamWorks Animation SKG, Inc., a Delaware corporation (“Studio”), and you, whereby Studio agreed to employ you and you agreed to accept such employment until December 31, 2009, upon the terms and conditions set forth therein (such agreement, the “Prior Agreement”). Studio now wishes to amend and restate the Prior Agreement in order to, among other things, continue your employment beyond December 31, 2009, and you wish to remain employed by Studio beyond such date, in each case, pursuant to the terms and conditions set forth below. Therefore, the parties now hereby agree to amend and restate the Prior Agreement in its entirety as set forth in this agreement (this “Agreement”), effective as of the date shown above:

1. Term. The term of your employment commenced on October 27, 2004, which was the closing date of Studio’s initial public offering (the “Commencement Date”), and shall continue until December 31, 2013. 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 President of Studio, all as hereinafter set forth.

c. Reporting. Studio hereby employs and retains you to 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 President of Studio, all as hereinafter set forth. You shall report to the President of Studio (currently Lew Coleman (“Coleman”)); provided that if Coleman is not actively involved in the business of Studio or is otherwise incapable of involvement in the day-to-day business of

2

Studio, including by reason of death or disability, then you shall report to the Chief Executive Officer of Studio. In addition, if any senior executive of Studio other than the President reports to the Chief Executive Officer of Studio, then you shall be entitled to report to the Chief Executive Officer of Studio.

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 your 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 at a rate of One Million Twelve-Thousand Dollars ($1,012,000) for each full year of the Employment Term, payable in accordance with Studio’s applicable payroll practices (“Base Salary”).

b. Equity-Based Compensation.

(i) Immediately prior to the Commencement Date, you received a grant of fully vested DreamWorks LLC Phantom E Interests that, upon the Commencement Date, were converted into fully vested shares of Studio Class A Common Stock, par value $0.01 per share (“Shares”), that had an aggregate value as of October 27, 2004 (which was the IPO pricing date) of $5,700,000.

(ii) On October 27, 2004, you received, pursuant to the 2004 Omnibus Incentive Compensation 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 (the “Initial Grants”).

(iii) Concurrently with the execution of this Agreement, you shall receive an award of performance-based restricted stock units having a grant-date value targeted at $9,000,000. The vesting of such award shall be subject to conditions (including achievement of performance goals) as specified in the agreement evidencing the grant of such award, which agreement shall be executed concurrently with this Agreement.

(iv) While you remain employed hereunder, commencing in 2011, 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

3

Restricted Stock (or such other form of equity-based compensation as the Compensation Committee of the Board of Directors of Studio (the “Compensation Committee”) may determine) having an aggregate grant-date value of $500,000, provided that you shall not be entitled to receive more than two (2) such awards during the period beginning on the date hereof and ending on December 31, 2013 (the “Extended Term”). 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.

(v) You will also be eligible, while you remain employed hereunder, 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 targeted at $750,000. 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. 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.

(vi) In addition, you will be eligible, while you remain employed hereunder, commencing in 2011, 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), provided that you shall not be entitled to receive more than two (2) such awards during the Extended Term. 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.

(vii) 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 five (5) 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 4.b(viii), 9, 10, 11, 12, 13 and 25) and the achievement of performance goals as established by the Compensation Committee from time to time (it being understood that 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 Chief Executive Officer, President, Chief Financial Officer and the General Counsel of Studio), and (z) otherwise be subject to such terms and conditions as may be set forth in the applicable equity compensation plan

4

of Studio (each such plan, a “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 2010.

(viii) Upon the expiration of the Employment Term (i.e., December 31, 2013) 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 that you retire from Studio, your equity-based compensation that has not yet vested as of December 31, 2013 will become vested as provided in this Paragraph 4.b(viii). Accordingly, in the event that you retire from Studio, (A) in the case of equity-based compensation awards that are subject to time-based vesting criteria, the full amount of such awards will vest on December 31, 2013, and (B) in the case of equity-based compensation awards that are subject to performance-based vesting criteria, following December 31, 2013, 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. Notwithstanding clause (B) of the immediately preceding sentence, in the event that a change of control (as defined in Paragraph 25) occurs prior to the end of the applicable performance period, unless provision is made in connection with such change of control for assumption of such awards or substitution for such awards in the manner described in Paragraph 25.a, such awards shall be treated in accordance with the proviso of Paragraph 25.a. Subject to the foregoing, all Options, SARs and any similar equity-based awards will remain exercisable for the balance of the term of the grant. In the case of restricted stock units that are subject to time-based vesting criteria, provided that you retire from Studio, such awards will be settled within thirty (30) days following December 31, 2013. In the case of restricted stock units that are subject to performance-based vesting criteria, except as otherwise provided in Paragraph 25, such awards will be settled on the seventieth (70th) day after the date that such awards become vested. For purposes of the immediately preceding sentence, an award will be deemed to have vested when it is no longer subject to a substantial risk of forfeiture (within the meaning of Treasury Regulation Section 1.409A-1(d)). For purposes of this Agreement, “retirement” or “retire” shall mean that you have ceased to be an employee of Studio as of any date during the 30-day period commencing on the expiration of the Employment Term and, as of such date, (A) you have attained the age of 55 and (B) the sum of your age and years of service with Studio is at least 70. For purposes of the foregoing sentence, your employment with Studio shall be deemed to have commenced on July 7, 1997. In the event that you do not retire pursuant to this Paragraph 4.b(viii) and instead remain employed by Studio following expiration of the Employment Term, your outstanding equity-based compensation awards will continue to vest during your continued employment in accordance with the terms of the applicable awards and any new employment agreement between you and Studio.

(ix) Studio agrees to use its best efforts to either (A) in the case of equity-based compensation awards granted to you that have a scheduled vesting date that is after December 31, 2013, grant only those types of awards that are not expected to be subject to immediate taxation upon the date that you reach eligibility to retire pursuant to

5

Paragraph 4.b(viii) (e.g., Options, SARs or restricted stock units) or (B) in the event that Studio has granted awards to you that are expected to be subject to taxation in such a case, then if you do not retire pursuant to Paragraph 4.b(viii) and instead remain employed pursuant to the last sentence of Paragraph 4.b(viii), Studio will withhold from the Shares subject to taxation a number of Shares sufficient to satisfy applicable tax withholding obligations and shall permit you to sell a number of additional Shares sufficient to pay any other marginal income taxes with respect thereto, and all other Shares applicable to such awards shall remain nontransferable and forfeitable by you in accordance with Paragraph 4.b(viii).

(x) Notwithstanding any provision of the foregoing Paragraph 4.b(viii) to the contrary, in the event that Studio enters into a new employment agreement with Jeffrey Katzenberg or extends his existing employment agreement (such new or extended agreement, the “New Katzenberg Agreement”) that provides for vesting of Mr. Katzenberg’s equity-based compensation awards in connection with the expiration of the New Katzenberg Agreement on terms that are more favorable than those set forth in Paragraph 4.b(viii) above, then, except as would result in the imposition of any taxes or other penalties pursuant to Section 409A, you shall be entitled to treatment of your equity-based compensation awards that are outstanding upon expiration of the Employment Term on terms that are as favorable as those applicable pursuant to the New Katzenberg Agreement.

5. Benefits. In addition to the foregoing, during the period of your employment with Studio, 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 Studio’s 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). Expenses shall be eligible for reimbursement hereunder to the extent that they are incurred by you during the period of your employment with Studio pursuant to this Agreement. All reimbursable expenses shall be reimbursed to you as promptly as practicable and in any event not later than the last day of the calendar year after the calendar year in which the expenses are

6

incurred, and the amount of expenses eligible for reimbursement during any calendar year will not affect the amount of expenses eligible for reimbursement in any other calendar year.

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 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). Any tax gross-up payments that you become entitled to receive pursuant to this Paragraph 7 will be paid to you (or to the applicable taxing authority on your behalf) as promptly as practicable and in any event not later than the last day of the calendar year after the calendar year in which you remit the related taxes.

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 serving in an executive position at an entertainment company that has an animation division, provided that supervision of such division is not your primary job responsibility. 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.

7

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 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, subject to Paragraph 27.b, to the extent required by law, and in addition to any other remedy Studio may have, to deduct from

8

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) days 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 twelve (12) month period during the Employment Term, 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) for a period commencing on the termination of your employment by Studio and ending on the earlier of the expiration of the Employment Term and the second anniversary of the termination of your employment, payments at a rate equal to 50% of your rate of Base Salary, and, except as otherwise provided in this Paragraph 9.a, such payments will be payable in accordance with Studio’s regular payroll practices applicable to similarly situated active employees, 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, 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, financial counseling and other benefits (the “Continued 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). Except as specifically permitted by Section 409A, the Continued Benefits provided to you during any calendar year will not affect the Continued Benefits to be provided to you in any other calendar year. 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

9

hereunder shall be offset on a dollar-for-dollar basis by 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 reduced on a dollar-for-dollar basis by 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 pursuant to Paragraph 9.a, your grants of equity-based compensation will be determined as follows. For purposes of this Agreement (other than Paragraph 4.b(viii)), an award will be deemed to have vested when it is no longer subject to a substantial risk of forfeiture (within the meaning of Treasury Regulation § 1.409A-1(d)). With respect to grants having performance-based vesting criteria, the amount of such award that is eligible to vest 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. With respect to grants having time-based vesting criteria, the full amount of such award will be eligible to vest. Vesting will be determined promptly following termination of employment. A ratable portion of the amount of each award that is eligible to vest will become vested 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 (for grants having performance-based vesting criteria) or the total vesting period in months (for grants having time-based vesting criteria) 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. In the case of restricted stock units that are subject to performance-based vesting criteria, except as otherwise set forth in Paragraph 25, such awards will be settled on the seventieth (70th) day after the date that such awards become vested. In the case of restricted stock units that are subject to time-based vesting criteria, such awards will be settled within thirty (30) days following your termination of employment; provided, however, that in the case of any restricted stock units that constitute deferred compensation (within the meaning of Section 409A), unless you are disabled (within the meaning of Section 409A), then even though your rights to payment with respect to such restricted stock units will become vested pursuant to this Paragraph 9.b and the amount of such payment will be determined as of the date your employment terminates pursuant to this Section 9.b, such amount will not be paid to you until the earliest time permitted under Section 409A.

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 up to and including the date of death and, thereafter, for a period commencing on such date and ending on the earlier of the

10

expiration of the Employment Term and the first anniversary of such date, continued Base Salary payable in accordance with Studio’s regular payroll practices applicable to similarly situated active employees, (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 Plan, 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 President of Studio, 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 any amounts that would be payable pursuant to Paragraph 11 and will also receive, for a period equal to the Continuation Period (as defined below), (i) continued Base Salary (provided that your yearly rate of Base Salary shall be deemed to have been increased by $500,000 for each year during the Continuation Period that begins on or after January 1, 2011 and for which, as of the date your employment terminates, you have not yet received a grant of equity-based compensation in lieu of a larger Base Salary pursuant to Paragraph 4.b(iv)) payable in accordance with Studio’s regular payroll practices applicable to similarly situated active employees, and (ii) Continued Benefits. In the event that any cash bonuses have been paid to you with respect to any of the three fiscal years that ended prior to the date of termination of your employment (such period, the “Bonus Look Back Period”), or in the event that you have received a grant of equity-based awards in lieu of payment of a cash bonus with respect to any fiscal year during the Bonus Look Back Period, you shall also be entitled to receive, with respect to each complete or partial calendar year that ends on or prior to the expiration of the Continuation Period with respect to which, as of the date of termination of your employment, Studio has not yet paid annual bonuses (if any) under its short term incentive plan to similarly situated

11

active employees (each such year, a “Bonus Entitlement Year”), an annual cash payment (such payment, a “Bonus Equivalent Payment”) in an amount equal to the average of the sum of (i) the annual cash bonuses that have been paid (whether or not deferred) to you, if any, during the Bonus Look Back Period, plus (ii) the aggregate grant-date value (which value shall be determined using the same methodology employed by the Compensation Committee for determining the value of the relevant award at the time of grant) of each equity-based award, if any, that was granted to you in lieu of all or a portion of a cash bonus during the Bonus Look Back Period. In the event that you become entitled to a Bonus Equivalent Payment in accordance with the preceding sentence, such Bonus Equivalent Payment will be made to you no earlier than January 1 and no later than December 31 of the calendar year following the Bonus Entitlement Year to which such Bonus Equivalent Payment relates, and the Bonus Equivalent Payment relating to the calendar year for the last year of the Continuation Period shall be pro-rated based on the number of days prior to the expiration of the Continuation Period during such calendar year. For purposes of this Paragraph 12, the term “Continuation Period” shall be defined as follows: (A) in the event that your employment is terminated by Studio other than for cause or incapacity, unless such termination is during the 12-month period following a change of control (as defined in Paragraph 25), then “Continuation Period” shall mean the period commencing on the date of such termination and ending on the expiration of the Employment Term and (B) in the event that your employment is terminated by Studio other than for cause or incapacity during the 12-month period following a change of control, then “Continuation Period” shall mean the period commencing on the termination of your employment and ending on the later of the expiration of the Employment Term and the second anniversary of the termination of your employment. 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 (with respect to grants having performance-based vesting criteria, 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. All outstanding restricted stock units (whether subject to time-based or performance-based vesting criteria) will be settled not later than thirty (30) days following your termination of employment; provided, however, that in the case of any restricted stock units that constitute deferred compensation (within the meaning of Section 409A), unless you have experienced a separation from service (within the meaning of Section 409A), then even though your rights to payment with respect to such restricted stock units will become vested pursuant to this Paragraph 12 and the amount of such payment will be determined as of the date your employment terminates pursuant to this Paragraph 12, such amount will not be paid to you until the earliest time permitted under Section 409A. 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 this Agreement to the maximum extent required by law.

12

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 material diminution in duties; (iv) any time that Studio shall direct or require that you report to any person other than the President (except as provided in Paragraph 2.c. hereof); 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 not be entitled to terminate your employment for good reason for purposes of this Agreement as the result of any event specified in the foregoing clauses (i) through (v) unless, within ninety (90) days following the occurrence of such event, you give Studio written notice of the occurrence of such event, which notice sets forth the exact nature of the event and the conduct required to cure such event. Studio shall have thirty (30) days from the receipt of such notice within which to cure (such period, the “Cure Period”). If, during the Cure Period, such event is remedied, then you will not be permitted to terminate your employment for good reason as a result of such event. If, at the end of the Cure Period, the event that constitutes good reason has not been remedied, you will be entitled to terminate your employment for good reason during the sixty (60) day period that follows the end of the Cure Period. In the event of your voluntary termination for good reason, you shall be entitled to the payments, benefits (including the post-term continuation 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, (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 this 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.

13

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. 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.

14

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(viii), 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

15

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 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.

a. Except as set forth in Paragraph 25.b, 25.c or 25.g below, in the event of a “change of control” all unvested equity-based compensation held by you shall remain unvested and shall continue to vest in accordance with its terms, without regard to the occurrence of the change of control; provided, however, that unless provision is made in connection with the change of control for (i) assumption of such outstanding equity-based compensation or (ii) substitution for such equity-based compensation 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 price, if applicable, in each case, that preserve the material terms and conditions of such outstanding equity-based compensation as in effect immediately prior to the change of control (including, without limitation, with respect to the vesting schedules, the intrinsic value of the awards (if any) as of the change of control and transferability of the shares underlying such awards), all such equity-based compensation shall accelerate vesting (on the basis that any mid-range or “target” goals rather than premium goals are deemed to have been achieved) immediately prior to such change of control, in which case, all outstanding restricted stock units (whether subject to time-based or performance-

16

based vesting criteria) will be settled not later than the tenth (10th) day following the date of such change of control. Notwithstanding the foregoing, in the event that payment of any amount that would otherwise be paid pursuant to the proviso in the immediately preceding sentence would result in a violation of Section 409A, then even though your rights to payment of such amount will become vested pursuant to such proviso and the amount of such payment will be determined as of the change of control, such amount will not be paid to you until the earliest time permitted under Section 409A.

b. Except as set forth in Paragraph 25.g below, in the event that, during the 12-month period following a change of control, your employment is terminated by Studio other than for cause or by you for good reason, then notwithstanding any provision of this Agreement or any other agreement between you and Studio, 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. All outstanding restricted stock units (whether subject to time-based or performance-based vesting criteria) will be settled not later than the tenth (10th) day following the date of termination of your employment.

c. Notwithstanding any provision in this Agreement to the contrary, in order to avoid taxes and penalties under Section 409A, upon the occurrence of a change of control (as defined in the Prior Agreement), provided that you remain employed by Studio until the occurrence of such change of control, all then outstanding restricted stock units that were granted to you (i) prior to the date of this Agreement or (ii) on or following the date of this Agreement pursuant to the obligations set forth in Paragraph 4.b(iii), (iv) or (v) of the Prior Agreement (such restricted stock units, the “Prior Agreement RSUs”) shall, in accordance with Paragraph 25.a of the Prior Agreement, be settled within ten (10) days following the occurrence of such change of control; provided, however, that Studio shall withhold from the Shares to be delivered in settlement thereof a number of Shares sufficient to satisfy applicable tax withholding obligations and shall permit you to sell a number of additional Shares sufficient to pay any other marginal income taxes with respect thereto, and all other Shares delivered to you shall be nontransferable until the earliest of (A) the originally scheduled vesting date of the applicable restricted stock units, (B) the 30th day following the date of your death and (C) the date that the vesting of such restricted stock units otherwise would have accelerated in accordance with this Agreement (including, without limitation, Paragraph 25.b).

d. Except as set forth in Paragraph 25.c or 25.g, for purposes of this Agreement, “change of control” shall mean the occurrence of any of the following events:

(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

17

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 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, 40% or more of the combined voting power of the then outstanding voting securities of the Continuing Corporation and (3) at least 50% 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

18

(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 40% 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.

e. In the event that it is determined that any payment (other than the Gross-Up Payments provided for in this Paragraph 25.e) 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 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 subject to Paragraphs 25.f and 25.g, 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”). Any Gross-Up Payment that you become entitled to pursuant to this Paragraph 25.e will be paid to you (or to the applicable taxing authority on your behalf) as promptly as practicable and in any event not later than the last day of the calendar year after the calendar year in which the applicable Excise Tax is paid. 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 generally applicable rate (plus any applicable Excise Tax) in effect in the year in which the Gross-Up Payment will be made and (ii) state and local income taxes at the highest generally applicable rate (plus any applicable Excise Tax) 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.

19

f. Notwithstanding any provision of the foregoing Paragraph 25.e but subject to Paragraph 25.g, if it shall be determined (by the reasonable computation by a nationally recognized certified public accounting firm that shall be selected by Studio (the “Accountant”), which determination shall be certified by the Accountant and set forth in a certificate delivered to you) that the aggregate amount of the payments, distributions, benefits and entitlements of any type payable by Studio or any affiliate to or for your benefit (including any payment, distribution, benefit or entitlement made by any person or entity effecting a change of control), in each case, that could be considered “parachute payments” within the meaning of Section 280G of the Code (such payments, the “Parachute Payments”) that, but for this Paragraph 25.f, would be payable to you, does not exceed 110% of the greatest amount of Parachute Payments that could be paid to you without giving rise to any liability for the Excise Tax in connection therewith (such greatest amount, the “Floor Amount”), then: (A) no Gross-Up Payment shall be made to you; and (B) the aggregate amount of Parachute Payments payable to you shall be reduced (but not below the Floor Amount) to the largest amount which would both (1) not cause any Excise Tax to be payable by you, and (2) not cause any portion of the Parachute Payments to become nondeductible by reason of Section 280G of the Code (or any successor provision). You shall be permitted to provide Studio with written notice specifying which of the Parachute Payments will be subject to reduction or elimination; provided, however, that to the extent that your ability to exercise such authority would cause any Parachute Payment to become subject to any taxes or penalties pursuant to Section 409A, or if you do not provide Studio with any such written notice, Studio shall reduce or eliminate the Parachute Payments by first reducing or eliminating the portion of the Parachute Payments that are payable in cash and then by reducing or eliminating the non-cash portion of the Parachute Payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the date of the Accountant’s determination. Except as set forth in the preceding sentence, any notice given by you pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing your rights and entitlements to any benefits or compensation.

g. If, (i) at the time of a change of control (within the meaning of either Paragraph 25.d or this Paragraph 25.g) or (ii) upon the occurrence of a change in the ownership or effective control of Studio or a change in the ownership of a substantial portion of Studio’s assets (within the meaning of Section 280G of the Code), any other executive officer of Studio has an employment agreement that provides for (A) in the case of the foregoing clause (i), (1) accelerated vesting of equity compensation awards on terms that are more favorable to such executive officer than Paragraphs 25.a and 25.b, (2) a definition of “change of control” that is more favorable to such executive officer than the definition set forth in Paragraph 25.d or (3) a period of protection following a change of control during which enhanced severance will be paid if the executive officer is terminated during such period that is longer than the 12-month period set forth in the definition of Continuation Period (as defined in Paragraph 12), or (B) in the case of the foregoing clause (ii), a gross-up for the excise tax imposed by Section 4999 of the Code on terms that are more favorable to such executive officer than Paragraphs 25.e and 25.f, then, in each case, notwithstanding any provision of this Paragraph 25 to the contrary, you shall be entitled to the more favorable terms applicable to such executive officer.

20

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.

27. Section 409A.

a. It is intended that the provisions of this Agreement comply with Section 409A, and all provisions of this Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.

b. Neither you nor any of your creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A) payable under this Agreement or under any other plan, policy, arrangement or agreement of or with Studio or any of its affiliates (this Agreement and such other plans, policies, arrangements and agreements, the “Company Plans”) to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A, any deferred compensation (within the meaning of Section 409A) payable to you or for your benefit under any Company Plan may not be reduced by, or offset against, any amount owing by you to Studio or any of it affiliates.

c. If, at the time of your separation from service (within the meaning of Section 409A), (i) you shall be a specified employee (within the meaning of Section 409A and using the identification methodology selected by Studio from time to time) and (ii) Studio shall make a good faith determination that an amount payable under a Company Plan constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then Studio (or its affiliate, as applicable) shall not pay such amount on the otherwise scheduled payment date but shall instead accumulate such amount and pay it, together with interest credited at the Applicable Federal Rate in effect as of the date of your termination of employment, on the first business day after such six-month period.

d. Notwithstanding any provision of this Agreement or any Company Plan to the contrary, in light of the uncertainty with respect to the proper application of Section 409A, Studio reserves the right to make amendments to any Company Plan as Studio deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A. In any case, except as provided in Paragraph 25.e of this Agreement, you are solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on you or for your account in connection with any Company Plan (including any taxes and penalties under Section 409A), and neither Studio nor any affiliate shall have any obligation to indemnify or otherwise hold you harmless from any or all of such taxes or penalties.

21

e. For purposes of Section 409A, each of (i) the installments at a rate equal to 50% of your Base Salary, as provided in Paragraph 9, and (ii) the installments of continued Base Salary, as provided in Paragraphs 10 and 12, will be deemed to be a separate payment as permitted under Treasury Regulation Section 1.409A-2(b)(2)(iii).

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/Lewis Coleman
Its:	President

ACCEPTED AND AGREED AS OF

THE DATE FIRST ABOVE WRITTEN:

/s/Ann Daly

ANN DALY

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULE 13A – 14(A) OR 15D – 14(A),

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey Katzenberg, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) 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

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 28, 2008	/S/    JEFFREY KATZENBERG
	Jeffrey Katzenberg, Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO EXCHANGE ACT RULE 13A – 14(A) OR 15D – 14(A),

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Lewis W. Coleman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) 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

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 28, 2008	/s/    LEWIS W. COLEMAN
	Lewis W. Coleman, President and Chief Financial Officer
	(Principal Financial 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 Quarterly Report on Form 10-Q of DreamWorks Animation SKG, Inc., a Delaware corporation (the “Company”), for the period ending September 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

1. the Report 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 Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: October 28, 2008	/S/    JEFFREY KATZENBERG
	Jeffrey Katzenberg
	Chief Executive Officer
Dated: October 28, 2008	/S/    LEWIS W. COLEMAN
	Lewis W. Coleman
	President and Chief Financial Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002, or other document authenticating, acknowledging or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.