Exhibit 10.1
[DWA LOGO]
November 11, 2005
DreamWorks L.L.C.
1000 Flower Street
Glendale, CA 91201
Attention: General Counsel / Chief
Financial Officer
|
Re:
|
Letter of
Amendment and Clarification
|
Ladies and Gentlemen:
We refer to the Distribution
Agreement, dated as of October 7, 2004 (the “
Distribution Agreement ”) between DreamWorks Animation
SKG, Inc. (“ DWA ”) and DreamWorks L.L.C.
(“ Distributor ”). This letter is to amend and
clarify certain provisions of the Distribution Agreement as, and to
the sole extent, set forth below to more precisely reflect
DWA’s and Distributor’s mutual understanding of the
applicability of such provisions as evidenced by DWA’s and
Distributor’s business practices since the effective date of
the Distribution Agreement and by that certain memorandum, dated
July 14, 2004, from Dea Benson entitled “DreamWorks
Animation: Financial Accounting for Revenue and Costs Pursuant to
the Distribution Agreement between DreamWorks LLC and DreamWorks
Animation, Inc.” Capitalized terms in this letter not
otherwise defined shall have the meaning ascribed thereto in the
Distribution Agreement.
1. Clarification of
“Reported and Paid to DWA” . DWA and Distributor
acknowledge and agree that the central principle of the
Distribution Agreement is that Distributor, and not DWA, is
responsible for the payments of Distribution Expenses, that the
Distributor is only entitled to recoup Distribution Expenses so
paid out of available Gross Receipts and that DWA has no
responsibility to reimburse Distributor for unrecouped Distribution
Expenses, other than Additional Distribution Expenses. In
recognition thereof, DWA and Distributor hereby agree that
Section 8.1 of the Distribution Agreement shall be amended by
inserting the following sentence at the end of
Section 8.1(j)(ii) as it presently appears:
For the avoidance of doubt, the
parties acknowledge and agree that the words “reported and
paid to DWA” are intended to clarify that to the extent
Distribution Expenses were deducted from Gross Receipts by
Distributor, then the amount of any overstatement of such Gross
Receipts that Distributor shall be entitled to recoup pursuant to
this Section 8.1(j)(ii) shall be commensurately
reduced.
2. Amendment to Sections
8.1(j)(ii) and 8.6(d) . In addition, DWA and Distributor
acknowledge and agree that Sections 8.1(j)(ii) and 8.6(d) of the
Distribution Agreement must be read in connection with both
Section 8.4 thereof, which provides that except for an End of
Term Reserve, Distributor is not entitled to establish a cash
reserve of any kind in connection with Gross Receipts, Distribution
Fees, Distribution Expenses, Residuals and Contingent Compensation
or for any other reason and Section 8.6(b) thereof, which
provides that Distributor shall furnish to DWA, on a monthly basis,
revenue reports sufficiently detailed to enable DWA to record
Picture revenue on an accrual basis in accordance with GAAP.
Further, nothing in Section 8.1(j)(ii) or Section 8.6(d)
should be construed to amend or modify the central principle of the
Distribution Agreement that Distributor, and not DWA, is
responsible for the payment of all Distribution Expenses, that
Distributor shall only recoup Distribution Expenses so paid out of
Gross Receipts and that DWA has no responsibility to reimburse
Distributor for unrecouped Distribution Expenses, other than
Additional Distribution Expenses.
1
In recognition of the foregoing, DWA
and Distributor hereby agree that (i) the last sentence of
Section 8.1(j)(ii) of the Distribution Agreement as it
presently appears shall be amended by inserting the following
parenthetical at the end thereof:
(it being understood that DWA shall
not be obligated to repay cash amounts to Distributor, nor shall
Distributor be entitled to deduct from cash amounts otherwise due
and payable to DWA hereunder, to the extent that any such repayment
or deduction would result in the cumulative cash amounts received
by DWA with respect to a Licensed Picture under this Agreement, as
of the applicable measurement date, being less than the cumulative
revenue reported by Distributor to DWA on an accrual basis in
accordance with GAAP pursuant to Section 8.6(b) hereof with
respect to such Licensed Picture as of such date). Any overstated
amounts not repaid or recouped in one period shall be carried
forward to the next accounting period.
and (ii) the last sentence of
Section 8.6(d) of the Distribution Agreement as it presently
appears shall be amended by inserting the following at the end
thereof:
; provided , however ,
that DWA shall not be obligated to pay all or a portion of any
Final Payment Amount to Distributor to the extent that any such
payment would result in the cumulative cash amounts received by DWA
with respect to a Licensed Picture under this Agreement as of the
applicable measurement date, being less than the cumulative revenue
reported by Distributor to DWA on an accrual basis in accordance
with GAAP pursuant to Section 8.6(b) hereof with respect to
such Licensed Picture as of such date.
3. Amendment to
Section 8.6(b) . Distributor and DWA acknowledge and agree
that, in connection with the foregoing amendments and
clarifications to the Distribution Agreement, Section 8.6 of
the Distribution Agreement shall also be amended by adding the
following to the end of Section 8.6(b) as it presently
appears:
In preparing the reports required to
be furnished to DWA under this Section&nb
