Document:

Standstill Agreement, dated October 27, 2004

 Exhibit 10.25 
  
 EXECUTION COPY 
  
 STANDSTILL AGREEMENT 
  
 Among 
  
 DREAMWORKS ANIMATION SKG, INC., 
  
 STEVEN SPIELBERG, 
  
 DW LIPS,
L.P., 
  
 M&J K B LIMITED PARTNERSHIP, 
  
 DG-DW, L.P. 
  
 and 
  
 DW INVESTMENT II, INC. 
  
 Dated As Of October 27, 2004 

 STANDSTILL AGREEMENT, dated as of October 27, 2004, among DREAMWORKS ANIMATION SKG, INC., a Delaware
corporation (the “Company”), DW LIPS, L.P., a California limited liability partnership (“DW Lips”), M&J K B LIMITED PARTNERSHIP, a Delaware limited partnership (“M&J K B”) (solely for
purposes of Section 4.06(b)), DG-DW, L.P., a Delaware limited partnership (“DG-DW”) (solely for purposes of Section 4.06(b)), DW INVESTMENT II, INC., a Washington corporation (“DWI II”) (solely for purposes of
Section 4.06(b)), and STEVEN SPIELBERG. 
  
 WHEREAS, DreamWorks
L.L.C., a Delaware limited liability company (“DW”), and the Company, together with other parties, have entered into a Separation Agreement dated as of October 27, 2004, providing for the separation of the animation business (the
“Separation”) from DW; 
  
 WHEREAS, after the
Separation, the Company intends to sell shares of its Class A Common Stock, par value $0.01 per share (“Class A Stock”), in a public offering (the “Offering”); 
  
 WHEREAS, immediately following the consummation of the Offering, DW Lips will
own approximately 12% of the Company’s issued and outstanding Class A Stock; and 
  
 WHEREAS, each of the parties desires to enter into this Agreement (as defined below); 
  
 NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby,
the parties hereto agree as follows: 
  
 Definitions 
  
 Certain Defined Terms. As used in this Agreement: 
  
 “Affiliate” means, with respect to any Person, any other
Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled By or is Under Common Control With, such specified Person. 
  
 “Agreement” means this Standstill Agreement, as it may be amended, supplemented, restated or modified from time to time. 
  
 “Beneficial Owner” or “Beneficially Own”
has the meaning assigned to such term in Rule 13d-3 under the Exchange Act and a Person’s beneficial ownership of Common Stock shall be calculated in accordance with the provisions of such Rule. 
  
 “Board” means the Board of Directors of the Company.

 “Business Day” means any day that is not a Saturday, a Sunday or other day on which
banks are required or authorized by law to be closed in The City of New York. 
  
 “By-laws” means the By-laws of the Company, as amended or restated from time to time. 
  
 “Charter” means the Restated Certificate of Incorporation of the Company, as amended or restated from time to time. 
  
 “Class A Stock” has the meaning assigned to such term in the
recitals hereto. 
  
 “Class B Holder” means any
Person who shall hold of record shares of Class B Stock. 
  
 “Class B Stock” has the meaning assigned to such term in the Vulcan Stockholder Agreement. 
  
 “Common Stock” has the meaning assigned to such term in the Vulcan Stockholder Agreement. 
  
 “Company” has the meaning assigned to such term in the
preamble hereto. 
  
 “Control” (including the
terms “Controlled By” and “Under Common Control With”) has the meaning assigned to such term in the Charter as in effect at consummation of the Offering. 
  
 “DG-DW” has the meaning assigned to such term in the preamble hereto. 
  
 “Director” means any member of the Board. 
  
 “DW” has the meaning assigned to such term in the recitals
hereto. 
  
 “DW Lips” has the meaning assigned to
such term in the preamble hereto. 
  
 “DWI II”
has the meaning assigned to such term in the preamble hereto. 
  
 “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended. 
  
 “Family Group” has the meaning assigned to such term in the Vulcan Stockholder Agreement. 
  
 “Final Allocation” has the meaning assigned to such term in
the Holdco LLLP Agreement as in effect at consummation of the Offering. 
  
 “Group” has the meaning assigned to such term in Section 13(d)(3) of the Exchange Act. 
  

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 “Holdco LLLP Agreement” means the limited liability limited partnership agreement of
Holdco, dated as of October 27, 2004, as it may be amended, supplemented, restated or modified from time to time. 
  
 “KG Termination Date” has the meaning assigned to such term in the Vulcan Stockholder Agreement. 
  
 “M&J K B” has the meaning assigned to such term in the
preamble hereto. 
  
 “Offering” has the meaning
assigned to such term in the recitals hereto. 
  
 “Person” has the meaning assigned to such term in the Charter (as modified in Section 2(f) of Article IV thereof) as in effect at consummation of the Offering. 
  
 “Principal Holder” has the meaning assigned to such term in the Vulcan Stockholder Agreement. 

 
 “Proceeding” has the meaning assigned to such term in
Section 4.09. 
  
 “SEC” means the United States
Securities and Exchange Commission or any other federal agency at the time administering the Securities Act or the Exchange Act. 
  
 “Securities Act” means the U.S. Securities Act of 1933, as amended. 
  
 “Separation” has the meaning assigned to such term in the recitals hereto. 
  
 “Separation Date” has the meaning assigned to such term in
the Vulcan Stockholder Agreement. 
  
 “Spielberg
Parties” means Steven Spielberg, DW Lips and any Person Controlled By Steven Spielberg. 
  
 “Vulcan Stockholder Agreement” means the Stockholder Agreement, dated as of October 27, 2004, among the Company, DWA Escrow LLLP, M&J
K B, M&J K Dream Limited Partnership, The JK Annuity Trust, The MK Annuity Trust, Katzenberg 1994 Irrevocable Trust, DG-DW, DWI II, Jeffrey Katzenberg, David Geffen and Paul Allen as in effect at consummation of the Offering. 
  
 Other Definitional Provisions. i)The words “hereof”,
“herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article and Section references are to this
Agreement unless otherwise specified. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. 
  
 The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms. 
  

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 Standstill 
  
 Standstill Restrictions. Each of Steven Spielberg and DW Lips covenants and agrees with the Company that they shall not, and shall cause each
Spielberg Party not to, prior to the earlier of (i) the fifth anniversary of the date of this Agreement and (ii) the KG Termination Date, directly or indirectly, alone or in concert with others, unless specifically requested in writing by a
Principal Holder or by a resolution of a majority of the Directors or pursuant to a transaction (x) in which the Company has entered into a definitive agreement or (y) the Board has recommended in favor of, take any of the actions set forth below
(or take any action that would require the Company to make an announcement regarding any of the following): 
  
 effect, seek, offer, engage in, propose (whether publicly or otherwise) or cause or participate in, or assist any other Person to effect, seek, engage in,
offer or propose (whether publicly or otherwise) or participate in: 
  
 any tender or exchange offer, merger, consolidation, share exchange, business combination, recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction involving the Company or any of
its subsidiaries or any material portion of its or their business or any purchase of all or any substantial part of the assets of the Company or any of its subsidiaries or any material portion of its or their business; or 
  
 any “solicitation” of “proxies” (as such
terms are used in the proxy rules of the SEC but without regard to the exclusion set forth in Section 14a-1(1)(2)(iv) from the definition of “solicitation”) with respect to the Company or any of its Affiliates or any action resulting in
Steven Spielberg, DW Lips, any Affiliate of Steven Spielberg or DW Lips or such other Person becoming a “participant” in any “election contest” (as such terms are used in the proxy rules of the SEC) with respect to the Company or
any of its subsidiaries; 
  
 propose any matter for submission to
a vote of stockholders of the Company or call or seek to call a meeting of the stockholders of the Company; 
  
 seek election to, seek to place a representative on or seek the removal of any Director; provided, however, that nothing in this Section
2.01(c) shall restrict the manner in which a Spielberg Party may vote its shares of Common Stock (if any); 
  
 grant any proxy with respect to any Common Stock (other than to a Principal Holder, the Chief Executive Officer of the Company or a bona fide financial
institution in connection with a bona fide recourse borrowing); 
  
 execute any written consent with respect to any Common Stock other than at the request of a Principal Holder or the Chief Executive Officer of the Company; 
  
 form, join or participate in a Group with respect to any Common Stock or deposit any Common Stock in a voting trust or
subject any Common Stock to any arrangement or agreement with respect to the voting of such Common Stock or other agreement having similar effect (in each case except with the Class B Holders); 
  

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 take any other action to seek to affect the control of the management or Board of the Company or any of
its Affiliates, including publicly suggesting or announcing its willingness to engage in or have another Person engage in a transaction that could reasonably be expected to result in a transaction of the type described in Section 2.01(a)(i);
provided, however, that nothing in this Section 2.01(g) shall restrict the manner in which a Spielberg Party may vote its shares of Common Stock (if any); 
  
 enter into any discussions, negotiations, arrangements or understandings with any Person with respect to any of the
foregoing, or advise, assist, encourage or seek to persuade others to take any action with respect to any of the foregoing (in each case except with the Class B Holders); 
  
 disclose to any Person, or otherwise induce, encourage, discuss or facilitate, any intention, plan or arrangement
inconsistent with the foregoing or which would result in the Company or any of its Affiliates or any Class B Holder or any Affiliates of any Class B Holder being required to make any such disclosure in any filing with a governmental entity or being
required to make a public announcement with respect thereto; 
  
 bring any action or otherwise act to contest the validity of this Article II (including this Section 2.01) or seek a release from the restrictions contained in this Article II; or 
  
 request the Company or any of its Affiliates, directors, officers, employees,
representatives, advisors or agents, or any party hereto, directly or indirectly, to amend or waive this Article II, the Charter or the By-laws (or similar constituent documents) of the Company or any of its Affiliates. 
  
 Exceptions to Standstill. Notwithstanding Section 2.01, no Spielberg
Party shall be subject to any of the restrictions set forth therein if (a) the Company shall have entered into a definitive agreement providing for, or, in the case of clause (ii) below, the Board shall have recommended in favor of, (i) any direct
or indirect acquisition or purchase by any Person or Group of a majority of the Common Stock of the Company, (ii) any tender offer or exchange offer that if consummated would result in any Person or Group acquiring a majority of the Common Stock of
the Company or (iii) any merger, consolidation, share exchange or other business combination involving the Company which, if consummated, would result in the stockholders of the Company immediately prior to the consummation of such transaction
ceasing to own at least a majority of the equity interests in the surviving entity (or any direct or indirect parent of such surviving entity); (b) any Person or Group (other than the Company, any Class B Holder, any Spielberg Party or any Group
that includes a Spielberg Party) acquires 25% or more of the number of then outstanding shares of Common Stock or other voting securities of the Company having the right to vote generally in the election of Directors; (c) any Class B Holder,
Principal, Family Group member or any of their respective Affiliates commences (x) a “going private” transaction subject to Rule 13e-3 under Section 13(e) of the Exchange Act involving the Company or any of its material subsidiaries or (y)
a transaction of the type contemplated in clause (a) above; or (d) the KG Termination Date shall have occurred. 
  

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 Term 
  
 Term. This Agreement shall become effective on the Separation Date and shall continue in effect until the earliest of (i) the KG Termination Date,
(ii) the fifth anniversary hereof and (iii) such time, following the Final Allocation, as the Spielberg Parties shall cease to Beneficially Own in the aggregate at least 5% of the issued and outstanding Common Stock. 
  
 General Provisions 
  
 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’s fax machine if sent on a Business Day (or otherwise on the next Business
Day) or (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice: 
  
 if to the Company, to: 
  
 DreamWorks
Animation SKG, Inc. 
 Grandview Building 
 1000 Flower Street 
 Glendale, California 91201 
 Fax: (818) 659-6123 
 Attention: Katherine Kendrick, General Counsel 
  

with a copy to: 
  
 Cravath, Swaine & Moore LLP 
 Worldwide Plaza 
 825 Eighth Avenue 
 New York, NY 10019-7475 
 Fax: (212) 474-3700 
 Attention: Faiza J. Saeed 
  
 if to any Spielberg Party, to: 
  
 DW Lips, L.P. 
 c/o DreamWorks L.L.C. 
 100 Universal Plaza 
 Bungalow 477 
 Universal City, CA 91608 
 Fax: (818) 733-5222 
 Attention: Steven Spielberg 
  

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 (iii) if to any other party hereto, to the address of such party specified on the signature page hereto.

  
 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties
need not sign the same counterpart. 
  
 Entire Agreement; No
Third Party Beneficiaries. ii)This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. 
  
 This Agreement shall be binding upon and inure solely to the benefit of each
party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 
  
 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York without giving effect to applicable principles of conflict of laws, except to the extent the substantive laws of the State of Delaware are mandatorily applicable under Delaware law. 
  
 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

  
 Assignment; Amendments. iii)Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, in whole or in part (whether by operation of law or otherwise), without the prior written consent of the other parties, and any attempt to make any
such assignment without such consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by, the parties and their respective successors (including any executor
or administrator of a party’s estate) and permitted assigns. 
  
 No amendment to or waiver of this Agreement shall be effective unless it shall be in writing and signed by the Company and each of the parties hereto. 
  

Enforcement. iv)Each of the Company and each party hereto acknowledges that the other parties would not have an adequate remedy at law for money
damages in the event that any of the covenants or agreements of any of the other parties in this Agreement were not 
  

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 performed in accordance with its terms, and it is therefore agreed that each of the Company and each party hereto, in
addition to and without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such actual or potential breach and enforcing specifically
the terms and provisions hereof, and each of the Company and each party hereto hereby waives (i) any and all defenses they may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable
relief and (ii) the need to post any bond that may be required in connection with the granting of such an injunction or other equitable relief. 
  
 All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not
alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. 
  
 Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 
  
 Submission to Jurisdiction; Waivers. With respect to any suit, action or proceeding relating to this Agreement (collectively, a
“Proceeding”), each party to this Agreement irrevocably (a) consents and submits to the exclusive jurisdiction of the courts of the States of New York and the Court of Chancery of the State of Delaware and any court of the United
States located in the Borough of Manhattan in New York City; (b) waives any objection which such party may have at any time to the laying of venue of any Proceeding brought in any such court, waives any claim that such Proceeding has been brought in
an inconvenient forum and further waives the right to object, with respect to such Proceeding, that such court does not have jurisdiction over such party; (c) consents to the service of process at the address set forth for notices in Section 4.01
herein; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable law; and (d) waives, to the fullest extent permitted by applicable law, any and
all rights to trial by jury in connection with any Proceeding. 
  

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

							
	DREAMWORKS ANIMATION SKG, INC.,
				
	 	 	 	 	By	 	 /s/ Katherine Kendrick

	 	 	 	 	Name:	 	Katherine Kendrick
	 	 	 	 	Title:	 	Vice President
	
	DW LIPS, L.P.,
			
	 	 	By	 	 DW SUBS, INC.,
 General
Partner

				
	 	 	 	 	By	 	 /s/ Michael Rutman

	 	 	 	 	Name:	 	Michael Rutman
	 	 	 	 	Title:	 	Treasurer
	
	M&J K B LIMITED PARTNERSHIP,
			
	 	 	By	 	 M&J K DREAM CORP.,
 General
Partner

				
	 	 	 	 	By	 	 /s/ Jeffery Katzenberg

	 	 	 	 	Name:	 	Jeffrey Katzenberg
	 	 	 	 	Title:	 	President
	
	Address:
	
	DG-DW, L.P.,
			
	 	 	By	 	 DG-DW, INC.,
 General
Partner

				
	 	 	 	 	By	 	 /s/ Richard Sherman

	 	 	 	 	Name:	 	Richard Sherman
	 	 	 	 	Title:	 	Chief Financial Officer

					
	Address:
	
	DW INVESTMENT II, INC.,
			
	 	 	By	 	 /s/ W. Lance Conn

	 	 	Name:	 	W. Lance Conn
	 	 	Title:	 	Vice President
	
	Address:
	
	STEVEN SPIELBERG
			
	 	 	 	 	 /s/ Steven Spielberg

  

 10Agreement and Plan of Merger, dated  October 7, 2004

 Exhibit 10.26 
  
 AGREEMENT AND PLAN OF MERGER 
  

This Agreement and Plan of Merger (the “Agreement”) was made and entered into as of October 7, 2004, and amended and restated as of
October 22, 2004, between Pacific Data Images, Inc., a California corporation (“Target” and after the Effective Time of the Merger (as defined below) the “Surviving Corporation”), DreamWorks Animation SKG, Inc., a
Delaware corporation (the “Acquiror”), and DWA Acquisition Corp., a Delaware corporation (“Sub”). Target and Sub are hereinafter collectively referred to as the “Constituent Corporations.”

  
 The Constituent Corporations hereby agree as follows:

  
 1. The Merger. 
  
 (a) Merger of Sub With and Into Target. 
  
 (i) Agreement to Acquire Target. Subject to the terms of this
Agreement (the “Merger Agreement”), Target shall be acquired by Acquiror through a merger (the “Merger”) of Sub with and into Target. The closing of the Merger (the “Closing”) will take place at
10:00 a.m., New York time, on a date to be specified by the parties (the “Closing Date”) at the offices of Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, NY 10019. 
  
 (ii) Effective Time of the Merger. The Merger shall be
effective (the “Effective Time”) as prescribed by law. 
  
 (iii) Surviving Corporation. At the Effective Time of the Merger, Sub shall be merged with and into Target and the separate corporate existence of Sub shall thereupon cease. Target shall be the surviving corporation in the
Merger and the separate corporate existence of Target, with all its purposes, objects, rights, privileges, powers, immunities and franchises, shall continue unaffected and unimpaired by the Merger. 
  
 (b) Effect of the Merger; Additional Actions. 
  
 (i) Effects. The Merger shall have the effects set forth in
Section 1107 of the California General Corporation Law (the “CGCL”) and Section 259 of the Delaware General Corporation Law. 
  
 (ii) Additional Actions. If, at any time after the Effective Time of the Merger, Target shall consider or be advised that any deeds, bills
of sale, assignments, assurances or any other actions or things are necessary or desirable (i) to vest, perfect or confirm of record or otherwise in Target its right, title or interest in, to or under any of the rights, properties or assets of
either Constituent Corporation acquired or to be acquired by Target as a result of, or in connection with, the Merger or (ii) to otherwise carry out the purposes of this Agreement, each Constituent Corporation and its officers and directors shall be
deemed to have granted to Target an irrevocable power of attorney to execute and deliver all such deeds, bills of sale, assignments and assurances and to take and do all such other actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under such rights, properties or assets in Target and otherwise to carry out the purposes of this Agreement; and the officers and directors of Target are fully authorized in the name of
each Constituent Corporation or otherwise to take any and all such actions. 

 2. The Constituent Corporations. 
  
 (a) Organization of Target. 
  
 (i) Incorporation. Target was incorporated under the laws of the State of California on August 13, 1980.

  
 (ii) Authorized Stock. Target is authorized to
issue one class of shares designated Common Stock in the aggregate amount of 30,000,000 shares (“Target Common Stock”) . 
  
 (iii) Outstanding Stock. As of the date of this Agreement, 11,356,610 shares of Target Common Stock were outstanding. 
  
 (b) Organization of Sub. 
  
 (i) Incorporation. Sub was incorporated under the laws of the
State of Delaware on September 14, 2004. 
  
 (ii) Authorized
Stock. Sub is authorized to issue an aggregate of 1,000 shares of Common Stock (“Sub Stock”). 
  
 (iii) Outstanding Stock. On the date hereof, an aggregate of 1,000 shares of Sub Stock are outstanding. 
  
 (c) Target Shareholder Approval. The holders of a majority of
the outstanding shares of Target’s Common Stock are expected to approve and adopt this Agreement without a meeting by written consent in accordance with the provisions of Section 603 of the CGCL. 
  

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 3. Amended Articles of Incorporation; By-Laws and Directors and Officers of Target.

  
 (a) Amendment of Target’s Articles of
Incorporation. 
  
 (i) Authorized Stock at
Merger. At the Effective Time of the Merger, Article V of the Articles of Incorporation of Target shall be amended in its entirety to read as set forth on Exhibit A attached hereto. 
  
 (ii) Articles of Incorporation of Surviving Corporation. The
Articles of Incorporation of Target in effect at the Effective Time of the Merger, as amended as provided in clause (a)(i) above, shall be the Articles of Incorporation of the Surviving Corporation unless and until amended as provided by applicable
law. 
  
 (b) Bylaws. The Bylaws of Target, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation until thereafter amended as provided by California law and such Bylaws. 
  
 (c) Officers and Directors of Surviving Corporation. The directors of Sub in effect immediately prior to the
Effective Time of the Merger shall be the directors of the Surviving Corporation, and the officers of Target immediately prior to the Effective Time of the Merger shall be the officers of the Surviving Corporation, in each case until the earlier of
their resignation or removal or until their respective successors shall have been duly elected and qualified. 
  
 4. Effect of the Merger on the Capital Stock of the Constituent Corporations; Exchange of Certificates. 
  
 (a) Effect on Capital Stock. As of the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the holder of any shares of Target Common Stock: 
  
 (i) Capital Stock of Sub. Each issued and outstanding share of capital stock of Sub shall be converted into and become one fully paid and
non-assessable share of Target Common Stock. Each stock certificate of Sub evidencing ownership of any such shares shall continue to evidence ownership of such shares of capital stock of the Surviving Corporation. 
  
 (ii) Cancellation of Treasury Stock. All shares of Target
Common Stock that are owned by Target (as treasury stock), Acquiror or Sub shall be canceled and retired and shall cease to exist and no consideration shall be delivered in exchange therefor. 
  
 (iii) Conversion of Target Common Stock. The issued and
outstanding shares of Target capital stock (other than shares to be canceled pursuant to Section 4(a)(ii) hereof and shares, if any, held by persons exercising dissenters’ rights in accordance with Section 1300 of the CGCL) held by a holder of
record of Target capital stock immediately prior to the Effective Time shall be converted, without any action on the part of such holder, into the right to receive a number of whole shares of Class A common stock of Acquiror, $.01 par value
(“Acquiror Common Stock”), determined by multiplying the number of shares of Target capital 
  

 -3- 

 stock held by such holder of Target capital stock by a fraction (the “Exchange Ratio”), the numerator of
which is $6.50, and the denominator of which is the initial public offering price per share of Class A common stock of the Acquiror in connection with its initial public offering (the “Merger Consideration”) and rounding the product
up for any fraction equal to or greater than one half, and rounding the product down for any fraction that is less than one half. The initial public offering price per share of Class A common stock of the Acquiror shall be determined by reference to
the per share amount appearing under the column “Price to Public” on the cover page of the Acquiror’s prospectus, dated October 28, 2004, regarding the offering of 29,000,000 shares of Class A common stock of the Acquiror, without any
deduction for underwriting discounts and commissions. 
  
 (iv)
Conversion of Target Options. As of the Effective Time, each outstanding option to purchase shares of Target Common Stock granted pursuant to the PDI Inc. 1996 Equity Incentive Plan and the PDI Inc. 1998 Stock Plan (the “Target
Stock Option Plans”), whether vested or unvested (a “Target Option”), will be converted into an option to purchase shares of Acquiror Common Stock (each, an “Acquiror Option”). In addition, the Target Stock
Option Plans shall be terminated by resolution of the Target’s board of directors. Except as provided below, each such Target Option converted by Acquiror under this Agreement shall retain its respective vesting schedule as set forth under the
applicable Target Stock Option Plan; however, the converted Target Options will be governed by the 2004 Omnibus Incentive Compensation Plan as of the Effective Time. The 2004 Omnibus Incentive Compensation Plan shall provide for terms and conditions
such that the converted Target Options shall continue to be subject to the same terms and conditions that are comparable to those set forth in the applicable Target Stock Option Plan, except that (i) each such option will be exercisable for that
number of whole shares of Acquiror Common Stock obtained by multiplying the number of shares of Target Common Stock that would be issuable upon exercise of such option immediately prior to the Effective Time, assuming that all vesting conditions
applicable to such option were then satisfied, by the Exchange Ratio and rounded down to the nearest whole number of shares of Acquiror Common Stock, and (ii) the per share exercise price for the shares of Acquiror Common Stock issuable upon
exercise of such converted Target Option will be equal to the quotient determined by dividing the exercise price per share of Target Common Stock at which such option was exercisable immediately prior to the Effective Time by the Exchange Ratio,
rounded up to the nearest cent. Consistent with the terms of the Target Stock Option Plans and the documents governing the outstanding Target Options under such plans, the Merger will not terminate any of the outstanding Target Options under the
Target Stock Option Plans or accelerate the exercisability or vesting of such options or the shares of Target Common Stock which will be subject to those options upon the conversion of the Target Options in connection with the Merger. It is the
intention of the parties that the Target Options converted to Acquiror Options qualify, to the maximum extent permissible, following the Effective Time, as incentive stock options, as defined in Section 422 of the Code, to the extent, and only to
the extent, the Target Options so converted qualified as incentive stock options prior to the Effective Time. 
  
 (iv) Dissenters’ Rights. If any holder of Target Common Stock (a “Dissenting Holder”) duly demands purchase of his,
her or its shares of Target Common Stock in connection with the Merger under Chapter 13 of the CGCL (such shares being “Dissenting 
  

 -4- 

 Shares”), the Dissenting Shares shall not be converted into Merger Consideration but shall be converted into
the right to receive an amount in cash equal to the fair market value of such shares as may be determined to be due with respect to such Dissenting Shares pursuant to the law of the State of California. After the Effective Time of the Merger,
Acquiror shall issue and deliver to any holder of shares of Target Common Stock who shall have withdrawn his, her or its demand for purchase or have failed to perfect or shall have otherwise lost his, her or its right of purchase, in any case
pursuant to the CGCL, upon surrender by such Dissenting Shareholder of his, her or its, certificate or certificates representing shares of Target Common Stock, the Merger Consideration to which such Dissenting Shareholder is then entitled under
Section 4(a)(iii) of this Agreement. 
  
 (b) Exchange of
Certificates. 
  
 (i) Exchange Agent. Prior
to the Closing Date, Acquiror shall appoint The Bank of New York to act as Exchange Agent (the “Exchange Agent”) in the Merger. 
  
 (ii) Exchange Procedures. At the Effective Time, the Exchange Agent shall mail to each holder of record of a certificate (i) a form of
letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the certificates held by such person shall pass, only upon proper delivery of the certificates to the Exchange Agent and shall be in a form and
have such other provisions as Acquiror may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the applicable Merger Consideration. Upon surrender of a certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly completed and validly executed, and such other documents as may reasonably be required by the Exchange Agent, the holder of such certificate shall be entitled to receive in exchange
therefor the Merger Consideration with respect to such shares, without interest and the certificate so surrendered shall forthwith be canceled. 
  
 (iii) No Further Ownership Rights in Target Common Stock. All Merger Consideration delivered upon the surrender of certificates that
represented shares of Target Common Stock in accordance with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to such shares of Target Common Stock theretofore represented by such certificates. At the
close of business on the day on which the Effective Time occurs the stock transfer books of Target shall be closed, and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of
Target capital stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, certificates are presented to the Surviving Corporation or the Exchange Agent for transfer or any other reason, they shall be canceled
and exchanged as provided in this Section 4. 
  
 5. TERMINATION

  
 (a) Termination by Mutual Agreement.
Notwithstanding the approval of this Agreement by the shareholders of Target, this Agreement may be terminated at any time prior to the Effective Time of the Merger by mutual written consent of the Constituent Corporations. 
  

 -5- 

 (b) Effects of Termination. In the event of the termination of this Agreement, this
Agreement shall become void and there shall be no liability on the part of either Target or Sub or their respective officers or directors. 
  
 6. GENERAL PROVISIONS. 
  
 (a) Amendment. This Agreement may be amended by the boards of directors of the Constituent Corporations and the Acquiror hereto any time
prior to the effective time of the Merger; however, after approval hereof by the shareholders of the Constituent Corporations, no amendment shall be made which by law requires the further approval of such shareholders without obtaining such further
approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. 
  
 (b) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument. 
  
 (c) Governing
Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of New York, without giving effect
to its principles governing conflicts of laws, except to the extent the laws of California or Delaware are mandatorily applicable to the Merger. 
  
 (d) Entire Agreement. This Agreement constitutes the entire agreement among such parties pertaining to the subject matter hereof and
thereof, and the agreements contemplated hereby and all negotiations and drafts of the parties with regard to the transactions contemplated herein, and any and all written or oral agreements existing between the parties hereto regarding such
transactions are expressly canceled. 
  

 -6- 

 The parties have duly executed this Agreement as of the date first written above. 
  

			
	 TARGET:

	
	 PACIFIC DATA IMAGES, INC.,

		
	 by
	 	 /s/ Jeffrey Katzenberg

	 Name:
	 	Jeffrey Katzenberg
	 Title:
	 	President

  

			
	 by
	 	 /s/ Ann Daly

	 Name:
	 	Ann Daly
	 Title:
	 	Vice President and Assistant Secretary
	
	 SUB:

	
	 DWA ACQUISITION CORP.,

		
	 by
	 	 /s/ Ann Daly

	 Name:
	 	Ann Daly
	 Title:
	 	President
		
	 by
	 	 /s/ Katherine Kendrick

	 Name:
	 	Katherine Kendrick
	 Title:
	 	Secretary
	
	 ACQUIROR:

	
	 DREAMWORKS ANIMATION SKG, INC.,

		
	 by
	 	 /s/ Katherine Kendrick

	 Name:
	 	Katherine Kendrick
	 Title:
	 	General Counsel and Secretary
		
	 by
	 	 /s/ Kristina Leslie

	 Name:
	 	Kristina Leslie
	 Title:
	 	Chief Financial Officer and Vice President

 EXHIBIT A 
  

Amendment to Pacific Data Images, Inc.’s Articles of Incorporation: 
  
 Article V 
  
 The Corporation is authorized to issue one class of shares designated “Common Stock.” The total number of shares of Common Stock that the
Corporation is authorized to issue is one thousand, par value $0.01 per share. 
  

 -8-

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