Exhibit 10.21

 

DREAMWORKS ANIMATION SKG, INC.

1000 FLOWER STREET

GLENDALE, CA 91201

 

As of October 8, 2004

 

Mr. David Geffen

c/o James H. Schwab

Paul, Weiss, Rifkind, Wharton & Garrison

1285 Avenue of the Americas

New York, NY 10019

 

Dear David:

 

Upon the date (“Effective Date”) of the closing of the DreamWorks Animation SKG
Inc. (“Studio”) initial public offering (“Closing”), Studio agrees to retain you
as a consultant and you agree to accept such retention upon the terms and
conditions set forth below. In the event the Closing fails to occur for any
reason by June 28, 2005, the parties shall have no obligation to each other
under the terms of this consulting agreement (“Agreement”).

 

1. Term. The term of your retention hereunder shall commence on the Effective
Date and shall continue for a period of five (5) years thereafter. This period
shall hereinafter be referred to as the “Consulting Term”.

 

2. Duties/Responsibilities. You shall consult with Jeffrey Katzenberg in his
capacity as Chief Executive Officer of Studio with respect to the operations,
overall direction and projects of the Studio.

 

3. Exclusivity. Your services shall be non-exclusive to Studio; it being
understood that your services hereunder will be subject to your other personal
and business activities, including to your services under your agreement with
DreamWorks L.L.C. (“DW”).

 

4. Compensation. For all services rendered under this Agreement, Studio will pay
you base salary at an annual rate of One Dollar ($1.00), payable in accordance
with Studio’s applicable payroll practices (“Base Salary”).

 

5. Business Expenses. During the Consulting Term, you shall be reimbursed for
such reasonable travel and other expenses incurred in the performance of your
duties hereunder as are customarily reimbursed for executives of major motion
picture and television companies, but in no event less favorable than any other
officer, director, employee or consultant of Studio (an “MFN Basis”). Studio
shall reimburse all of your costs and expenses (including reasonable legal fees)
in connection with entering into this Agreement. All Studio business-related air
travel by you shall be by private jet. You shall be entitled to take guests on
such trips at Studio expense, to attend a premiere or industry function, or, for
such other business-related travel as

 

- 1 -

--------------------------------------------------------------------------------

you determine necessary. You shall be entitled to limousine transportation and
to first class private business travel expenses, including hotels and per diems
on an MFN Basis. You shall be entitled to the services of such reasonable
security personnel as you request. In addition to the foregoing, you shall be
entitled to industry-customary perks as are normally made available to
entertainment industry executives and in all cases on an MFN Basis. To the
extent any such business expenses are duplicative with the business expenses
actually paid by DW or reimbursed to you under your agreement with DW, you shall
not be entitled to such expense reimbursement hereunder.

 

6. Indemnification. You shall be fully indemnified and held harmless by Studio
to the fullest extent permitted by law from any claim, liability, loss, cost or
expense of any nature (including attorney’s fees of counsel selected by you,
judgments, fines, any amounts paid or to be paid in any settlement, and all
costs of any nature) incurred by you (all such indemnification to be on an
“after tax” “grossed-up” basis) which arises in whole or in part out of any
alleged or actual action, inaction, omission or conduct on your part in or in
connection with or related in any manner to your services (whether as an
employee, agent, officer, corporate director, member, manager, shareholder,
partner, or in any other capacity) to Studio or any entity owned or controlled
by Studio, or which owns or controls Studio, or as to which you are providing
services on behalf of Studio or which may be doing business with Studio. To the
maximum extent allowed by law, all amounts to be indemnified hereunder including
reasonable attorneys’ fees shall be advanced by Studio until such time, if ever,
as it is determined by final, non-appealable decision pursuant to Paragraph 23
below that you are not entitled to indemnification hereunder (whereupon you
shall reimburse Studio for all sums theretofore advanced). Your rights under
this Paragraph 6 will be in addition to any other rights you may be entitled to
pursuant to Studio’s Certificate of Incorporation or By-Laws, or any other
agreement between you and Studio.

 

7. Covenants.

 

a. Non-Competition. During the Consulting Term (or the earlier termination of
your consulting services to Studio) you shall not directly or indirectly engage
in or participate as an officer, employee, corporate director, agent of or
consultant for or provide services in any other capacity to, any animation
business directly competitive with that of Studio.

 

For purposes of this paragraph, an animation business directly competitive (a
“Direct Competitor”) with that of Studio shall mean an entity whose primary
business and purpose is the development and production of animated product (such
as Pixar), but would not include a motion picture studio that produces live
action product or a combination of live action and animation product (e.g., Sony
and Disney) or any other entity that has material business or assets other than
the development and production of animated product, so long as you do not
provide services directly to the animation business of such entity.

 

b. Confidential Information. You agree that you shall not, during the Consulting
Term or at any time thereafter; use for your own purposes, or disclose to or for
any benefit of any third party, any trade secret or other material confidential
information of Studio or

 

- 2 -

--------------------------------------------------------------------------------

any of its subsidiaries (except as may be required by law or in the performance
of your duties hereunder consistent with Studio’s policies) and that you will
comply with any confidentiality obligations of Studio actually known by you to a
third party, whether under agreement or otherwise. Notwithstanding the
foregoing, confidential information shall be deemed not to include information
which (i) is or becomes generally available to the public other than as a result
of a disclosure by you or any other person who directly or indirectly receives
such information from you or at your direction or (ii) is or becomes available
to you on a non-confidential basis from a source which you reasonably believe is
entitled to disclose it to you.

 

c. Studio Ownership. Except as otherwise herein provided, the results and
proceeds of your services hereunder, including, without limitation, any works of
authorship resulting from your services during the Consulting Term with Studio
and/or any of its subsidiaries and any works in progress, in each case to the
extent they are readily identifiable as being directly related to your services
hereunder, shall be works-made-for-hire and Studio shall be deemed the sole
owner throughout the universe of any and all rights of whatsoever nature
therein, whether or not now or hereafter known, existing, contemplated,
recognized or developed, with the right to use the same in perpetuity in any
manner Studio determines in its sole discretion without any further payment to
you whatsoever. If, for any reason, any of such results and proceeds shall not
legally be a work-for-hire and/or there are any rights which do not accrue to
Studio under the preceding sentence, then you hereby irrevocably assign and
agree to assign any and all of your right, title and interest thereto,
including, without limitation, any and all copyrights, patents, trade secrets,
trademarks and/or other rights of whatsoever nature therein, whether or not now
or hereafter known, existing, contemplated, recognized or developed by Studio,
and Studio shall have the right to use the same in perpetuity throughout the
universe in any manner Studio may deem useful or desirable to establish or
document Studio’s exclusive ownership of any and all rights in any such results
and proceeds, including, without limitation, the execution of appropriate
copyright and/or patent applications or assignments. To the extent you have any
rights in the results and proceeds of your services that cannot be assigned in
the manner described above, you unconditionally and irrevocably waive the
enforcement of such rights. This Paragraph 7(c) is subject to, and shall not be
deemed to limit, restrict, or constitute any waiver by Studio of any rights of
ownership to which Studio may be entitled by operation of law by virtue of
Studio or any of its subsidiaries having retained your services.

 

d. Return of Property. All documents, data, recordings, or other property,
whether tangible or intangible, including all information stored in electronic
form, obtained or prepared by or for you, in each case to the extent they are
readily identifiable as being directly related to your services hereunder, shall
remain the exclusive property of Studio. In the event of the termination of your
employment for any reason, and subject to any other provisions hereof, all such
property in your possession shall be returned by you to Studio, at Studio’s sole
cost and expense, as soon as reasonably practical.

 

e. Promise Not To Solicit. You will not during the period of the Consulting Term
(or the earlier termination of your consulting services to Studio) induce or
attempt to induce any employees, exclusive consultants, exclusive contractors or
exclusive representatives

 

- 3 -

--------------------------------------------------------------------------------

of the Studio (or those of any of its subsidiaries) to stop working for,
contracting with or representing the Studio or any of its subsidiaries or to
work for, contract with or represent any Direct Competitors; provided that this
Paragraph 7.e shall not prohibit you from employing any member of your personal
staff upon the termination of the Consulting Term (or the earlier termination of
your consulting services to Studio).

 

8. Incapacity. In the event you become totally medically disabled and cannot
substantially perform your duties at any time during the Consulting Term, the
Board of Directors may at any time after such disability has continued for
ninety (90) consecutive days require Studio to give you written notice that it
intends, subject to applicable state and federal law, to suspend this Agreement.
Upon receipt of such notice, prior to any suspension hereunder, you shall be
entitled to an expedited arbitration to determine whether or not you are
medically disabled and have been disabled for at least ninety (90) consecutive
days, provided that you request such arbitration within ten (10) business days
of receipt of such notice from Studio. If you do not so request such an
arbitration, or if the arbitrator rules that you are so disabled, you shall be
placed on a “medical payroll”. You will first receive your Base Salary (and all
other payments and benefits) for the first twenty-six (26) weeks of consecutive
absence commencing at the end of the later of the ten (10) day period or upon
the conclusion of the arbitration. Thereafter, if you are not able to resume
your duties hereunder, you shall remain entitled to receive 50% of Base Salary
for the remainder of the then current Consulting Term. Notwithstanding the
foregoing, you shall be entitled to reinstate this Agreement and to resume your
duties hereunder if subsequent to your disability you recover the ability to so
perform.

 

9. Death. If you die prior to the end of the Consulting Term this Agreement
shall be terminated as of the date of death and your beneficiary or estate shall
be entitled to receive your Base Salary up to the date on which the death occurs
and for 12 months thereafter, but not to exceed the end of the then current
Consulting Term.

 

10. Termination for Cause. Studio may, at its option and upon resolution of the
Board of Directors, terminate this Agreement forthwith for “cause”, including,
without limitation, any obligation to pay Base Salary under this Agreement
(except to the extent accrued to the date of termination). For purposes of this
Agreement, termination of this Agreement for “cause” shall mean only: (i)
conviction of a felony or a crime involving moral turpitude or for embezzlement
or the misappropriation of corporate assets, in any case, after the exhaustion
of all possible appeals; or (ii) your material breach of Paragraphs 2 or 7
hereof. Anything herein to the contrary notwithstanding, Studio will give you
written notice prior to terminating this Agreement for your material breach
under clause (ii), setting forth the exact nature of any alleged breach and the
conduct required to cure such breach. You shall have thirty (30) days from the
giving of such notice within which to cure.

 

11. Change of Control. In the event of a “change of control”, you shall be
entitled to terminate this Agreement and discontinue providing any consulting
services hereunder.

 

- 4 -

--------------------------------------------------------------------------------

a. For purposes of this Agreement, “change of control” shall mean the occurrence
of any of the following events, not including any events occurring prior to or
in connection with the Closing (including the occurrence of the Closing):

 

(i) during any period of fourteen (14) consecutive calendar months, individuals
who were directors of Studio on the first day of such period (the “Incumbent
Directors”) cease for any reason to constitute a majority of the Board of
Directors of Studio (the “Board”); provided, however, that any individual
becoming a director subsequent to the first day of such period whose election,
or nomination for election, by Studio’s stockholders was approved by a vote of
at least a majority of the Incumbent Directors shall be considered as though
such individual were an Incumbent Director, but excluding, for purposes of this
proviso, any such individual whose initial assumption of office occurs as a
result of an actual or threatened proxy contest with respect to election or
removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a “person” (as such term is used in Section 13(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (each, a
“Person”), in each case other than the management of Studio, the Board or the
holders of Studio’s Class B common stock par value $0.01;

 

(ii) the consummation of (A) a merger, consolidation, share exchange or similar
form of corporate transaction involving (x) Studio or (y) any of its
Subsidiaries, but in the case of this clause (y) only if Studio Voting
Securities (as defined below) are issued or issuable (each of the events
referred to in this clause (A) being hereinafter referred to as a
“Reorganization”) or (B) the sale or other disposition of all or substantially
all the assets of Studio to an entity that is not an Affiliate (a “Sale”), in
each such case, if such Reorganization or Sale requires the approval of Studio’s
stockholders under the law of Studio’s jurisdiction of organization (whether
such approval is required for such Reorganization or Sale or for the issuance of
securities of Studio in such Reorganization or Sale), unless, immediately
following such Reorganization or Sale, (1) all or substantially all the
individuals and entities who were the “beneficial owners” (as such term is
defined in Rule 13d-3 under the Exchange Act (or a successor rule thereto)) of
the securities eligible to vote for the election of the Board (“Studio Voting
Securities”) outstanding immediately prior to the consummation of such
Reorganization or Sale beneficially own, directly or indirectly, more than 50%
of the combined voting power of the then outstanding voting securities of the
corporation resulting from such Reorganization or Sale (including, without
limitation, a corporation that as a result of such transaction owns Studio or
all or substantially all Studio’s assets either directly or through one or more
subsidiaries) (the “Continuing Corporation”) in substantially the same
proportions as their ownership, immediately prior to the consummation of such
Reorganization or Sale, of the outstanding Studio Voting Securities (excluding
any outstanding voting securities of the Continuing Corporation that such
beneficial owners hold immediately following the consummation of the
Reorganization or Sale as a result of their ownership prior to such consummation
of voting securities of any company or other entity involved in or forming part
of such Reorganization or Sale other than Studio), (2) no Person (excluding (x)
any employee benefit plan (or related trust) sponsored or maintained by the
Continuing Corporation or any corporation controlled by the Continuing
Corporation, (y) Jeffrey Katzenberg and (z) you) beneficially owns, directly or
indirectly, 20% or more of the combined voting power of the then outstanding
voting securities of the Continuing Corporation

 

- 5 -

--------------------------------------------------------------------------------

and (3) at least a majority of the members of the board of directors of the
Continuing Corporation were Incumbent Directors at the time of the execution of
the definitive agreement providing for such Reorganization or Sale or, in the
absence of such an agreement, at the time at which approval of the Board was
obtained for such Reorganization or Sale;

 

(iii) the stockholders of Studio approve a plan of complete liquidation or
dissolution of Studio; or

 

(iv) any Person, corporation or other entity or “group” (as used in Section
14(d)(2) of the Exchange Act) (other than (A) Studio, (B) any trustee or other
fiduciary holding securities under an employee benefit plan of Studio or an
Affiliate or (C) any company owned, directly or indirectly, by the stockholders
of Studio in substantially the same proportions as their ownership of the voting
power of Studio Voting Securities) becomes the beneficial owner, directly or
indirectly, of securities of Studio representing 20% or more of the combined
voting power of Studio Voting Securities but only if the percentage so owned
exceeds the aggregate percentage of the combined voting power of Studio Voting
Securities then owned, directly or indirectly, by Jeffrey Katzenberg and you;
provided, however, that for purposes of this subparagraph (iv), the following
acquisitions shall not constitute a change of control: (x) any acquisition
directly from Studio or (y) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by Studio or an Affiliate.

 

12. Termination For Good Reason. You shall be entitled to terminate your
consulting services for good reason, for the purpose of this Paragraph 12, in
the event of a material breach of this Agreement by Studio or any material
change in your services hereunder. If, in the event of any of the foregoing,
such circumstance is not remedied within 30 days after receipt of written notice
from you specifically delineating each act giving rise to good reason and
setting forth your intention to terminate your consulting services if such
breach is not duly remedied, provided that if the specified circumstance cannot
reasonably be remedied within said 30-day period and the Studio commences
reasonable steps within said 30-day period to remedy said breach and diligently
continues such steps thereafter until a remedy is effected, such circumstance
will not constitute good reason.

 

13. No Mitigation. In the event this Agreement is terminated for any reason
prior to its expiration, you shall not be required to mitigate your damages
hereunder, nor shall Studio be entitled to offset from any sums owing to you
hereunder any amounts received by you from any third party.

 

14. Section 317 and 508 of the Federal Communications Act. You represent that
you have not accepted or given nor will you accept or give, directly or
indirectly, any money, services or other valuable consideration from or to
anyone other than Studio for the inclusion of any matter as part of any film,
television program or other production produced, distributed and/or developed by
Studio and/or any of its affiliates.

 

15. Equal Opportunity Employer. You acknowledge that Studio is an equal

 

- 6 -

--------------------------------------------------------------------------------

opportunity employer. You agree that you will comply with Studio policies
regarding employment practices and with applicable federal, state and local laws
prohibiting discrimination or harassment.

 

16. Notices. All notices required to be given hereunder shall be given in
writing, by personal delivery or by mail and confirmed by fax at the respective
addresses of the parties hereto set forth above, or at such address as may be
designated in writing by either party, and in the case of Studio, to the
attention of the General Counsel of Studio. A courtesy copy of any notice to you
hereunder shall be sent to Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue
of the Americas, New York, NY 10019, Fax: (212) 757-3990, Attn: James H. Schwab,
Esq. Any notice given by mail shall be deemed to have been given three (3)
business days following such mailing.

 

17. Assignment. This is an Agreement for the performance of personal services by
you and may not be assigned by you (other than the right to receive payments
which may be assigned to a company, trust or foundation owned or controlled by
you) and any purported assignment in violation of the foregoing shall be deemed
null and void. Studio shall have the right to assign this Agreement and your
services hereunder only to an entity acquiring all or substantially all of the
assets of Studio.

 

18. California Law. This Agreement and all matters or issues collateral thereto
shall be governed by the laws of the State of California applicable to contracts
entered into and performed entirely therein.

 

19. No Implied Contract. The parties intend to be bound only upon execution of
this Agreement and no negotiation, exchange or draft or partial performance
shall be deemed to imply an agreement. Neither the continuation of employment or
any other conduct shall be deemed to imply a continuing agreement upon the
expiration of this Agreement.

 

20. Entire Understanding. This Agreement contains the entire understanding of
the parties hereto relating to the subject matter herein contained, and can be
changed only by a writing signed by both parties hereto.

 

21. Void Provisions. If any provision of this Agreement, as applied to either
party or to any circumstances, shall be adjudged by a court to be void or
unenforceable, the same shall be deemed stricken from this Agreement and shall
in no way affect any other provision of this Agreement or the validity or
enforceability of this Agreement. In the event any such provision (the
“Applicable Provision”) is so adjudged void or unenforceable, you and Studio
shall take the following actions in the following order: (i) seek judicial
reformation of the Applicable Provision; (ii) negotiate in good faith with each
other to replace the Applicable Provision with a lawful provision; and (iii)
have an arbitration as provided in Paragraph 23 hereof determine a lawful
replacement provision for the Applicable Provision; provided, however, that no
such action pursuant to either of clauses (i) or (iii) above shall increase in
any respect your obligations pursuant to the Applicable Provision.

 

- 7 -

--------------------------------------------------------------------------------

22. Survivals Modification of Terms. Your obligations under Paragraph 7 hereof
shall remain in full force and effect for the entire period provided therein
notwithstanding the termination of the Consulting Term pursuant to Paragraph 10
hereof or otherwise. Studio’s obligations under Paragraphs 5 (with respect to
expenses theretofore incurred) and 6 hereof shall survive indefinitely the
termination of this Agreement regardless of the reason for such termination.

 

23. Arbitration of Disputes. Any controversy or claim by you against Studio or
any of its parent companies, subsidiaries, affiliates (and/or officers,
directors, employees, representatives or agents of Studio and such parent
companies, subsidiaries and/or affiliates), including any controversy or claim
arising from, out of or relating to this Agreement, the breach thereof, or the
employment or termination thereof of you by Studio which would give rise to a
claim under federal, state or local law (including, but not limited to, claims
based in tort or contract, claims for discrimination under state or federal law,
and/or claims for violation of any federal, state or local law, statute or
regulation), or any claim against you by Studio (individually and/or
collectively, “Claim[s]”) shall be submitted to an impartial mediator
(“Mediator”) selected jointly by the parties. Both parties shall attend a
mediation conference in Los Angeles County, California and attempt to resolve
any and all Claims. If the parties are not able to resolve all Claims, then upon
written demand for arbitration to the other party, which demand shall be made
within a reasonable time after the Claim has arisen, any unresolved Claims shall
be determined by final and binding arbitration in Los Angeles, California, in
accordance with the Model Employment Procedures of the American Arbitration
Association (collectively, “Rules”) by a neutral arbitrator experienced in
employment law, licensed to practice law in California, in accordance with the
Rules, except as herein specified. In no event shall the demand for arbitration
be made after the date when the institution of legal and/or equitable
proceedings based upon such Claim would be barred by the applicable statute of
limitations. Each party to the arbitration will be entitled to be represented by
counsel and will have the opportunity to take depositions in Los Angeles,
California of any opposing party or witnesses selected by such party and/or
request production of documents by the opposing party before the arbitration
hearing. By mutual agreement of the parties, additional depositions may be taken
at other locations. In addition, upon a party’s showing of need for additional
discovery, the arbitrator shall have discretion to order such additional
discovery. You acknowledge and agree that you are familiar with and fully
understand the need for preserving the confidentiality of Studio’s agreements
with third parties and compensation of Studio’s employees. Accordingly, you
hereby agree that to the extent the arbitrator determines that documents,
correspondence or other writings (or portions thereof) whether internal or from
any third party, relating in any way to your agreements with third parties
and/or compensation of other employees are necessary to the determination of any
Claim, you and/or your representatives may discover and examine such documents,
correspondence or other writings only after execution of an appropriate
confidentiality agreement. Each party shall have the right to subpoena witnesses
and documents for the arbitration hearing. A court reporter shall record all
arbitration proceedings. With respect to any Claim brought to arbitration
hereunder, either party may be entitled to recover whatever damages would
otherwise be available to that party in any legal proceeding based upon the
federal and/or

 

- 8 -

--------------------------------------------------------------------------------

state law applicable to the matter. The arbitrator shall issue a written
decision setting forth the award and the findings and/or conclusions upon which
such award is based. The decision of the arbitrator may be entered and enforced
in any court of competent jurisdiction by either Studio or you. Notwithstanding
the foregoing, the result of any such arbitration shall be binding but shall not
be made public (including by filing a petition to confirm the arbitration
award), unless necessary to confirm such arbitration award after non-payment of
the award for a period of at least fifteen (15) days after notice to Studio of
the arbitrator’s decision. Each party shall pay the fees of their respective
attorneys (except as otherwise awarded by the arbitrator), the expenses of their
witnesses, and all other expenses connected with presenting their Claims or
defense(s). Other costs of arbitration shall be borne by Studio. Except as set
forth below, should you or Studio pursue any Claim covered by this Paragraph 23
by any method other than said arbitration, the responding party shall be
entitled to recover from the other party all damages, costs, expenses, and
reasonable outside attorneys’ fees incurred as a result of such action. The
provisions contained in this Paragraph 23 shall survive the termination of your
consulting services to Studio. Notwithstanding anything set forth above, you
agree that any breach or threatened breach of this Agreement (particularly, but
without limitation, with respect to Paragraphs 2 and 7, above) may result in
irreparable injury to the Studio, and therefore, in addition to the procedures
set forth above, Studio may be entitled to file suit in a court of competent
jurisdiction to seek a Temporary Restraining Order and/or preliminary or
permanent injunction or other equitable relief to prevent a breach or
contemplated breach of such provisions.

 

If the foregoing correctly sets forth your understanding, please sign one copy
of this letter and return it to the undersigned, whereupon this letter shall
constitute a binding agreement between us.

 

Very truly yours,

DREAMWORKS ANIMATION SKG, INC.

By:

 

/s/ Katherine Kendrick

--------------------------------------------------------------------------------

 

ACCEPTED AND AREED AS OF THE

DATE FIRST ABOVE WRITTEN:

/s/ David Geffen

--------------------------------------------------------------------------------

DAVID GEFFEN

 

- 9 -