Exhibit 10.10

 

INTERPARTY AGREEMENT

 

between

 

DREAMWORKS L.L.C.

 

and

 

DREAMWORKS ANIMATION SKG, INC.

 

and

 

VIVENDI UNIVERSAL ENTERTAINMENT LLLP

 

dated as of October 7, 2004

 

        FINAL            

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TABLE OF CONTENTS

 

                 Page

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Section 1.

     Definitions and Usage    2       

1.1

   Definitions    2       

1.2

   Terms and Usage Generally    6

Section 2.

     Confirmation of Universal’s Rights to Prior Pictures    6       

2.1

   Prior Picture Rights Acquired by DWA Subject to the Universal Agreement    6
      

2.2

   Relation Between DWA, DW Studios and Universal as to Prior Pictures    6  
    

2.3

   Transfer of Benefits; Retransfer    7

Section 3.

     Grant of Rights; Period of Distribution    7       

3.1

   Grant of Rights    7       

3.2

   Period of Distribution    7       

3.3

   Clarification    7

Section 4.

     Rights and Obligations With Respect to DW Distributed Pictures and Prior
Pictures    8       

4.1

   DWA Approval of Universal Exploitation Agreements    8       

4.2

   Universal Not Bound by DW Distribution Agreement    8       

4.3

   Universal’s Rights of Collection, Deduction and Recoupment    8       

4.4

   Laboratory and Storage Access Letters    9

Section 5.

     Animation Advance and Related Payment Obligations    9       

5.1

   Animation Advance    9

Section 6.

     No Adverse Amendment of DW Distribution Agreement; No DW Studios Assignment
   9       

6.1

   No Adverse Amendment of DW Distribution Agreement    9       

6.2

   No Assignment of DW Distribution Agreement by DW Studios    10

 

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Table of Contents

(Continued)

 

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Section 7.

     Representations, Warranties and Agreements    10       

7.1

   DWA    10       

7.2

   Universal    10       

7.3

   DW Studios    10       

7.4

   Amblin Projects    10       

7.5

   Bank Consent and Non-Disturbance Agreement    10

Section 8.

     Rights Under Universal Agreement    11       

8.1

   DW Studios – Sole Claimant    11

Section 9.

     Termination; Disputes    11       

9.1

   Termination Rights    11       

9.2

   Disputes Under Universal Agreements    11

Section 10.

     Grant of Rights (Theme Parks)    12

Section 11.

     UIP Amendment    12

Section 12.

     Ownership    12

Section 13.

     Force Majeure    13

Section 14.

     Assignment    13

Section 15.

     Distributor Distribution Credit    13

Section 16.

     Other Activities    13

Section 17.

     No Partnership or Third Party Benefit    14

Section 18.

     Integration/Formalities    14

Section 19.

     Dispute Resolution    14

Section 20.

     Severability of Provisions    16

Section 21.

     Waiver    16

 

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Table of Contents

(Continued)

 

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Section 22.

   Governing Law    16

Section 23.

   Confidentiality    16

Section 24.

   Notice of Representatives    17

Section 25.

   Paragraph Headings    17

Section 26.

   Intellectual Property License    17

Section 27.

   Disclosure, Compliance and Reporting Obligations    17

Section 28.

   Notices    18

Section 29.

   Counterparts    19

Section 30.

   Effect of Subsequent Event    19

Schedule 1.1

   Table of Definitions     

Schedule 5.1

   Provisions Related to Advances     

 

    -iii-   FINAL            

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INTERPARTY AGREEMENT

 

between

 

DREAMWORKS L.L.C.

 

and

 

DREAMWORKS ANIMATION SKG, INC.

 

and

 

VIVENDI UNIVERSAL ENTERTAINMENT LLLP

 

dated as of October 7, 2004

 

THIS INTERPARTY AGREEMENT dated as of October 7, 2004 (this “Agreement”), is
entered into by and among DreamWorks Animation SKG, Inc. (“DWA”), DreamWorks
L.L.C. (“DW Studios”) and Vivendi Universal Entertainment LLLP (“Universal”).

 

WHEREAS DW Studios and Universal (as assignee of Universal Studios, Inc.) are
parties to that certain Master Agreement (Amended and Restated as of October 31,
2003) (the “Master Agreement”), which includes certain other agreements as
Exhibits A, B, C and D thereto (collectively, the Master Agreement and the other
agreements attached as Exhibits A, B, C and D thereto are the “Universal
Agreement”);

 

WHEREAS pursuant to Exhibit A of the Universal Agreement (the “Theatrical
Distribution Agreement”) Universal has certain exclusive international
theatrical distribution rights and obligations with respect to certain motion
pictures (as more fully described and set forth in the Theatrical Distribution
Agreement);

 

WHEREAS, pursuant to Exhibit B of the Universal Agreement (the “Home Video
Fulfillment Services Agreement”) Universal has certain exclusive domestic and
international home video fulfillment services rights and obligations with
respect to certain motion pictures (as more fully described and set forth in the
Home Video Fulfillment Services Agreement);

 

WHEREAS, pursuant to Exhibit C of the Universal Agreement (the “Amblin
Agreement”), Universal and DW Studios agreed to certain procedures and
allocations of rights to certain projects developed at least in part by Amblin
Entertainment, Inc. and set forth on schedules to the Amblin Agreement
(collectively, all such projects listed in schedules to the Amblin Agreement,
the “Amblin Projects”);

 

WHEREAS, pursuant to Exhibit D of the Universal Agreement (the “Theme Park
Agreement”) Universal has an exclusive option to acquire certain rights to
exploit certain motion pictures in theme parks (as more fully described and set
forth in the Theme Park Agreement);

 

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WHEREAS, as part of the separation of DW Studios and DWA pursuant to the
Separation Agreement dated as of the date hereof (“Separation Agreement”) by and
among DW Studios, DreamWorks Animation L.L.C. and DWA, DW Studios and DWA have
agreed to enter into a Distribution Agreement dated as of the date hereof (the
“DW Distribution Agreement”); and

 

WHEREAS, the parties hereto have agreed to set forth herein the parties’
respective rights, privileges and obligations under the Universal Agreement and
DW Distribution Agreement, and to enter into certain other agreements;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, DWA, DW Studios and Universal hereby agree as follows:

 

Section 1. Definitions and Usage.

 

1.1 Definitions:

 

a. The following terms shall have the same meaning as in the DW Distribution
Agreement:

 

Accepted Additional Picture(s).

Affiliate of Any Person; provided, however, that for purposes of this Agreement,
none of DWA, DW Studios and Universal are Affiliates of any other party to this
Agreement.

Animated Motion Picture(s).

Bankruptcy Code

Business Day.

Control.

Delivery.

Distribution Rights.

Exhibit, Exhibition.

Good Faith Dispute.

Internet Rights.

Person.

Qualified Pictures.

Retained Rights.

Subdistributor; provided, however, that for purposes of this Agreement a
“Subdistributor” shall not include an Affiliate of DW Studios or of Universal.

Tangible Film Materials.

Television Exhibition.

 

b. The following terms shall have the meanings set forth below:

 

Animation Advance shall mean the $75 million amount advanced by Universal to DW
Studios under the Master Agreement with respect to Animated Motion Pictures,
which $75 million amount on the Effective Date shall be contributed by DW
Studios to DWA pursuant to the Separation Agreement, as such $75 million amount
may be adjusted pursuant to Section 5 of this Agreement.

 

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Domestic Territory shall mean the territorial United States and its possessions,
territories and commonwealths, including the U.S. Virgin Islands, Puerto Rico,
Guam, and the U.S. Trust Territories of the Pacific Islands, including the
Carolina Islands, the Marshall Islands and the Mariana Islands, Saipan and
American Samoa; the Dominican Republic, the British Virgin Islands, Nassau,
Bahamas, Bermuda, Saba Island, St. Eustatius Island, St. Kitts Island, St.
Maarten Island, and Freeport; the Dominion of Canada and its possessions,
territories and commonwealths; and all Army, Navy, Air Force, Red Cross and
other national or governmental installations, diplomatic posts, camps, bases and
reservations of the above mentioned countries, as well as oil rigs (including
Aramco sites) and maritime facilities (and other commercial and/or industrial
installations of the above mentioned countries and territories), wherever any of
the aforementioned facilities or installations are located, to the extent that
sales are made and/or servicing thereof is performed within the geographical
areas set forth above, and all airlines and ships flying the flag of, or having
the registry of, or whose principal office is located in the United States,
Canada or Bermuda and other possessions, territories and commonwealths within
the Domestic Territory.

 

DW Distributed Pictures shall mean Qualified Pictures and Accepted Additional
Pictures.

 

Effective Date shall have the same meaning as the term “Separation Date” in the
Separation Agreement.

 

Home Video Exhibition shall mean the Exhibition of Videograms.

 

Home Video Fulfillment Services Rights shall mean the right and obligation to
provide fulfillment services under the Home Video Fulfillment Services
Agreement.

 

Home Video Territory shall mean the territory in which fulfillment services are
to be performed pursuant to the Home Video Fulfillment Services Agreement,
excluding only (i) South Korea and North Korea to the extent and for the period
licensed to DW Studios’ “Korean Shareholder” (as defined in the Home Video
Fulfillment Services Agreement), and (ii) either (a) Japan or (b) The Federal
Republic of Germany, the Republic of Austria, and German–language rights in
Switzerland, Lichtenstein, Luxembourg and Alto Adige.

 

LLC Agreement shall mean the Limited Liability Limited Partnership Agreement of
Holdco, dated as of October 7, 2004, by and among M&J K Dream Limited
Partnership, M&J K B Limited Partnership, DG-DW, L.P., DW Lips, L.P., DW
Investment II, Inc., Lee Entertainment, L.L.C. and Vivendi Universal
Entertainment LLLP.

 

Licensed Picture has the meaning set forth in the DW Distribution Agreement as
in effect on the Effective Date.

 

Motion Picture(s) (a) with respect to Theatrical Distribution Rights, shall mean
all live-action and animated motion pictures (and combinations thereof), and (b)
with

 

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respect to Home Video Exhibition and Home Video Fulfillment Services Rights
shall mean a theatrical motion picture, one or more television programs,
television movies, television episodic series or direct-to-video motion picture.

 

Non-Theatrical Exhibition shall mean, with respect to each Prior Picture, DW
Distributed Picture or Universal Licensed Picture, the right to exhibit a
Picture as set forth in paragraph 2.a of Schedule A-TC to the Theatrical
Distribution Agreement.

 

Prior Picture(s) shall mean the following Animated Motion Pictures: Antz; The
Prince of Egypt; The Road to Eldorado; Chicken Run; Shrek; Spirit: Stallion of
the Cimarron; Sinbad: Legend of the Seven Seas; Shrek 2; and Shark Tale.

 

Term shall mean the period commencing on the Effective Date and continuing until
expiration or earlier termination of the Universal Term; provided, however, if
the Effective Date does not occur on or before December 31, 2005 this Agreement
shall terminate without taking effect.

 

Termination Amounts shall have the meaning set forth in the definition of
Universal Term.

 

Theatrical Distribution Rights shall mean the right and obligation to distribute
Pictures pursuant to the Theatrical Distribution Agreement. Theatrical
Distribution Rights include Non-Theatrical Exhibition rights but do not include
any other rights including Television Exhibition, Internet Rights, or any other
form of distribution, exhibition or other method of exploitation of Motion
Pictures, now known or hereafter devised.

 

Theatrical Exhibition shall mean all forms of Exhibition which are subject to
the Theatrical Distribution Agreement.

 

Theatrical Territory shall mean the “Territory” as defined in the Theatrical
Distribution Agreement.

 

Theme Park Rights shall have the same meaning as “Theme Park Rights” in
paragraph 3 of the Theme Park Agreement.

 

Theme Park Supplemental Agreements shall mean, collectively, (i) the letter
agreement dated as of January 20, 2000 between DW Studios and Universal Studios,
Inc. relating to the exploitation of Chicken Run at the Universal Studios theme
parks, (ii) the letter agreement dated as of February 27, 2001 between DW
Studios and Universal Studios, Inc. relating to the exploitation of Shrek at the
Universal Studios theme parks and adjacent Universal CityWalk locations, (iii)
the letter agreement dated as of January 15, 2002 between DW Studios and
Universal Studios, Inc. captioned “Universal-DreamWorks Theme Park Issues”, and
(iv) the agreement dated as of March 12, 2002 between PDI/Dreamworks L.L.C. and
Universal City Studios LLLP entitled “Shrek 4D Attraction at Universal Studios”,
as amended by letter agreement dated as of March 13, 2002 and as assigned
effective as of March 13, 2002 by PDI/Dreamworks L.L.C. to DreamWorks Animation
LLC.

 

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UIP shall mean United International Pictures, B.V. and its successors and
assigns.

 

Universal Affiliate shall mean any Person that qualifies as an Affiliate of
Universal pursuant to the definition of Affiliate set forth above.

 

Universal Exploitation Agreements shall mean the Master Agreement, the
Theatrical Distribution Agreement and the Home Video Fulfillment Services
Agreement only.

 

Universal Licensed Picture(s) shall mean any Motion Picture released after the
Effective Date and during the Universal Term (A) for which DWA has acquired (i)
Theatrical Distribution Rights in any portion of the Theatrical Territory, or
(ii) Home Video Exhibition rights in any portion of the Home Video Territory
(and Universal expressly acknowledges and agrees that all Home Video Exhibition
rights are not “licensed” to Universal, and instead Universal is providing
fulfillment services with respect thereto), or (iii) Theme Park Rights in any
territory(ies), and (B) where some or all of such Theatrical Distribution
Rights, Home Video Exhibition rights or Theme Park Rights have not been granted
by DWA to DW Studios or as to which DW Studios no longer holds such rights, in
each case for any reason including, without limitation, because DW Studios has
declined or surrendered such rights, DW Studios no longer performs the
distribution services in whole or in part as required under the DW Distribution
Agreement, or the DW Distribution Agreement has expired or been terminated, in
whole or in part.

 

Universal Term shall mean the period commencing on the Effective Date and
terminating on the first date on which all of the following have occurred: (i)
termination of the Theatrical Distribution Agreement, (ii) termination of the
Home Video Fulfillment Services Agreement and (iii) the Advance Amounts,
Animation Advance Amounts, Additional Amounts, Animation Additional Amounts, DW
Adjustment amounts, DWA Animation Adjustment amounts and Special Termination Fee
(as defined in the Master Agreement) (if applicable) have been paid in full; the
Class U Preferred Stock together with all accrued and unpaid cash and non-cash
distributions thereon, is redeemed and the redemption price paid in full in
cash; and the Satisfaction Event with respect to Universal (as defined in the
LLC Agreement) has occurred (the aggregate of the payments required pursuant to
this clause (iii), the “Termination Amounts”).

 

Videogram(s) shall mean videocassettes, laserdiscs, Digital Versatile Discs
(“DVD”) or video CDs intended for in-home use by members of the public and
physically transported to the home for such use that is sold or rented and
physically embodies (without need for further transfer of data or further
activation or other authorization from outside the home) a Motion Picture for
exhibition by a playback device which causes a visual image of the Motion
Picture to be seen, in a linear fashion, as such Motion Picture is made
available by the producer of such Motion Picture for video distribution, and
which Motion Picture appears on the screen of a television receiver or other
monitor in the home. CD-ROM, CD-I products, video games, and interactive
products (including, but not limited to, DVD interactive products containing a
Motion Picture[s]) or interactive pictures of any type, are not Videograms.

 

Certain other terms are defined elsewhere in this Agreement, as noted on
Schedule 1.1.

 

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1.2 Terms and Usage Generally.

 

The definitions in Section 1.1. and Schedule 1.1. as used herein shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. All references herein to Sections and Schedules shall
be deemed to be references to Sections of, and Schedules to, this Agreement
unless the context shall otherwise require. All Schedules attached hereto shall
be deemed incorporated herein as if set forth in full herein. The words
“include”, “includes” and “including” herein and in any Exhibit and Schedule
hereto shall be deemed to be followed by the phrase “without limitation”. All
accounting terms not defined in this Agreement shall have the meanings
determined by United States generally accepted accounting principles as in
effect from time to time. The words “hereof”, “herein” and “hereunder” and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. References to a
Person are also to its permitted successors and permitted assigns. Unless
otherwise expressly provided herein, any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and references to all attachments thereto and
instruments incorporated therein.

 

Section 2. Confirmation of Universal’s Rights to Prior Pictures.

 

2.1 Prior Picture Rights Acquired by DWA Subject to the Universal Agreement. The
Prior Pictures conveyed by DW Studios to DWA pursuant to the Separation
Agreement have been conveyed subject to the Universal Agreement. DWA and DW
Studios acknowledge and agree that certain exclusive distribution or other
exploitation rights to each Prior Picture have been licensed or granted to
Universal by DW Studios prior to the Effective Date under the Universal
Exploitation Agreements, Theme Park Agreement and the Theme Park Supplemental
Agreements and that such rights are unaffected by the Separation Agreement, the
DW Distribution Agreement, or the transactions contemplated thereby. With
respect to each Prior Picture, Universal shall have the rights and obligations
to exploit the applicable Theatrical Distribution Rights and Home Video
Fulfillment Services Rights as set forth in the Universal Exploitation
Agreements during the Universal Term. Any sale, transfer, assignment, license,
pledge or other encumbrance of a Prior Picture during the Universal Term shall
be expressly subject to the Universal Agreement as and to the extent required by
the Universal Agreement, and to the consent of Universal to such sale, transfer,
assignment, license, pledge or other encumbrance if such consent is required
pursuant to the Universal Agreement.

 

2.2 Relation Between DWA, DW Studios and Universal as to Prior Pictures.
Notwithstanding anything to the contrary set forth in the DW Distribution
Agreement, and subject to the further provisions of this Agreement, as to all
Prior Pictures, DWA, DW Studios and Universal agree: (i) as between DWA and DW
Studios, each Prior Picture shall be deemed to be a Licensed Picture under the
DW Distribution Agreement, (ii) as between DW Studios and Universal, Universal
retains all the rights to each Prior Picture granted under (including pursuant
to Section 10 below), and is obligated to exploit such Prior Picture subject to
the terms and conditions of, the Universal Exploitation Agreements; and (iii) as
between DWA and Universal,

 

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Universal shall have no duty or obligations to DWA with respect to the Prior
Pictures or their distribution or other exploitation, and DWA shall not be a
third party beneficiary of the Universal Exploitation Agreements, provided that
to the extent any Prior Picture is not licensed by DWA to DW Studios under the
DW Distribution Agreement, Universal shall distribute such Prior Picture
directly for DWA, as if Sections 3.1 and 3.2 of this Agreement applied to such
Prior Picture.

 

2.3 Transfer of Benefits; Retransfer. Subject to the other terms and conditions
of this Agreement, Universal hereby approves the transfer from DW Studios to DWA
of all of DW Studios’ benefits under the Universal Agreement with respect to the
Prior Pictures, subject to the following: (a) DW Studios and DWA hereby agree
that such transfer has no effect on Universal’s rights in the Prior Pictures
pursuant to the Universal Agreement (as more fully set forth in Section
2.2.(ii), above); and (b) DWA hereby acknowledges and agrees that all such
benefits are being retransferred from DWA to DW Studios pursuant to the
Distribution Agreement (and accordingly, Section 2.2.(iii), above, applies as
between DW Studios, DWA and Universal).

 

Section 3. Grant of Rights; Period of Distribution. The following shall apply
only as and to the extent that a given Motion Picture constitutes a Universal
Licensed Picture hereunder:

 

3.1 Grant of Rights. Subject to the terms and conditions hereof, DWA grants,
licenses, and/or assigns (as applicable) to Universal, to the extent of the
rights owned or controlled by DWA or any Affiliate Controlled by DWA thereof in
and to each Universal Licensed Picture, the following rights: (i) throughout the
Theatrical Territory, to exploit the Theatrical Distribution Rights on its
initial theatrical release (as referenced in paragraph 1.a. of the Theatrical
Distribution Agreement); and (ii) throughout the Home Video Territory, to
exploit the Home Video Fulfillment Services Rights if DWA designates such Motion
Picture for release as a Videogram. As between Universal and DWA, all rights to
Universal Licensed Pictures not expressly granted or licensed (as applicable) to
Universal pursuant to this Agreement, including the Retained Rights, shall
remain vested in DWA. If and to the extent that DWA has licensed or granted (as
applicable) rights to a Universal Licensed Picture to Universal pursuant to the
first sentence of this Section 3.1., Universal and DWA shall each have the
rights and obligations with respect to such Universal Licensed Picture set forth
in the Theatrical Distribution Agreement and the Home Video Fulfillment Services
Agreement, with DWA having all the rights and obligations of DW Studios to
Universal under such agreements with respect to the Universal Licensed Picture,
and Universal having all the rights and obligations to DWA as Universal would
have to DW Studios under such agreements with respect to the Universal Licensed
Pictures.

 

3.2 Period of Distribution. With respect to each Universal Licensed Picture,
Universal shall have the rights and obligations to exploit the applicable
Theatrical Distribution Rights and Home Video Fulfillment Services Rights
granted pursuant to Section 3.1 above during the Universal Term (subject to the
terms of the Universal Exploitation Agreements).

 

3.3 Clarification. For avoidance of doubt, in no event shall Universal have any
right to exercise any rights with respect to any given Motion Picture pursuant
to this Section

 

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3, nor shall there be any executory obligations from DWA to Universal or from
Universal to DWA hereunder with respect to such Motion Picture, so long as such
Motion Picture constitutes a DW Distributed Picture pursuant to Section 4,
below.

 

Section 4. Rights and Obligations With Respect to DW Distributed Pictures and
Prior Pictures.

 

4.1 DWA Approval of Universal Exploitation Agreements. DWA hereby irrevocably
approves the terms and conditions of the Universal Exploitation Agreements,
which approval may not hereafter be withdrawn, terminated, qualified or
conditioned.

 

4.2 Universal Not Bound by DW Distribution Agreement. The parties hereto
acknowledge and agree that as to all DW Distributed Pictures and Prior Pictures,
Universal shall have the rights to distribute and provide such fulfillment
services therefor as set forth in the Universal Exploitation Agreements; that
Universal’s sole obligations as to such DW Distributed Pictures and Prior
Pictures are those it is required to render to DW Studios as set forth in the
Theatrical Distribution Agreement and the Home Video Fulfillment Services
Agreement; and that neither Universal nor any of its Affiliates, nor UIP, is
bound by the provisions of the DW Distribution Agreement. Without limitation of
the foregoing, and regardless of the provisions of the DW Distribution
Agreement, Universal shall not be required to render services, or provide
information, approval, consultation, access, audit or other rights to DWA with
respect to DW Distributed Pictures or Prior Pictures. DWA and DW Studios
acknowledge and agree that Universal is required to take instructions
exclusively from, and is entitled to rely exclusively on all instructions of DW
Studios with respect to such DW Distributed Pictures and Prior Pictures,
regardless of any instructions by DWA, and that DW Studios may not delegate,
transfer or assign any of its rights or obligations under the Universal
Exploitation Agreements to DWA with respect to DW Distributed Pictures or such
Prior Pictures. Universal’s (i) rights under the Theatrical Distribution
Agreement apply to DW Distributed Pictures on the commencement of their
theatrical distribution in the Domestic Territory, and (ii) rights under the
Home Video Fulfillment Services Agreement apply to DW Distributed Pictures DW
Studios distributes for DWA as Videograms during the Universal Term or within
*** following the Motion Picture’s initial general U.S. theatrical release,
which release occurs during the Universal Term.

 

4.3 Universal’s Rights of Collection, Deduction and Recoupment. DWA acknowledges
that Universal has the right to collect receipts, deduct fees, and recoup
expenses and other amounts (if any) with respect to the DW Distributed Pictures
and Prior Pictures all as set forth in the Universal Exploitation Agreements.
For so long as the DW Distribution Agreement is in effect, Universal shall pay
over all amounts required to be remitted by it in respect of DW Distributed
Pictures and Prior Pictures solely to DW Studios, and shall have no liability to
DWA in respect of such payments. Notwithstanding the foregoing, Universal agrees
that it shall make payments to DW Studios in respect of DW Distributed Pictures
and Prior Pictures without setoff, counterclaim or defense except (a) for
setoffs, counterclaims or defenses

 

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  *** Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.

 

    -8-   FINAL            

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related to DW Distributed Pictures and Prior Pictures, (b) if any Motion
Pictures later become Universal Licensed Pictures hereunder, for setoffs,
counterclaims or defenses related to such Universal Licensed Pictures or (c) for
the obligations of DWA to Universal under Section 5 of this Agreement. DWA, DW
Studios and Universal agree that if any and all fees or expenses related to DW
Distributed Pictures and Prior Pictures and owed to Universal under the
Universal Exploitation Agreements for any reason are not paid when due,
Universal shall be entitled to recoup such amounts from all amounts collected by
it related to the DW Distributed Pictures and Prior Pictures, together with
interest on amounts due and owing as provided in the applicable Universal
Exploitation Agreements.

 

4.4 Laboratory and Storage Access Letters. To the extent required for the
exercise of Universal’s Theatrical Distribution Rights and Home Video
Fulfillment Services Rights with respect to Licensed Pictures, Universal
Licensed Pictures or Prior Pictures, DWA shall provide Universal with
fully-executed access letters in reasonable and customary form for each
laboratory or storage facility in which Tangible Film Materials for such Motion
Pictures are held upon Universal’s request therefor from time to time. To the
extent that DWA or DW Studios maintains possession of any Tangible Film
Materials required for the exercise of Universal’s Theatrical Distribution
Rights and Home Video Fulfillment Services Rights with respect to Licensed
Pictures, Universal Licensed Pictures or Prior Pictures, Universal shall have
the same right of access thereto as it would have under the above-referenced
laboratory or storage-facility access letter had such Tangible Film Materials
been held at a laboratory or storage facility.

 

Section 5. Animation Advance and Related Payment Obligations.

 

5.1 Animation Advance.

 

a. Article VIII of the Master Agreement is hereby deleted and amended to read as
set forth in Schedule 5.1 to this Agreement, and incorporated herein as if fully
set forth.

 

b. Universal, DW Studios and DWA agree that DWA shall be solely responsible for
the payment of the Animation Advance Amount and all Animation Additional Amounts
as and when due under the Universal Agreement. DWA acknowledges and agrees that
such amounts may become due and payable in full due to the action or inaction of
DW Studios, and that Universal is entitled to exercise against DWA any and all
of its remedies under Section 5.1.a if and when such Animation Advance Amount or
Animation Additional Amounts are due and payable, including rights of offset and
recoupment and is entitled to Theatrical Distribution and Home Video Fulfillment
Services Rights to all Licensed Pictures and Universal Licensed Pictures unless
and until all amounts required to be paid to Universal by DW Studios or DWA
pursuant to the Master Agreement have been repaid.

 

Section 6. No Adverse Amendment of DW Distribution Agreement; No DW Studios
Assignment.

 

6.1 No Adverse Amendment of DW Distribution Agreement. DW Studios and DWA shall
not at any time during the Universal Term, without the consent of Universal (not

 

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to be unreasonably withheld), amend or modify the license granted to DW Studios
under the DW Distribution Agreement or the transfer of “Animated Film Assets” as
defined in and pursuant to the Separation Agreement in any manner that would
have an adverse effect on Universal under the Universal Agreement and this
Agreement.

 

6.2 No Assignment of DW Distribution Agreement by DW Studios. DW Studios may not
at any time during the Universal Term assign any of its Theatrical Exhibition,
Home Video Exhibition or Theme Park Rights under the DW Distribution Agreement
if such assignment would result in a loss of any or all of Universal’s Home
Video Fulfillment Services Rights, Theatrical Distribution Rights or Theme Park
Rights.

 

Section 7. Representations, Warranties and Agreements. Each of the parties,
severally and as of the Effective Date, represents and warrants as follows:

 

7.1 DWA. DWA makes the same representations and warranties with respect to this
Agreement as made by DW Studios in Section XII.4 of the Master Agreement. If and
when DWA licenses and/or grants rights to Universal Licensed Pictures to
Universal, it will make the representations and warranties, and provide such
indemnities to Universal with respect to such Universal Licensed Pictures as are
set forth in the Universal Exploitation Agreements for DW Studios.

 

7.2 Universal. Universal makes the same representations and warranties with
respect to this Agreement that it (or its predecessors in interest) made in
Section XII.4 of the Master Agreement. If and when Universal is granted a
license and/or rights to Universal Licensed Pictures, it will make the
representations and warranties, and provide such indemnities to DWA with respect
to such Universal Licensed Pictures as are set forth in the Universal
Exploitation Agreements for Universal.

 

7.3 DW Studios. DW Studios makes the same representations and warranties with
respect to this Agreement that it made in Section XII.4 of the Master Agreement.
For purposes of clarity, DW Studios makes the same representations and
warranties as to, and provides the same indemnities to Universal with respect to
Prior Pictures and DW Distributed Pictures as DW Studios makes as to “Pictures”
in the Theatrical Distribution Agreement and “DW Videograms” in the Home Video
Fulfillment Services Agreement.

 

7.4 Amblin Projects. No Amblin Projects or any of DW Studios’ rights under the
Amblin Agreement have been conveyed to DWA.

 

7.5 Bank Consent and Non-Disturbance Agreement. Neither DW Studios nor DWA shall
convey, pledge or otherwise encumber Prior Pictures, DW Distributed Pictures or
the Universal Licensed Pictures unless (i) all rights sufficient to grant
Universal’s Theatrical Distribution Rights, Home Video Fulfillment Services
Rights and Theme Park Rights are retained by DWA and DW Studios, or (ii) such
conveyance or encumbrance is expressly subject to the rights and obligations of
Universal under this Agreement and (to the extent applicable) the Universal
Exploitation Agreements. In the event of a conveyance or encumbrance subject to
clause (ii), effective no later than such transfer or encumbrance, the
applicable transferee or encumbrance holder shall provide Universal with an
acknowledgement of Universal’s rights

 

    -10-   FINAL            

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under this Agreement and (to the extent applicable) the Universal Exploitation
Agreements and an agreement not to disturb, interfere or seek to terminate
Universal’s rights under this Agreement or (to the extent applicable) the
Universal Exploitation Agreements, such acknowledgement and agreement not to
disturb to be in a form reasonably satisfactory to Universal.

 

Section 8. Rights Under Universal Agreement.

 

8.1 DW Studios – Sole Claimant. Except with respect to Universal Licensed
Pictures (if any) and any Prior Pictures to which the last clause of Section 2.2
above applies, only DW Studios shall, as between DW Studios and DWA, have the
right to bring any claim, action, or proceeding against Universal by reason of
any actual or alleged breach of the Universal Agreement. (The foregoing is not
intended to limit the scope of remedies available to DW Studios or Universal for
any such breach.)

 

Section 9. Termination; Disputes.

 

9.1 Termination Rights. Except as set forth in Section 11, nothing in this
Agreement shall limit or expand DW Studios’ or Universal’s rights to terminate
the Theatrical Distribution Agreement or the Home Video Fulfillment Services
Agreement, or (except as expressly set forth in this Section 9.1) their
respective rights or obligations with respect to and following such termination,
in each case in accordance with such agreements’ terms. DWA shall not have any
right to terminate any of the Universal Exploitation Agreements unless DW
Studios would have such right and has exercised it (or is no longer a party to
the Universal Exploitation Agreements). DW Studios, DWA and Universal each
acknowledge and agree that no termination of this Agreement, the Theatrical
Distribution Agreement or the Home Video Fulfillment Services Agreement shall be
effective against either or both of DW Studios or DWA unless and until the
Termination Amounts are paid in full. Universal, DW Studios and DWA agree that
notwithstanding the foregoing, (i) DWA shall not be liable for the payment of
the Advance, Additional Amounts, DW Adjustment amounts, Special Termination Fee,
or the redemption of the Class U Preferred Stock of DW Studios or distributions
or other payments thereof, and (ii) DW Studios shall not be liable for the
payment of the Animation Advance, Animation Additional Amounts, DWA Animation
Adjustment amounts or Satisfaction Event as to Universal.

 

9.2 Disputes Under Universal Agreements. Notwithstanding anything to the
contrary in the Universal Agreement, any dispute arising out of or relating to
the Universal Agreement, or hereunder, shall be resolved as set forth in Section
19, below. With respect to any claim arising out of or relating to this
Agreement, a party asserting such claim shall give the applicable other party
written notice of such claim and a reasonable opportunity (not less than ***,
nor more than ***) to cure prior to commencing proceedings in accordance with
Section 19 below.

 

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*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

 

    -11-   FINAL            

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Section 10. Grant of Rights (Theme Parks). By its execution and delivery of this
Agreement, DWA and Universal acknowledge and agree that Sections 1 (other than
1.D.), 3, 4.B, 5, 6, 7, and 9 of the Theme Park Agreement, and the first
sentence of paragraph C of that certain Theme Park Supplemental Agreement dated
as of January 15, 2002 between DW Studios and Universal Studios, Inc. captioned
“Universal-DreamWorks Theme Park Issues”, shall apply to all “Eligible DWA
Properties,” which are: (i) all Prior Pictures, and (ii) Motion Pictures
initially released or initially broadcast by DWA during the Universal Term, or
any other product which is released by DWA to the general public (e.g.,
interactive games or devices distributed to the public) during the Universal
Term. Sections 1 (other than 1.D), 3, 4.B, 5, 6, 7 and 9 of the Theme Park
Agreement and the first sentence of paragraph C of that certain Theme Park
Supplemental Agreement dated as of January 15, 2002 between DW Studios and
Universal Studios, Inc. captioned “Universal-DreamWorks Theme Park Issues”, are
incorporated herein as if fully set forth, with the following changes: (i) each
use of the phrase “Eligible DW Property” or “Eligible DW Properties” shall be
deemed amended to read “Eligible DWA Property” or “Eligible DWA Properties,” as
applicable, and (ii) each use of the word “DW” (alone or when used in another
definition or phrase) shall be deemed amended to read “DWA”. Other than as set
forth in Sections 4.B and 5 of the Theme Park Agreement, Universal shall have no
payment obligations to DWA under the Theme Park Agreement; for avoidance of
doubt, the “Exclusivity Fee” shall be payable to DW Studios as provided in the
Universal Agreement (and the “Term” of the Theme Park Agreement is extended)
until the earlier of (i) December 31, 2010 and (ii) the date on which the
Theatrical Distribution Agreement terminates. The provisions of the first
sentence of paragraph C of that certain Theme Park Supplemental Agreement dated
as of January 15, 2002 between DW Studios and Universal Studios, Inc. captioned
“Universal-DreamWorks Theme Park Issues” shall be applicable to, and credited
against, any fees payable by Universal to DWA under the Theme Park Agreement
notwithstanding the fact that the annual exclusivity fee payable by Universal
pursuant to Section 4A. of the Theme Park Agreement is payable to DW Studios,
not DWA.

 

Section 11. UIP Amendment. Notwithstanding anything in the Universal
Exploitation Agreements to the contrary, on a UIP “restructure” (as defined in
Section 10.a.(ii) of the Theatrical Distribution Agreement), DW Studios shall
have the right (but not the obligation) to terminate (i) the Theatrical
Distribution Agreement and (ii) (if the Theatrical Distribution Agreement is
terminated pursuant to the immediately preceding clause (i)) Universal’s home
video fulfillment services under the Home Video Fulfillment Services Agreement
but only with respect to the “Foreign Territory” as defined in Schedule B-TC of
the Home Video Fulfillment Services Agreement. Such termination(s) shall be
effective only if and when the Termination Amounts are paid in full, provided
that nothing herein shall affect the rights and obligations of the parties
thereto which survive termination under the Universal Exploitation Agreements.

 

Section 12. Ownership. Except for the rights expressly licensed and/or granted
to Universal herein or under the Universal Agreements, as between DWA and
Universal, DWA shall be the sole and exclusive owner of all rights, title and
interest in and to the Licensed Pictures, Universal Licensed Pictures and Prior
Pictures at all times. DWA’s ownership includes all copyrights, trademarks,
patents, titles, designs, artwork, characters, stills, drawings, literary
material, film materials, computer models, logos, stories, plots and any other
intellectual properties and rights in, to, or arising out of the Licensed
Pictures, Universal Licensed Pictures and Prior Pictures or any element thereof
regardless of whether created by DWA or by any other

 

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person on DWA’s behalf. Universal shall not have any ownership or security
interest in, lien on, or other creditor’s rights with respect to the Licensed
Pictures, Universal Licensed Pictures or Prior Pictures, or any elements or
components thereof, the Retained Rights and any revenue derived from
exploitation of the Retained Rights, any of the literary, dramatic, musical or
other materials upon which the Licensed Pictures, Universal Licensed Pictures,
Prior Pictures are based or which are contained in the Licensed Pictures,
Universal Licensed Pictures, Prior Pictures or any of the copyrights,
trademarks, computer models, design patents, technology or similar or analogous
rights in or to the Licensed Pictures, Universal Licensed Pictures, Prior
Pictures or any of the foregoing.

 

Section 13. Force Majeure. No party shall be liable to any other because of any
failure to perform hereunder caused by any cause beyond its control, including
fire, earthquake, flood, epidemic, accident, explosion, casualty, strike,
lockout, labor controversy, riot, civil disturbance, act of a public enemy,
embargo, war, act of God or law, except as expressly provided herein to the
contrary; provided, that Universal shall in no event be required to accede to or
to cause any Universal Affiliate to accede to the demands of any guild, union or
similar organization in order to bring to an end a strike, lockout or labor
controversy, or to accede to the demands of any suppliers or others not a party
hereto which Universal considers unreasonable. This Section 13. shall not
diminish or impair the payment obligations of any party hereunder.

 

Section 14. Assignment. This Agreement may not be assigned by any party without
the prior written consent of each of the other parties, including in the event
of a merger, reorganization, or transaction in which another party succeeds to
all or substantially all of the assigning party’s assets, except that (a)
without securing the prior written consent of DWA or DW Studios except as
required under the Universal Exploitation Agreements, Universal may from time to
time assign or delegate any or all of its rights and obligations hereunder to
one or more Universal Affiliates or to subdistributors, and (b) if DW Studios
ceases to operate its theatrical distribution business in the Domestic
Territory, then, with respect to all DW Distributed Pictures, DW Studios may
assign or sublicense to Universal (and Universal shall accept such assignment or
sublicense of) Theatrical Exhibition in the Domestic Territory on the same terms
and conditions as set forth in the DW Distribution Agreement, and such
additional Distribution Rights then subject to the Universal Agreement,
including certain Non-Theatrical Exhibition in the International Territory and
Home Video Fulfillment Services Rights throughout the Territory. Nothing
contained in this Section 14 shall prohibit or limit DWA’s, DW Studios’ or
Universal’s sale or transfer of its assets (other than its rights under this
Agreement) in the ordinary course of business.

 

Section 15. Distributor Distribution Credit. Universal shall have such right to
accord itself its customary distribution credit (with integrated logo) for each
Prior Picture, DW Distributed Picture and Universal Licensed Picture as and to
the extent (if any) provided in the applicable Universal Exploitation Agreement.
Each agreement with a Subdistributor or licensee shall provide that such
Subdistributor or licensee is contractually bound to abide by all such credit
obligations.

 

Section 16. Other Activities. Subject to the provisions hereof nothing herein
shall limit in any way the right of DWA, DW Studios, Universal or their
respective Affiliates to engage in business activities or endeavors of any kind
or nature, including:

 

(i) Motion Picture production, distribution and related businesses;

 

    -13-   FINAL            

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(ii) Television production and merchandising (including video games and computer
games) exploiting the Licensed Pictures by DWA;

 

(iii) Advertising;

 

(iv) Publishing;

 

(v) Interactive Media;

 

(vi) The sale or license of designs, stories, characters, trademarks, trade
names or other rights or properties;

 

(vii) Ancillary market activities;

 

(viii) The co-financing or co-production or acquisition of any other interest of
any nature in any Motion Picture or other property; and

 

(ix) The exercise of any right not expressly granted hereunder.

 

Section 17. No Partnership or Third Party Benefit. This Agreement does not
constitute DWA, DW Studios or Universal as partners, joint venturers, or as each
other’s agents or representatives (except as may be herein otherwise expressly
provided). This Agreement is not for the benefit of any third party and shall
not give any right or remedy to any such third party whether or not referred to
hereunder.

 

Section 18. Integration/Formalities. This Agreement contains the entire
agreement and understanding between the parties relating to the subject matter
hereof and supersedes, cancels and replaces any prior understanding, writing or
agreement between the parties relating to such subject matter. This Agreement
may not be amended, modified or altered except by an instrument in writing duly
executed by the parties. The parties acknowledge that each was represented by
counsel in the negotiation and execution of this Agreement. No provision herein
shall be construed against any party by virtue of the activity of that party,
through its counsel or otherwise, in negotiating and drafting this Agreement.
Notwithstanding the foregoing or anything to the contrary in this Agreement,
except as expressly set forth herein, nothing in this Agreement amends, modifies
or terminates the DW Distribution Agreement, the Universal Agreement or the
Theme Park Supplemental Agreements, which shall continue in full force and
effect in accordance with their respective terms as between DW Studios,
Universal and DWA (as applicable).

 

Section 19. Dispute Resolution.

 

a. The parties agree that any dispute to interpret or enforce, or otherwise
arising out of or relating to, this Agreement shall be determined by binding
arbitration according to the Commercial Arbitration Rules of the American
Arbitration Association (“AAA”), provided always that: (a) the arbitration shall
be conducted before a single neutral

 

    -14-   FINAL            

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arbitrator with at least ten (10) years experience in the theatrical Motion
Picture industry, appointed by mutual agreement of the parties within five (5)
business days from the date the notice of arbitration is delivered by the
petitioning party; (b) the parties shall be entitled to discovery as provided in
California Code of Civil Procedure sections 1283.05 and 1283.1; (c) in deciding
any such matter, the arbitrator shall follow the substantive law of the State of
California as it would be applied by California courts; (d) either party may,
without waiving its right to arbitration, seek preliminary or interlocutory
relief from a court of competent jurisdiction; (e) all arbitration proceedings
(including any discovery and other evidence in connection therewith) shall be
closed to the public and shall remain confidential; and (f) arbitration awards
hereunder may be entered and enforced as provided in California Code of Civil
Procedure sections 1285 et seq. If the arbitrator is not selected by mutual
consent within five (5) business days from the date the notice of arbitration is
delivered by the petitioning party, the rules of the AAA with respect to the
selection of an arbitrator shall apply. Notwithstanding the foregoing, before
proceedings are initiated hereunder, the Chief Executive Officer or Chief
Operating Officer of DWA, DW Studios and Universal, or their designated
representatives shall meet and in good faith attempt to resolve the dispute.

 

b. Notwithstanding the foregoing:

 

(i) Any payment disputes submitted to binding arbitration pursuant to Section
19.a above shall commence within ten (10) business days from the date the notice
is delivered by the petitioning party and the arbitrator shall rule not later
than thirty (30) days after the date the notice is delivered. The hearing shall
be conducted by the arbitrator for as many days as the arbitrator determines to
allow; provided, that the hearing shall conclude, and the arbitrator shall rule,
not later than thirty (30) days after the date the notice is delivered. The
arbitrator shall rule as to whether or not amounts are owed to the petitioning
party, and if so, the exact amount owed to the petitioning party (taking into
account the default interest and other provisions contained in the Agreement).
In such event, the non-petitioning party shall have five (5) Business Days from
the date of the arbitrator’s ruling to make such payment. In the event such
payment is not made within the aforementioned period, such failure shall
constitute a breach of this Agreement and the petitioning party may exercise all
rights and remedies available under Section 9 above.

 

(ii) Any disputes submitted to binding arbitration pursuant to Section 19.a.
above that affect the timely release of a Licensed Picture, Universal Licensed
Picture or Prior Picture for initial Theatrical Exhibition or initial Home Video
Exhibition shall commence within seven (7) Business Days from the date the
notice is delivered by the petitioning party and the arbitrator shall rule not
later than ten (10) Business Days after the date the notice is delivered. The
hearing shall be conducted by the arbitrator for as many days as the arbitrator
determines to allow; provided, that the hearing shall conclude, and the
arbitrator shall rule, not later than ten (10) Business Days after the date the
notice is delivered.

 

c. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, AND
EXCEPT AS PROVIDED BELOW, IN NO EVENT WILL ANY PARTY BE LIABLE FOR SPECIAL,
INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST
PROFITS SUFFERED BY AN INDEMNITEE, HOWEVER CAUSED AND ON ANY THEORY OF
LIABILITY, IN CONNECTION WITH ANY DAMAGES ARISING HEREUNDER; PROVIDED, HOWEVER,
THAT TO THE

 

    -15-   FINAL            

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EXTENT ANY PARTY IS REQUIRED TO PAY (A) ANY AMOUNT ARISING OUT OF THE INDEMNITY
SET FORTH IN SECTION 7 AND/OR (B) ANY SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS, IN EACH CASE, TO A THIRD
PARTY IN CONNECTION WITH A THIRD PARTY CLAIM, SUCH DAMAGES WILL CONSTITUTE
DIRECT DAMAGES AND WILL NOT BE SUBJECT TO THE LIMITATION SET FORTH IN THIS
SECTION 19.c.

 

Section 20. Severability of Provisions. If any provision in this Agreement shall
be held by any court of competent jurisdiction to be illegal, invalid or
unenforceable, such provision shall be of no force or effect while such
infirmity shall exist, but such infirmity shall have no effect whatsoever upon
the binding force or effectiveness of any other provisions hereof unless the
parties otherwise agree. The parties shall endeavor in good faith negotiations
to replace the illegal, invalid or unenforceable provision with a valid
provision the economic effect of which comes as close as possible to that of the
illegal, invalid or unenforceable provision.

 

Section 21. Waiver. No delay or failure to exercise any right hereunder shall
constitute a waiver of such right except in those instances where this Agreement
provides for specific notice and a period of time thereafter within which to
exercise a right, in which case failure to exercise such right within the
specified time period shall constitute a waiver thereof.

 

Section 22. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the state of California, applicable to contracts
entered into and to be fully performed in said state by residents thereof. For
purposes of enforcing, confirming or vacating an award under Section 19 above,
or in the event the provisions of Section 19 shall be held invalid or
unenforceable, only the California courts (state and federal) shall have
jurisdiction over controversies regarding or arising under this Agreement, and
if there is any matter which might be subject either to state or federal
jurisdiction, the parties agree that the matter shall be submitted to federal
jurisdiction. The parties specifically agree that the Superior Court of the
State of California, County of Los Angeles and the United States District Court
for the Central District of California shall have the personal jurisdiction over
them, and each of them, notwithstanding the fact that they may be citizens of
other states or countries. In this regard the parties agree that Los Angeles
County is a convenient forum.

 

Section 23. Confidentiality. Except as may be required by law or NASD or stock
exchange rules, each party shall keep confidential all terms and conditions
contained herein. DWA, DW Studios and Universal acknowledge that they will,
during the Term hereof, have access to, and acquire knowledge from, materials,
data and other information which is not accessible or known to the general
public (“Confidential Information”). Except as required by law or NASD or stock
exchange rules, or as may be required for the preparation of tax returns or
other government or legally required documents, or as reasonable necessary to
employees, agents, lawyers, accountants, auditors, bankers, consultants,
representative or investors of DWA, DW Studios and Universal or their Affiliates
for a bona fide business purpose (who shall be similarly bound by these
confidentiality provisions), neither the Confidential Information nor any
knowledge acquired by DWA, DW Studios and Universal, as the case may be, from
such Confidential Information or otherwise through its engagement hereunder
shall be used, publicized or divulged by the other to any other Person without
the prior written consent of the applicable party obtained in advance and in
each instance. Nothing herein shall prevent a party,

 

    -16-   FINAL            

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or any employees, agents, lawyers, accountants, auditors, bankers, consultants,
representatives or investors of such party or its Affiliates (the “Receiving
Party”) from using, disclosing, or authorizing the disclosure of any information
it receives in the course of performance of the Agreement which:

 

a. was known to the Receiving Party prior to its disclosure by the other party;

 

b. is or becomes publicly available without default hereunder by the Receiving
Party;

 

c. is lawfully acquired by the Receiving Party from a source which is not an
agent or representative of the Receiving Party and is not under any obligation
to the other party regarding disclosure of such information;

 

d. is independently developed by the Receiving Party without use of any of the
other party’s confidential information; or

 

e. is disclosed by the applicable party hereto to unaffiliated third parties
without confidential undertakings.

 

For the avoidance of doubt, Confidential Information as defined in this Section
23. shall not include any Information that the applicable party is obligated to
make available to any third party(ies) in the course of fulfilling its
obligations under this Agreement (e.g., contingent compensation statements).

 

Section 24. Notice of Representatives. Each party will give the other parties
reasonable notice of its appropriate contact person(s).

 

Section 25. Paragraph Headings. Paragraph headings and titles are solely for
convenience of reference and are not a part of this Agreement, nor are they
intended to aid or govern the interpretation of this Agreement.

 

Section 26. Intellectual Property License. DWA and DW Studios acknowledge and
agree that the Theatrical Distribution Rights licensed to Universal constitute
“intellectual property” as such term is defined in the Bankruptcy Code and that
Universal is entitled to all of the rights of a licensee of intellectual
property under Section 365(n) of the Bankruptcy Code with respect to all of such
licensed rights.

 

Section 27. Disclosure, Compliance and Reporting Obligations. Universal agrees
to supply information and reports to DWA (at DWA’s expense) in the form and
manner requested by DWA and access to Universal’s books and records and internal
controls, with respect to DWA’s public disclosure, compliance or reporting
obligations, including those under Section 404 and the other provisions under
the Sarbanes-Oxley Act of 2002 and the rules and regulations of the Securities
and Exchange Commission and the Public Company Accounting Oversight Board, and
to modify (at DWA’s expense) any such internal controls as are reasonably
requested by DWA to comply with such obligations, provided however, such
information,

 

    -17-   FINAL            

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reports, access and controls apply only to Universal’s direct obligations to DWA
hereunder. Universal shall have no responsibility for determining what changes
or corrections are necessary, if any, for DWA’s purposes.

 

Section 28. Notices. All notices hereunder shall be in writing and shall be
served by private delivery services, and shall be deemed given on the date
delivered to the following addresses (or such other addresses as such party may
hereafter designate in writing):

 

  (i) If to DWA:

 

DreamWorks Animation SKG, Inc.

1000 Flower Street

Glendale, California 91201

Attention: General Counsel

 

With copy to:

 

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, New York 10019

Telecopy: (212) 474-3700

Attention: Faiza J. Saeed, Esq.

 

  (ii) If to DW Studios:

 

DreamWorks L.L.C.

1000 Flower Street

Glendale, California 91201

Attention: General Counsel

 

  (iii) If to Universal:

 

Vivendi Universal Entertainment LLLP

100 Universal City Plaza

Universal City, CA 91067

Attention: General Counsel

 

With a copy to:

 

Gibson, Dunn & Crutcher LLP

333 S. Grand Avenue

Los Angeles, CA 90071-3197

Telecopy: (213) 229-7520

Attention: Ruth E. Fisher

 

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Section 29. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which, taken
together, shall constitute one and the same instrument, which may be
sufficiently evidenced by one counterpart.

 

Section 30. Effect of Subsequent Event. If the Effective Date occurs, but the
closing of the IPO does not occur within *** of the Effective Date, then the
parties to this Agreement agree that this Agreement and the DW Distribution
Agreement shall terminate and be of no further force or effect, and DWA shall
become a signatory to each of the Universal Agreements other than the Amblin
Agreement, as a result of which (but subject to the further provisions of this
Section 30): (i) Universal shall have the same rights and obligations under the
Universal Agreements vis-à-vis each of DW Studios and DWA and their respective
pictures, as it currently has with respect to DW Studios, (ii) DW Studios and
DWA shall collectively have the rights and obligations provided for DW Studios
under the Universal Agreements (other than, as to DWA, the Amblin Agreement) as
DW Studios currently holds except that each of DW Studios and DWA shall have
such rights only as to its own Motion Pictures, and this provision shall not be
deemed to require duplicative payments, (iii) each of DW Studios and DWA shall
be jointly and severally liable for all obligations of DW Studios or DWA to
Universal under such Universal Agreements (other than, as to DWA, the Amblin
Agreement), and (iv) DWA shall be entitled to the benefits accorded DW Studios
under Section 8.q. of the Amblin Agreement.

 

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*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

 

    -19-   FINAL            

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

 

DREAMWORKS L.L.C. By  

/s/ Brian Edwards

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

    VP and General Counsel Its  

 

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

DREAMWORKS ANIMATION SKG, INC. By  

/s/ Katherine Kendrick

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

    VP and General Counsel Its  

 

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

VIVENDI UNIVERSAL ENTERTAINMENT LLLP By  

/s/ Karen Randall

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

    Executive Vice President Its  

 

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

 

    -20-   FINAL            

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SCHEDULE 1.1.

 

Table of Definitions

 

Term

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

 

Defined

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

Advance Amounts   Schedule 5.1 Additional Amounts   Schedule 5.1 Agreement  
Preamble Amblin Agreement   Whereas Amblin Projects   Whereas Animation Advance
Amount   Schedule 5.1 Animation Additional Amounts   Schedule 5.1 Confidential
Information   23 DW Distribution Agreement   Whereas DW Studios   Preamble DWA  
Preamble Eligible DWA Properties   Section 3.2 Home Video Fulfillment Services
Agreement   Whereas Master Agreement   Whereas Receiving Party   23 Theatrical
Distribution Agreement   Whereas Theme Park Agreement   Whereas Universal  
Preamble Universal Agreement   Whereas

 

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SCHEDULE 5.1

 

I. Definitions

 

Capitalized terms used in this Schedule 5.1 but not referenced below or
otherwise defined herein shall have the meanings assigned thereto elsewhere in
this Interparty Agreement between DW, DWA and Universal dated as of October 7,
2004. Definitions used in this Schedule 5.1 which vary from the same or similar
definitions in this Agreement shall have the meanings set forth in this Schedule
5.1 solely for the purposes of this Schedule 5.1.

 

1. Agreement Module: “Agreement Module” shall refer to each of Exhibits A, B, C
and D of the Master Agreement, as amended, modified or supplemented from time to
time in accordance therewith.

 

2. Distributor shall mean Universal or its successors and permitted assigns
under the Theatrical Distribution Agreement.

 

3. DW or DW Studios shall mean DreamWorks L.L.C.

 

4. Exhibit A shall mean Exhibit A to the Master Agreement, and is also referred
to as the Theatrical Distribution Agreement.

 

5. FSP shall mean Universal or its successors or permitted assigns under the
Home Video Fulfillment Services Agreement.

 

6. Exhibit B shall mean Exhibit B to the Master Agreement, and is also referred
to as the Home Video Fulfillment Services Agreement.

 

7. Master Agreement: “Master Agreement” shall refer solely to the amended and
restated DW/Universal Studios, Inc. Master Agreement without consideration of
the Agreement Modules attached thereto.

 

8. Parties: “parties” (individually “party”) shall refer to Universal, DW
Studios and DWA.

 

9. Payment Default: A failure by DW or DWA, as applicable (as more fully set
forth in Section 9.1 of the Interparty Agreement) (i) to pay any Advance Amount,
Animation Advance Amount, Additional Amount, Animation Additional Amount, DW
Adjustment, DW Animation Adjustment, Special Termination Payment or redemption
or distribution amount payable under the DreamWorks L.L.C. Amended and Restated
Operating Agreement, in each case on the date due or (ii) to satisfy the
Satisfaction Event for Universal.

 

10. Person: “Person” shall refer to any individual, firm, corporation,
partnership, limited liability company, trust, joint venture, governmental
authority or other entity.

 

11. Preferred: “Preferred” shall refer to all outstanding shares of DW’s Class U
Preferred Stock.

 

    -2-   FINAL            

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VIII. Advance

 

1. Additional Definitions.

 

“Advance” is defined in Section VIII.2 of this Schedule 5.1.

 

“Advance Amount” at any time of determination, shall be equal to the Advance,
plus all Universal Adjustments, less all DW Adjustments and less the advance
adjustment effected under Paragraph VIII.3.

 

“Advance Maximum Amount” shall mean ***.

 

“Aggregate Expenses” shall equal the sum of (x) Distribution Expenses (as
defined in Exhibit A) and (y) Service Expenses (as defined in Exhibit B).

 

“Aggregate Fees” shall equal the sum of (x) Distribution Fees (as defined in
Exhibit A) and (y) Service Fees (as defined in Exhibit B).

 

“Aggregate Receipts” shall equal the sum of (x) Gross Receipts (as defined in
Exhibit A) and (y) Service Receipts (as defined in Exhibit B).

 

“Animation Advance Amount” at any time of determination, shall be equal to the
Initial Animation Advance, plus all Universal Animation Adjustments, less all
DWA Animation Adjustments.

 

“Animated Pictures” shall mean any theatrical motion picture in which a
substantial portion of the characters, creatures and environments are created
using animation techniques, including those techniques commonly referred to as
traditional hand-drawn animation, stop motion animation, claymation,
computer-generated animation or a similar or new method of animation now known
or hereafter devised; provided, however, that a theatrical motion picture shall
not be deemed an Animated Picture solely (i) because parts of its action are
created by animation intended to appear as live action, (ii) due to the
inclusion of incidental animation, or (iii) because it contains limited amounts
of animation presented in conjunction (whether or not in the same frame) with
live action (e.g., “Who Framed Roger Rabbit” would not be an Animated Picture).

 

“Animation Pipeline Estimate” as of the end of any fiscal quarter shall be equal
to a commercially reasonable estimate, based on revenue figures in ultimates, of
Aggregate Receipts in the territory for which Distributor or FSP holds rights
(i) for all Animated Pictures for which Distributor or FSP has been granted
rights pursuant to the Universal Agreement and this Agreement (a) which had
their initial public release (whether in theatres in the Domestic Territory (as
defined in the Universal Agreement) or the Foreign Territory (as defined in the
Universal Agreement), on home video or otherwise) prior to the end of such
quarter (“Animation

 

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Pipeline Released Pictures”), and (b) which are not Animated Pictures ultimates
for which are included in the Pipeline Estimate, and (c) that were placed in
production or pre-production (using estimates based on breakeven ultimates for
such [Motion] Pictures after capitalized interest and overhead) prior to the end
of such quarter (provided that, with respect to any [Motion] Picture described
in clause (c), DWA shall (I) be firmly committed to the production of such
[Motion] Picture, without any third party conditions, (II) have approved the
preliminary budget and screenplay for such [Motion] Picture, and (III) have
reasonably scheduled such Animated Picture for initial domestic theatrical
release within 18 months of the last day of such quarter) less (x) Aggregate
Fees which would be retained by Distributor and FSP based on such estimated
Aggregate Receipts, (y) estimated Aggregate Expenses attributable to such
Animated Pictures and (z) Aggregate Receipts for such Animated Pictures actually
paid to DW by Distributor and FSP prior to the end of such quarter. For further
clarity, once an Animated Picture has had its initial public release, it shall
only be factored in clause (i)(a) above and shall no longer be factored in
clause (i)(c). DWA’s independent auditors will certify that the ultimates for
Animated Pictures referred to in clause (i)(a) above are the same figures used
to prepare and review DW’s quarterly, and prepare and audit DW’s annual,
financial statements for the applicable fiscal period.

 

“Pipeline Estimate” as of the end of any fiscal quarter shall be equal to a
commercially reasonable estimate, based on revenue figures in ultimates, of
Aggregate Receipts in the territory for which Distributor or FSP holds rights
for all [Motion] Pictures for which Distributor or FSP has been granted rights
pursuant to the Universal Agreement (a) which had their initial public release
(whether in theatres in the Domestic Territory or the Foreign Territory, on home
video or otherwise) prior to the end of such quarter (“Pipeline Released
Pictures”), and (b) that were placed in production or pre-production (using
estimates based on breakeven ultimates for such [Motion] Pictures after
capitalized interest and overhead) prior to the end of such quarter (provided
that, with respect to any [Motion] Picture described in clause (b), DW shall (i)
be firmly committed to the production of such [Motion] Picture, without any
third party conditions, (ii) have scheduled principal photography to commence
within eight weeks of such quarter-end, (iii) have binding commitments from the
director and two principal cast members for such [Motion] Picture and (iv) have
approved the preliminary budget and screenplay for such [Motion] Picture) less
(x) Aggregate Fees which would be retained by Distributor and FSP based on such
estimated Aggregate Receipts, (y) estimated Aggregated Expenses attributable to
such [Motion] Pictures and (z) Aggregate Receipts for such [Motion] Pictures
actually paid to DW by Distributor and FSP prior to the end of such quarter. For
further clarity, once a [Motion] Picture has had its initial public release, it
shall only be factored in clause (a) above and shall no longer be factored in
clause (b). DW’s independent auditors will certify that the ultimates for
[Motion] Pictures referred to in clause (a) above are the same figures used to
prepare and review DW’s quarterly, and prepare and audit DW’s annual, financial
statements for the applicable fiscal period.

 

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“Pipeline Required Amount” shall mean ***.

 

“Termination Date” shall mean the date either or both of Exhibit A or Exhibit B
terminates, for any reason, or expires.

 

2. Outstanding Advance. Effective as of the Restatement Effective Date, the
Advance was in the stated amount of *** (the “Advance”).

 

3. Advance Adjustment. Effective as of the consummation of the transactions
contemplated by the Business Combination Agreement dated as of October 8, 2003
by and among GE, National Broadcasting Holding, Inc., National Broadcasting
Company Inc., Vivendi Universal S.A. and Universal Studios Holding III Corp.
(the “NBC Closing”), *** of the Advance was forgiven and the stated amount of
the Advance is ***.

 

4. Further Advance Adjustments. Not later than 45 days following the end of each
of the first three fiscal quarters of DW (commencing with the fiscal quarter
ending March 31, 2002) and 90 days following the end of each fiscal year-end of
DW (commencing with the fiscal year ending December 31, 2002) (each, an
“Estimate Date”), DW shall deliver to Universal a schedule containing DW’s good
faith estimate of the Pipeline Estimate as of such Estimate Date (the “Periodic
Pipeline Schedule” and, collectively the “Pipeline Schedules”), including
reasonably detailed supporting documentation for such computation. Within ***
following each Estimate Date:

 

  (i) if the Pipeline Estimate in respect of such Estimate Date is less than the
Pipeline Required Amount and less than the Pipeline Estimate in respect of the
most recent preceding Estimate Date (or the Initial Estimate Date, in the case
of the first Estimate Date), DW shall pay Universal in cash by wire transfer in
immediately available funds an amount (a “DW Adjustment”) equal to ***% of the
difference between (x) the lesser of (A) the Pipeline Required Amount and (B)
the Pipeline Estimate in respect of the most recent preceding Estimate Date, and
(y) the Pipeline Estimate on such Estimate Date; or

 

  (ii) if the Pipeline Estimate in respect of such Estimate Date is greater than
the Pipeline Estimate in respect of the most recent preceding Estimate Date (or
the Initial Estimate Date, in the case of the first Estimate Date) and the
Pipeline Estimate in respect of such preceding Estimate Date was less than the
Pipeline Required Amount, Universal shall pay DW (a “Universal Adjustment”) in
cash by wire transfer in immediately available funds an amount equal to *** of
the difference between (x) the lesser of (A) the

 

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    Pipeline Required Amount and (B) the Pipeline Estimate in respect of such
Estimate Date and (y) the Pipeline Estimate on the most recent preceding
Estimate Date provided in no instance under this Agreement shall Universal be
required to have outstanding as an advance to DW more than the Advance Maximum
Amount, or to make any payment in respect of a Universal Adjustment if DW is
then in default under its bank agreements or there is a Payment Default.

 

5. Animation Advance and Adjustments. On the Effective Date, DW has transferred
to DWA, and DWA has assumed, the “Initial Animation Advance” in the amount of
$75 million. Not later than *** following the end of each fiscal quarter of DWA
(commencing with the first fiscal quarter ending after the Effective Date) and
*** following the end of each fiscal year-end of DWA (commencing with the fiscal
year ending December 31, 2004) (each, an “Animation Estimate Date”), DWA shall
deliver to Universal a schedule containing DWA’s good faith estimate of the
Animation Pipeline Estimate as of such Estimate Date (the “Periodic Animation
Pipeline Schedule” and, collectively with the Initial Animation Pipeline
Schedule, the “Animation Pipeline Schedules”), including reasonably detailed
supporting documentation for such computation. Within 5 business days following
each Animation Estimate Date:

 

  (i) if the Animation Pipeline Estimate in respect of such Animation Estimate
Date is less than *** and less than the Animation Pipeline Estimate in respect
of the most recent preceding Animation Estimate Date, DWA shall pay Universal in
cash by wire transfer in immediately available funds an amount (a “DWA Animation
Adjustment”) equal to *** of the difference between (x) the lesser of (A) ***
and (B) the Animation Pipeline Estimate in respect of the most recent preceding
Animation Estimate Date, and (y) the Animation Pipeline Estimate on such
Animation Estimate Date; or

 

  (ii) if the Animation Pipeline Estimate in respect of such Animation Estimate
Date is greater than the Animation Pipeline Estimate in respect of the most
recent preceding Animation Estimate Date (or the Initial Animation Estimate
Date, in the case of the first Animation Estimate Date) and the Animation
Pipeline Estimate in respect of such preceding Animation Estimate Date was less
than *** Universal shall pay DWA (a “Universal Animation Adjustment”) in cash by
wire transfer in immediately available funds an amount equal to *** of the
difference between (x) the lesser of (A) *** and (B) the Animation Pipeline
Estimate in respect of such Animation Estimate Date and (y) the Animation

 

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    Pipeline Estimate on the most recent preceding Animation Estimate Date
provided in no instance under this Agreement shall Universal be required to have
outstanding as an Animation Advance to DWA of more than $75 million or to make
any payment in respect of a Universal Animation Adjustment if DW or DWA is then
in default under its bank agreements or there is a Payment Default.

 

6. Dispute Resolutions.

 

  a. If Universal delivers written notice to DW setting forth a description of
Universal’s objections to any Pipeline Estimate or a written notice to DWA
setting forth a description of Universal’s objections to any Animation Pipeline
Estimate, and the amount of the adjustment that Universal believes should be
made to each item in respect of such objection (an “Objection Notice”) no later
than *** days following receipt of such Pipeline Estimate or Animation Pipeline
Estimate (and associated supporting documentation), the Parties hereto shall
follow the resolution procedure described below.

 

  b. No later than *** following receipt of an Objection Notice, the Designated
Officer of each of DW or DWA, as applicable, on the one hand and Universal on
the other hand shall meet and negotiate in good faith to resolve any items set
forth in the Objection Notice. “Designated Officer” shall mean its chief
financial officer, in the case of DW or DWA, and its Chief Financial Officer, in
the case of Universal, or such other senior executive of such party as shall be
reasonably acceptable to the other parties.

 

  c. If the Designated Officers are unable to resolve all the objections set
forth in any Objection Notice within ***, they shall jointly appoint *** (the
“Neutral Expert”) within *** after the end of such *** period. The Neutral
Expert, acting as experts and not as arbitrators, shall review the objections
set forth in the Objection Notice which were not resolved pursuant to the
procedure in clause (b) above. The Neutral Expert shall determine, based on the
requirements set forth in this Agreement and only with respect to objections
submitted to the Neutral Expert, whether and to what extent the applicable
Pipeline Estimate or Animation Pipeline Estimate requires adjustment. Universal
on the one hand and DW or DWA on the other shall each pay *** of the fees and
disbursements of the Neutral Expert in respect of such engagement. Universal, DW
and DWA shall, and shall cause their representatives to, provide to the Neutral
Expert full cooperation. The Neutral Expert’s resolution shall be conclusive and
binding upon the Parties.

 

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  d. The Pipeline Estimate or Animation Pipeline Estimate, as applicable, for
any quarter shall be deemed to reflect any objections thereto resolved pursuant
to the foregoing procedure and any necessary adjustment to the amount of the
Advance or Animation Advance, as applicable, resulting from such resolution
shall be made within 5 days in accordance with the procedures of Paragraphs
VIII.4 and VIII.5 above.

 

  e. Notwithstanding the foregoing, Universal shall not be entitled to deliver
an Objection Notice and trigger the procedures described above if any Pipeline
Estimate delivered by DW or Animation Pipeline Estimate provided by DWA reflects
(solely for Pipeline Released Pictures or Animation Pipeline Released Pictures,
as applicable) (i) as to the Pipeline Estimate, a Pipeline Estimate greater than
or equal to ***, or (ii) as to the Animation Pipeline Estimate, an Animation
Pipeline Estimate greater than or equal to ***.

 

7. Additional Payment Obligation.

 

  a. On the last day of each fiscal quarter and on the first Termination Date,
through and including the last day of the fiscal quarter in which the Advance
and Animation Advance are both repaid in full (each such date, a “Payment
Date”), (i) DW shall pay to Universal by wire transfer in immediately available
funds an amount in cash equal to the Additional Amount (as defined below) for
each date from and including the preceding Payment Date until but excluding such
Payment Date, and (ii) DWA shall pay to Universal by wire transfer in
immediately available funds an amount in cash equal to the Animation Additional
Amount (as defined below) for each date from and including the preceding Payment
Date until but excluding such Payment Date. In addition, all accrued and unpaid
Additional Amounts or Animation Additional Amounts shall accrue at a rate of
8.75% per year. For purposes hereof, (I) the “Additional Amount” means an amount
equal to an annualized rate on the Advance Amounts outstanding from time to time
of 8.75% per year, and (II) the “Animation Additional Amount” means an amount
equal to an annualized rate on the Animation Advance Amount outstanding from
time to time of 8.75% per year. Without limitation of its other rights and
remedies hereunder, Universal shall be entitled to set off and apply an amount
equal to any DW Adjustment if not paid when due and/or any accrued but unpaid
Additional Amounts or Animation Additional Amounts not paid when due against,
and recoup such DW Adjustment amount, Additional Amounts or Animation Additional
Amounts from, any amounts owed to DW in accordance with the Agreement; provided,
however, that any

 

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    DW Adjustment or Additional Amounts may be recouped only against Aggregate
Receipts for [Motion] Pictures other than Animated Pictures, and that any DW
Animation Adjustment or Animation Additional Amounts may be recouped only
against Aggregate Receipts for Animated Pictures.

 

  b. Not later than *** days after (i) December 31 of each calendar year which
ends on or after December 31, 2006 and during the Term of Exhibit A or Exhibit
B, and (ii) the end of the Term of Exhibit A or Exhibit B (if such Term ends
after December 31, 2006 other than on the last day of a year), the cumulative
Aggregate Fees paid to Universal by DW since January 1, 2006 through the end of
such calendar year or end of the Term of Exhibit A or Exhibit B, as applicable,
shall be calculated. Each such calculation shall be an “Interest Credit
Calculation” and the period covered by such Interest Credit Calculation is the
“Interest Credit Calculation Period.”

 

  (i) If at the time of any Interest Credit Calculation, the cumulative
Aggregate Fees for the relevant Interest Credit Calculation Period are in excess
of the product of *** times the number of calendar years in such Interest Credit
Calculation Period (including any partial year in the case of a termination
other than at the end of a calendar year) (such amount for the relevant Interest
Credit Calculation Period, the “Interest Threshold Amount”), the amount in
excess of the Interest Threshold Amount (less any amount of such excess
previously credited pursuant to this Paragraph VIII.7.b. and not previously
repaid) shall be credited on a dollar for dollar basis, with *** of such credit
being applied against Additional Amounts and the remaining ***% of such credit
being applied against Animation Additional Amounts (collectively, “AAA Amounts”)
paid or payable during the applicable Interest Credit Calculation Period (the
amount of any such credit determined as a result of the foregoing is the
“Interest Credit”). Notwithstanding the foregoing, the maximum aggregate amount
of all Interest Credits which can be earned under this Paragraph VIII.7.b. shall
not exceed the Interest Credit Cap. The “Interest Credit Cap” is a dollar amount
equal to *** per annum of the aggregate amount of the Advance Amount and
Animation Advance Amount outstanding from time to time during the relevant
Interest Credit Calculation Period.

 

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  (ii) If at the time of any Interest Credit Calculation any Interest Credits
are outstanding (i.e., have previously been made and not reversed), and the
cumulative Interest Credit determined for such Interest Credit Calculation
Period is less than the cumulative Interest Credit determined for the
immediately preceding Interest Credit Calculation Period (or, no Interest Credit
is available under the most recent Interest Credit Calculation), DW and DWA
shall be entitled to retain only that amount of outstanding Interest Credits, if
any, also available under the most recent Interest Credit Calculation and shall
repay to Universal (in addition to any other AAA Amounts due and payable at such
time) an amount equal to the difference between the Interest Credit allocable to
it (if any) calculated for the most recent Interest Credit Calculation Period
and the Interest Credit previously credited for the immediately preceding
Interest Credit Calculation Period.

 

By way of illustration of this Paragraph VIII.7.b.:

 

  •   If as shown in Interest Credit Calculation for the Interest Credit
Calculation Period ended December 31, 2006, Universal has received *** in
Aggregate Fees for such Interest Credit Calculation Period, DW and DWA,
collectively, would be entitled to a *** Interest Credit against the 2006 AAA
Amount. This would either be credited against any 2006 AAA Amount payable to
Universal (with *** credited against the Additional Amount, and *** credited
against the Additional Animation Amount) or if all such AAA Amounts have already
been paid, Universal would repay *** million to DW and *** to DWA. (Since the
*** Interest Credit would not exceed the Interest Credit Cap, the entire *** is
available.)

 

  •   If as shown in the Interest Credit Calculation for the Interest Credit
Calculation Period ended December 31, 2007, Universal has received the *** in
cumulative Aggregate Fees for such Interest Credit Calculation Period, the ***
Interest Credit previously received for the Interest Credit Calculation Period
ended *** would be reversed and DW would pay Universal *** corresponding to such
reversal, and DWA would pay Universal ***, in each case in addition to all other
AAA Amounts due in ***.

 

  •   If as shown in the Interest Credit Calculation for the Interest Credit
Calculation Period ended ***, Universal has received *** in cumulative Aggregate
Fees for such Interest Credit Calculation Period, DW and DWA collectively would
be entitled to a *** Interest Credit against AAA

 

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Amounts paid or payable by DW for *** and against previous years’ AAA Amounts to
the extent necessary, but subject in all cases to the Interest Credit Cap.

 

8. Repayment of Advance Amount, Animation Advance Amount, Additional Amounts,
Animation Additional Amounts. The Advance Amount, the Animation Advance Amount,
plus all accrued and unpaid AAA Amounts shall become immediately due and payable
upon the date (the “Due Date”) which is the earliest to occur of (x) the first
Termination Date, (y) December 31, 2010 and (z) the *** day after a Payment
Default (if such Payment Default has not been cured by such date). Following the
Due Date, Universal shall have no further obligations to DW or DWA in respect of
this Paragraph VIII. provided if the Due Date arises as a result of the
preceding clause (z) and the Payment Default is subsequently cured in full,
Universal’s obligations to make Advances to DW and DWA under this Paragraph
VIII. shall be reinstated. Upon (a) notification by either DW or Universal to
the other Party of such Party’s intention to terminate either Exhibit A or
Exhibit B in accordance with its respective terms, (b) the expiration or
termination of any Agreement Module in accordance with its terms prior to the
stated expiration date of December 31, 2010, or (c) the Due Date, then Universal
shall be entitled to set off and apply the Advance Amount, Animation Advance
Amount, plus any accrued but unpaid Additional Amounts or Animation Additional
Amounts against, and recoup the Advance Amount, Animation Advance Amount,
Additional Amounts and Animation Additional Amounts from, any amounts owed to DW
in accordance with the Universal Agreement or DWA in accordance with the
Agreement or the Interparty Agreement among DW, DWA and Universal dated as of
[date], 2004, provided that in no instance shall Universal be entitled (i) to
recoup Advance Amounts or Additional Amounts from Aggregate Receipts for
Animated Pictures included in the Animated Pipeline Estimate, or (ii) to recoup
Animated Advance Amounts or Animation Additional Amounts from Aggregate Receipts
for [Motion] Pictures included in the Pipeline Estimate. Any remaining Advance
Amount and Additional Amounts after giving effect to the application set forth
in this Section 8 shall, upon Universal’s election (in its sole discretion),
convert into shares representing Preferred at a price of *** per share. Any
Advance Amount and Additional Amounts that Universal does not elect to convert
to equity of DW pursuant to the foregoing sentence shall continue to be due and
payable by DW and shall continue to accrue Additional Amounts. Any Animation
Advance Amount and Animation Additional Amounts remaining after giving effect to
the application set forth in this Section 8 shall continue to be due and payable
by DWA and shall continue to accrue Additional Animation Amounts.

 

Notwithstanding the foregoing, if both Exhibit A and Exhibit B expire at their
stated expiration date of December 31, 2010 (and only in such case) (the
“Special Repayment Case”), *** of the Advance outstanding on such date and ***
of the Animation Advance outstanding on such date shall be due and payable ***
together with all Additional Amounts and Animation Additional Amounts accrued
with respect thereto, and the remaining Advance and the remaining

 

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Animation Advance shall be payable ***, together with all Additional Amounts and
Animation Additional Amounts accrued with respect thereto. In the Special
Repayment Case, Universal shall be entitled to set off the Advance, Animation
Advance, Additional Amount and Animation Additional Amounts against, or recoup
such amounts from the amounts owed to DW under the Universal Agreement or to DWA
under this Agreement or the Interparty Agreement among DW, DWA and Universal
dated [date], 2004 only against amounts received by Universal after December 31,
2010 and to the extent such amounts are recouped through the set off, shall
reduce DW’s and DWA’s respective payment obligations under the preceding
sentence. (Notwithstanding the foregoing, in no instance shall Universal be
entitled (i) to recoup Advance Amounts or Additional Amounts from Aggregate
Receipts for Animated Pictures included in the Animated Pipeline Estimate, or
(ii) to recoup Animated Advance Amounts or Animation Additional Amounts from
Aggregate Receipts for [Motion] Pictures included in the Pipeline Estimate.)
Unless and until the Advance, Animation Advance, Additional Amounts and
Animation Additional Amounts are recouped or repaid in full, Universal shall
retain all distribution and fulfillment services rights it holds as of December
31, 2010 to [Motion] Pictures then in release (theatrically or as Videograms) or
revenues for which have been in either the Pipeline Estimate or the Animation
Pipeline Estimate prior to December 31, 2010. In the Special Repayment Case, DW
and DWA shall have the right but not the obligation after December 31, 2010, to
prepay all or any portion of the Advance Amount, Animation Advance Amount,
Additional Amounts and Animation Additional Amounts and on the payment in full
of all such amounts (whether by prepayment, set off, or payment) all of
Universal’s distribution and fulfillment rights under Exhibit A and Exhibit B
shall terminate.

 

* * *

 

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