AMENDMENT NO. 2
TO
EXHIBIT B TO THE MASTER AGREEMENT
DreamWorks L.L.C. ("DW") and Universal Studios, Inc. ("Universal") have
entered into a Master Agreement dated as of June 14, 1995, which was amended and
restated in its entirety as of June 20, 2001 (the "Master Agreement") and, in
connection with the amendment and restatement of the Master Agreement, entered
into an amendment to Exhibit B to the Master Agreement (Exhibit B as amended,
the "Home Video Agreement"). DW and Universal have agreed, effective as of
January 15, 2002 (the "Amendment Effective Date") to enter into this amendment
number 2 ("Amendment No. 2") to the Home Video Agreement as more fully set forth
below.
1. General.
a. Capitalized terms used in this Amendment No. 2 but not otherwise
defined herein shall have the meaning assigned thereto in the Home
Video Agreement.
b. The parties hereto have or may discuss other matters which may or
may not result in further amendments to the Home Video Agreement.
The fact that such matters are not addressed in this Amendment No. 2
shall not be used to impute to any party any position on any matter,
or to imply that any agreement has been reached on such matter.
Other than as expressly amended in this Amendment No. 2, the Home
Video Agreement remains in full force and effect as of the Amendment
Effective Date.
2. Clarification of Exhibit FS.
Subparagraph 1.ii of Exhibit FS is hereby clarified, with the
parties agreeing that it does not require FSP to provide compression
and authoring services to DW.
3. Amendment to Schedule B-TC
a. Paragraph 7.a. of Schedule B-TC is amended and restated to read, in
its entirety, as follows:
All Domestic Territory and Foreign Territory video expenses
and receipts shall be made as follows:
1. All Domestic Territory and Foreign Territory video
payments shall be made to DW based on *** rather than
***. Receipts for DW Videograms shall be deemed paid to
Universal, and therefore payable to DW (net of
applicable Service Fees) as follows: *** on the last day
of the second fiscal month commencing after the fiscal
month in which the effective invoice date occurs
("effective invoice date" means the actual invoice date
after shipment date, except for initial shipments,
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the Commission. Confidential treatment has been requested with respect to the
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for which the effective invoice date shall be street
date) and the remaining *** on the last day of the third
fiscal month commencing after such effective invoice
date. (As an example, if units are shipped in January
and invoiced in February prior to the February invoice
cutoff date, *** net of Service Fees would be due on the
last day of April and the remaining *** net of Service
Fees on the last day of May, subject to the next
sentence.) Each of the payment due dates set forth in
the preceding sentence shall be extended by any
DreamWorks-approved additional terms or dating. Deemed
Receipts shall be defined as gross shipments, less
actual returns, sales allowances, and discounts, and
substantially aged receivables (provided that Universal
shall promptly notify DW of the same and the parties
shall negotiate in good faith the appropriate accounting
and settlement of the same). Universal shall not
establish return reserves at any time.
2. Service Expenses shall be settled monthly on a "Deemed
Payment" basis. 100% of all Service Expenses incurred in
a month shall be due and payable on the last day of the
next succeeding month. (As an example, if a Service
Expense is incurred in January, it will be invoiced and
paid on the last day of February.)
3. The parties agree that the intent of this paragraph 7.a.
is to create an interest neutral position for both
parties. If there are changes in circumstances which
substantially affect the period of time between the time
Universal actually pays an expense and the time it is
reimbursed, or the period of time between the time
Universal invoices and collects receipts, the parties
shall discuss and revise this paragraph 7.a. in good
faith, provided that the intent hereof shall be
consistent with the first sentence of this paragraph 3,
but that nothing herein shall require Universal to adopt
cutoffs or reporting periods for DW which vary from
Universal's standard cutoffs or reporting periods.
Without limitation of the foregoing, the Deemed Receipts
formulation set forth in paragraph a.1 above shall not
apply to any account where the payor is in bankruptcy,
or has expressly indicated it will not pay such account,
or where such account is more than *** days past due and
Universal has ceased to ship product based on such
delinquency: in any such event, amounts receivable from
such payor which are not identified by specific invoices
shall be credited and paid (in an equitable manner based
on amounts due and payable to both DW and Universal) if
and when received by Universal from the payor.
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Neither party may take "self help" measures inconsistent
with the terms of this paragraph 7.a.
4. To the extent that Universal is requested to do so by
DW, it shall institute or defend litigation, claims or
proceedings on behalf of DW with respect to any amounts
due to DW for DW Videograms, at DW's cost and expense.
b. A new paragraph 8 is added to Schedule B-TC (prior to the last,
unnumbered paragraph thereof) which reads in full as follows:
8. Research Reports
The parties agree to the following modifications with respect to the
cost and sharing of research studies:
a. Except as further set forth in this paragraph 8, non-title
specific domestic market research studies related to home video
distribution, if commissioned or performed by Universal shall be
paid for by Universal and shared with DW. Domestic research which is
targeted on the DW family entertainment business shall be
commissioned by and paid for by DW (which shall control both the
scope of such research and the cost therefor) and shared with
Universal, provided that if and when the domestic family
entertainment business becomes a Universal core business (i.e. more
than *** of Universal's own aggregate domestic home video revenue is
generated by Universal "G" and/or ""PG" rated releases in each of
two consecutive years), Universal shall include DW titles in any of
such family entertainment business home video market research
Universal commissions and share such research reports with DW.
Domestic research which is related to new developments in the market
or technology (e.g., new formats) shall be paid for *** by
DreamWorks and Universal and both parties shall be provided the
research provided both the scope of the research and the cost
therefor is preapproved by both parties.
b. Except as further set forth in this paragraph, non-title
specific international market research studies related to home video
distribution, if commissioned or performed by Universal shall be
paid for by Universal and shared with DW. International research
which is targeted on the DW family entertainment business shall be
commissioned by and paid for by DW (which shall control both the
scope of such research and the cost therefore) and shared with
Universal, provided that if and when the international family
entertainment business becomes a Universal core business (i.e. more
than *** of Universal's own aggregate international home video
revenue is generated by Universal "G" and/or ""PG" rated releases
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in each of two consecutive years), Universal shall include DW titles
in any of such family entertainment business home video market
research Universal commissions and share such research reports with
DW. International research which is related to new developments in
the market or technology (e.g., new formats) shall be paid for ***
by DreamWorks and Universal and both parties shall be provided the
research provided both the scope of the research and the cost
therefor is preapproved by both parties.
4. Agreement Re Alleged Interest. The parties disagree on whether the manner
in which expenses and receipts have been deducted and paid has been "cash
neutral" to both parties, and on whether certain errors in monthly
international financial reports delivered by Universal to DW after June 30
and on or before December 31, 2001 underreported receipts and resulted in
a loss of use of funds by DW and/or Universal. In consideration of the
agreements made herein, DW agrees to accept an amount equal to *** from
Universal as the total payment due from Universal (whether as interest,
penalty or otherwise) on the ground that it was paid amounts due it later
than it should have been due to such international financial reporting
errors or because expenses were deducted early or receipts were not timely
paid for the period June 30, 2001 through December 31, 2001. Universal
agrees not to seek any payment from DW (whether as interest, penalty or
otherwise) on the basis that it paid amounts to DW earlier than it was
required to during the period from June 30, 2001 through December 31,
2001. Nothing herein shall be deemed to waive (i) any DW claim that it has
not received receipts to which it is entitled, or any claim that expenses
deducted are not appropriate expenses, or (ii) any Universal claim that it
has paid DW receipts Universal was not required to pay DW, or that
Universal has not deducted expenses it is entitled to deduct.
5. Conflicting Provisions. In the event of a conflict between anything
contained in this Amendment No. 2 and any provisions contained elsewhere
in the Home Video Agreement, this Amendment No. 2 shall control.
6. Integration. This Amendment No. 2 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.
7. Counterparts. This Amendment No. 2 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.
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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.
IN WITNESS WHEREOF, the Parties have caused this Amendment No. 2 to the
Home Video Agreement to be duly executed as of the date first written above.
DREAMWORKS L.L.C.
By: _____________________________
Its: ____________________________
UNIVERSAL STUDIOS, INC.
By: _____________________________
Its: ____________________________
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