Exhibit 1.1
DREAMWORKS ANIMATION SKG, INC.
CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE
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UNDERWRITING AGREEMENT
October __, 2004
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.,
▇.▇. ▇▇▇▇▇▇ Securities Inc.
As representatives of the several Underwriters
named in Schedule I hereto (the "Representatives"),
c/o Goldman, ▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and
c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
DreamWorks Animation SKG, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of 25,000,000 shares of Class A Common Stock, par value $0.01 per share
("Stock") of the Company; and the stockholders of the Company named in Schedule
II hereto (the "Selling Stockholders") propose, subject to the terms and
conditions stated herein, to sell to the Underwriters an aggregate of 4,000,000
shares and, at the election of the Underwriters, up to 4,350,000 additional
shares of Stock. The aggregate of 29,000,000 shares to be sold by the Company
and the Selling Stockholders is herein called the "Firm Shares" and the
aggregate of 4,350,000 additional shares to be sold by the Selling Stockholders
is herein called the "Optional Shares". The Firm Shares and the Optional Shares
that the Underwriters elect to purchase pursuant to Section 2 hereof are herein
collectively called the "Shares".
1. (a) The Company and DreamWorks L.L.C., a Delaware limited liability
company ("DreamWorks L.L.C."), jointly and severally represent and warrant to,
and agree with, each of the Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-117528) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment thereto,
each in the form, excluding exhibits thereto,
heretofore delivered to you for each of the other Underwriters have been
declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b) under
the Securities Act of 1933, as amended (the "Act"), which became effective
upon filing, no other document with respect to the Initial Registration
Statement has heretofore been filed with the Commission; and no stop order
suspending the effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that purpose has
been initiated or threatened by the Commission (any preliminary prospectus
included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act is hereinafter called a "Preliminary Prospectus";
the various parts of the Initial Registration Statement and the Rule
462(b) Registration Statement, if any, including all exhibits thereto and
including the information contained in the form of final prospectus filed
with the Commission pursuant to Rule 424(b) under the Act in accordance
with Section 6(a) hereof and deemed by virtue of Rule 430A under the Act
to be part of the Initial Registration Statement at the time it was
declared effective, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statement"; and such
final prospectus, in the form first filed pursuant to Rule 424(b) under
the Act, is hereinafter called the "Prospectus");
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
the Representatives expressly for use therein or by a Selling Stockholder
expressly for use in the preparation of the answers therein to Items 7 and
11(m) of Form S-1 with respect to such Selling Stockholder;
(iii) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the
Company by an Underwriter through the Representatives expressly for use
therein or by a Selling Stockholder expressly for use in the preparation
of the answers therein to Items 7 and 11(m) of Form S-1 with respect to
such Selling Stockholder;
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(iv) Since the date of the most recent audited financial statements
of DreamWorks Animation (a division of DreamWorks L.L.C. and its
consolidated subsidiaries, which collectively conduct the animation
business of DreamWorks L.L.C. and its subsidiaries as described in the
Prospectus ("Animation"), to be owned and operated by the Company after
giving effect to the consummation of the transactions (the "Separation")
contemplated by the Separation Agreement, dated as of ______, 2004, among
DreamWorks L.L.C., DreamWorks Animation L.L.C. ("DWA") and the Company
(the "Separation Agreement")), included in the Prospectus, Animation has
not sustained any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus; and, since the respective dates as of which information is
given in the Registration Statement and the Prospectus and other than as
set forth in the Prospectus, there has not been any change in the owner's
equity or long-term debt of Animation or any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position, owner's
equity or results of operations of Animation; and the Company has not
engaged in any business or incurred any liability or issued any capital
stock, otherwise than as set forth or contemplated in the Prospectus;
(v) After giving effect to the consummation of the transactions
contemplated by the Separation Agreement, the Company and each of its
subsidiaries will have good and marketable title in fee simple to all real
property and good and marketable title to all personal property described
as being owned by them in the Prospectus, in each case free and clear of
all liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such property
and do not materially interfere with the use proposed to be made of such
property by the Company and its subsidiaries; and any real property and
buildings to be held under lease by the Company or its subsidiaries are
held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not materially interfere with the
use proposed to be made of such property and buildings by the Company and
its subsidiaries;
(vi) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it
owns or leases properties or conducts any business so as to require such
qualification, except to the extent that the failure to be so qualified or
in good standing could not reasonably be expected to result in a material
adverse change in, or affect on, the business, operations, properties or
condition (financial or otherwise) of the Company (a "Company Material
Adverse Effect");
(vii) DWA has been duly organized and is validly existing as a
limited liability company in good standing under the laws of the State of
Delaware, with power and authority to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign company for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such qualification,
except to the extent that the failure to be so qualified or in good
standing could not reasonably be
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expected to result in a material adverse change in, or affect on, the
business, operations, properties or condition (financial or otherwise) of
Animation (an "Animation Material Adverse Effect", and together with a
Company Material Adverse Effect, a "Material Adverse Effect"); and each
subsidiary of DWA has been duly organized and is validly existing and in
good standing under the laws of its jurisdiction of organization and has
been duly qualified as a foreign company for the transaction of business
and is in good standing under the laws of each other jurisdiction in which
it owns or leases properties or conducts any business so as to require
such qualification, except to the extent that the failure to be so
qualified or in good standing could not reasonably be expected to result
in a Material Adverse Effect;
(viii) Pacific Data Images, Inc. ("PDI") has been duly incorporated
and is validly existing as a corporation in good standing under the laws
of the State of California, with power and authority (corporate and other)
to own its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, except to the extent that
the failure to be so qualified or in good standing could not reasonably be
expected to result in a Material Adverse Effect; and each subsidiary of
PDI has been duly organized and is validly existing and in good standing
under the laws of its jurisdiction of organization and has been duly
qualified as a foreign company for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such
qualification, except to the extent that the failure to be so qualified or
in good standing could not reasonably be expected to result in a Material
Adverse Effect;
(ix) After giving effect to the Separation, the Company will have an
authorized capitalization as set forth in the Prospectus, and all of the
issued shares of capital stock of the Company will be duly and validly
authorized and issued, fully paid and non-assessable and conform to the
description of the Stock contained in the Prospectus; and, after giving
effect to the Separation, all of the membership interests and issued
shares of capital stock of each subsidiary of the Company, as the case may
be, will be duly and validly authorized and issued, fully paid and
non-assessable and (except for directors' qualifying shares and except as
set forth in the Prospectus) will be owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims;
provided that any claims by PDI shareholders with respect to dissenters'
rights shall not be considered a lien, encumbrance, equity or claim for
purposes of this paragraph;
(x) Each of the Company and DreamWorks L.L.C. has the power and
authority to execute and deliver this Agreement, the Separation Agreement,
the Distribution Agreement, dated as of October 7, 2004, between the
Company and DreamWorks L.L.C. (the "Distribution Agreement"), the Services
Agreement, dated as of October 7, 2004, between the Company and DreamWorks
L.L.C. (the "Services Agreement") and the Formation Agreement, dated as of
______, 2004, among the Company, DreamWorks L.L.C., DWA Escrow LLLP, a
Delaware limited liability limited partnership ("DWA Escrow") and the
other parties thereto (the "Formation Agreement", and together with the
Separation Agreement, the Distribution Agreement and the Services
Agreement, the "Transaction Agreements") and to perform its obligations
hereunder and thereunder; and all corporate action required to be taken
for the due and proper authorization, execution and delivery of this
Agreement and each of
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the Transaction Agreements and the consummation of the transactions
contemplated hereby and thereby have been duly and validly taken by each
of the Company and DreamWorks L.L.C.;
(xi) This Agreement and the Transaction Agreements have been or in
the case of the Formation Agreement, will be duly authorized, executed and
delivered by each of the Company and DreamWorks L.L.C. and constitute
valid and legally binding agreements of each of the Company and DreamWorks
L.L.C.;
(xii) The unissued Shares to be issued and sold by the Company to
the Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued and fully paid and non-assessable and will conform
to the description of the Stock contained in the Prospectus;
(xiii) The issue and sale of the Shares to be sold by the Company
and the compliance by the Company and DreamWorks L.L.C. with all of the
provisions of this Agreement and the Transaction Agreements and the
consummation of the transactions herein and therein contemplated will not
(x) except as could not reasonably be expected to have a Material Adverse
Effect, conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument
to which the Company, DreamWorks L.L.C. or any of their respective
subsidiaries is a party or by which the Company, DreamWorks L.L.C. or any
of their respective subsidiaries is bound or to which any of the property
or assets of Animation or the Company or any of its subsidiaries is
subject, nor will such action result in the creation of a lien on any of
the property or assets of Animation or the Company or any of its
subsidiaries, except as described in the Prospectus; (y) result in any
violation of the provisions of the Restated Certificate of Incorporation
or By-laws of the Company, the Seventh Amended and Restated Limited
Liability Company Agreement of DreamWorks L.L.C., as amended; or (z)
except as could not reasonably be expected to have a Material Adverse
Effect, result in any violation of any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Company, DreamWorks L.L.C. or any of their respective
subsidiaries or any of their properties;
(xiv) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Shares or the consummation by the
Company and DreamWorks L.L.C. of the Separation, except the registration
under the Act of the Shares and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the
Shares by the Underwriters and except, in the case of the Separation, as
could not reasonably be expected to have a Material Adverse Effect;
(xv) None of the Company, DWA or PDI or any other subsidiaries is
(A) in violation of its Certificate of Incorporation or By-laws or Limited
Liability Company Agreement, as applicable; (B) in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party
or by which it or any of its properties may be bound (except as could not
reasonably be expected to have a Material Adverse Effect) or (C) any
statute, law, rule,
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regulation, judgment, order or decree applicable to Animation or the
Company of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over Animation,
the Company or such subsidiary or any of its properties, as applicable
(except as could not reasonably be expected to have a Material Adverse
Effect);
(xvi) The combined historical financial statements of Animation
included in the Prospectus and the Registration Statement present fairly,
in all material respects, the combined financial position of Animation, at
the dates indicated and the combined results of its operations and its
cash flows for the periods indicated in conformity with United States
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein); the
selected historical financial data set forth under the captions
"Prospectus Summary - Summary Historical and Pro Forma Financial Data,"
"Pro Forma Financial Information" and "Selected Financial Data" (in each
case, other than the pro forma information therein) present fairly, in all
material respects, the information included therein; management's
assumptions provide a reasonable basis for presenting the significant
effects directly attributable to the transactions described under the
caption "Unaudited Pro Forma Financial Information" and the related pro
forma adjustments set forth in the pro forma financial statements included
in the Prospectus give appropriate effect to those assumptions, and the
pro forma columns included under the caption "Unaudited Pro Forma
Financial Information" and under the caption "Prospectus Summary - Summary
Historical and Pro Forma Financial Data" reflect the proper application of
those adjustments to the historical financial statement amounts; the pro
forma financial statements included in the Prospectus comply as to form
with the applicable accounting requirements of Regulation S-X under the
Act, except as otherwise noted in the letter delivered on the date hereof
pursuant to Section 8(f) below;
(xvii) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Stock, and under the captions "Related Party
Agreements", "Material United States Tax Consequences for Non-United
States Stockholders" and "Underwriting", insofar as they purport to
describe the provisions of the laws and documents referred to therein, are
accurate, complete and fair;
(xviii) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company is a party
or of which any property of the Company is the subject which, if
determined adversely to the Company, could reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect; and, to
the best of DreamWorks L.L.C.'s knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others;
(xix) The Company has obtained and delivered to the Underwriters
executed copies of a lock-up agreement (each, a "Lock-Up Agreement" and
collectively, the "Lock-Up Agreements") from each party listed on Schedule
III hereto in form and substance reasonably satisfactory to you;
(xx) The Company is not and, after giving effect to the Separation,
the offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company", as such term is defined in the Investment Company Act of 1940,
as amended (the "Investment Company Act");
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(xxi) Neither Animation nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;
(xxii) Ernst & Young LLP, who have certified certain financial
statements of Animation, are registered independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder. Except as described in the Prospectus, since _______, 2003,
Ernst & Young LLP has not engaged in any "prohibited activities" (as
defined in Section 10A of the Exchange Act) on behalf of Animation or the
Company;
(xxiii) DreamWorks L.L.C. has filed, or has caused to be filed, all
non-U.S., U.S. federal, state and local tax returns related to Animation
that are required to be filed or has requested extensions thereof (except
as disclosed in the Prospectus) and has paid all taxes required to be paid
by it and any other assessment, fine or penalty levied against it, to the
extent that any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good
faith, except as disclosed in the Prospectus and except as could not
reasonably be expected to have an Animation Material Adverse Effect;
(xxiv) No labor disturbance by the employees of Animation exists or,
to the knowledge of DreamWorks L.L.C., is imminent, which could reasonably
be expected to have a Material Adverse Effect;
(xxv) Animation carries, or is covered by, insurance in such amounts
and covering such risks as is adequate in accordance with its reasonable
business judgment for the conduct of its business and the value of its
respective properties and as is customary for companies engaged in similar
businesses in similar industries;
(xxvi) There are no material off-balance sheet arrangements (as
defined in Regulation S-K Item 303(a)(4)(ii)) that could be reasonably be
expected to have a Material Adverse Effect;
(xxvii) Animation and the Company and its subsidiaries possess all
licenses, certificates, permits and other authorizations issued by the
appropriate U.S. federal, state or non-U.S. regulatory authorities
necessary to conduct their respective businesses, and none of Animation,
the Company or any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit, except as disclosed in the
Prospectus, and except, in each case, as could not reasonably be expected
to have a Material Adverse Effect;
(xxviii) Animation is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which Animation would have any liability; Animation has not
incurred and does not expect to incur liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986,
as amended, including the regulations and published interpretations
thereunder (the "Code"), except, in the case of (i) or (ii), as could not
reasonably be expected to have a Material Adverse Effect; and each
"pension
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plan" for which Animation would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act,
which would cause the loss of such qualification, except as could not
reasonably be expected to have a Material Adverse Effect;
(xxix) After giving effect to the consummation of the transactions
contemplated by the Separation Agreement, the Company and its subsidiaries
will own, possess, license or have other rights to use on reasonable
terms, all patents, trademarks and service marks, trade names, copyrights,
domain names (in each case including all registrations and applications to
register same), inventions, trade secrets, technology, know-how, and other
intellectual property (collectively, the "Intellectual Property"),
necessary for the conduct of Animation's business as now conducted or as
proposed in the Prospectus to be conducted by the Company and its
subsidiaries, except for any Intellectual Property, the failure to own,
possess, license or have other rights to use, could not reasonably be
expected to have a Material Adverse Effect. Except as disclosed in the
Prospectus and except as could not reasonably be expected to have a
Material Adverse Effect, (A) the Company and its subsidiaries will own, or
have rights to use under license, all such Intellectual Property free and
clear in all respects of all adverse claims, liens or other encumbrances,
including without limitation, claims by current and former employees,
freelance authors or independent contractors; (B) to the knowledge of the
Company and DreamWorks L.L.C., there is no infringement by third parties
of any such Intellectual Property; (C) there is no pending or, to the
Company's and DreamWorks L.L.C.'s knowledge, threatened action, suit,
proceeding or claim by any third party, including by or in any court or
governmental agency or body having jurisdiction over Animation or the
Company or any of its subsidiaries or any of their properties, challenging
Animation's or the Company's or its subsidiaries' rights in or to any such
Intellectual Property, and the Company and DreamWorks L.L.C. are not aware
of any reasonable basis for any such claim; (D) there is no pending or, to
the Company's and DreamWorks L.L.C.'s knowledge, threatened action, suit,
proceeding or claim by any third party, including by or in any court or
governmental agency or body having jurisdiction over Animation or the
Company or any of its subsidiaries or any of their properties, challenging
the validity, scope or enforceability of any such Intellectual Property,
and the Company and DreamWorks L.L.C. are not aware of any reasonable
basis for any such claim; (E) there is no pending or, to the Company's and
DreamWorks L.L.C.'s knowledge, threatened action, suit, proceeding or
claim by any third party, including by or in any court or governmental
agency or body having jurisdiction over Animation or the Company or any of
its subsidiaries or any of their properties, that Animation or the Company
or any subsidiary infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of any third party,
and the Company and DreamWorks L.L.C. are not aware of any reasonable
basis for any such claim; (F) all of the copyrights that will be
transferred to the Company or its subsidiaries in the Separation and all
of the copyrights presently owned by any Animation entity (the
"Copyrights") have been duly registered in the United States Copyright
Office and/or the appropriate offices of foreign jurisdictions; the
registrations for each of the Copyrights is enforceable and unexpired, is
free of liens, and has not been abandoned; and (G) no actions are
necessary (including filing of documents or payment of fees) within 90
days after the First Time of Delivery to maintain or preserve the validity
or status of any Intellectual Property;
(xxx) No person or entity other than the Selling Stockholders with
respect to shares being sold by such Selling Stockholders has the right to
require registration of
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shares of Stock or other securities of the Company because of the filing
or effectiveness of the Initial Registration Statement or otherwise,
except for persons and entities who have expressly waived such right or
who have been given proper notice and have failed to exercise such right
within the time or times required under the terms and conditions of such
right;
(xxxi) Except as described in the Prospectus and except with respect
to any outstanding equity of PDI as described in the Alternative Pages
included in the Registration Statement, there are no outstanding
subscriptions, rights, warrants, calls or options to acquire, or
instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, any shares of
capital stock of or other equity or other ownership interest in the
Company;
(xxxii) Based on the evaluation of its internal control over
financial reporting, the Company and DreamWorks L.L.C. have no reason to
believe that they will not be in compliance, on a timely basis, with
Section 404, entitled "Management's Assessment of Internal Controls", of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated
thereunder or any successor provisions;
(xxxiii) None of Animation, the Company or any of its subsidiaries,
nor to the knowledge of DreamWorks L.L.C. or the Company, any director,
officer, agent, employee or other person associated with or acting on
behalf of Animation, the Company or any of its subsidiaries, has used any
corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government official
or employee from corporate funds; violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment;
(xxxiv) There are no contracts or other documents that are required
to be described in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations, which
have not been described in the Prospectus or filed as exhibits to the
Registration Statement;
(xxxv) There are no relationships (including without limitation any
loans or advances), direct or indirect, nor has any transaction been
entered into since January 1, 2003, between or among Animation or the
Company and its subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of Animation or the Company (other
than the Company and its subsidiaries) on the other hand which are
required to be described in the Prospectus by the Securities Act or by the
Rules and Regulations which have not been described in the Prospectus; and
(xxxvi) Other than this Agreement, neither the Company nor any of
its subsidiaries is a party to any contract, agreement or understanding
with any person that would give rise to a valid claim against the Company
or any of its subsidiaries or any Underwriter for a brokerage commission,
finder's fee or like payment in connection with the offering and sale of
the Shares.
(b) Each of the Selling Stockholders, severally and not jointly,
represents and warrants to, and agrees with, each of the Underwriters and the
Company that:
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(i) All consents, approvals, authorizations and orders necessary for
the execution and delivery by such Selling Stockholder of this Agreement
and the Power of Attorney (defined below), if a party thereto, the
Irrevocable Instructions (defined below) and the Custody Agreement
(defined below), if a party thereto, and for the sale and delivery of the
Shares to be sold by such Selling Stockholder hereunder, have been
obtained; and such Selling Stockholder has full right, power and authority
to enter into this Agreement, the Power of Attorney (if a party thereto),
the Irrevocable Instructions and the Custody Agreement (if a party
thereto) and will have full right, power and authority upon the
consummation of the transactions contemplated by the Formation Agreement
to sell, assign, transfer and deliver the Shares to be sold by such
Selling Stockholder hereunder;
(ii) The sale of the Shares to be sold by such Selling Stockholder
hereunder and the compliance by such Selling Stockholder with all of the
provisions of this Agreement, the Power of Attorney (if a party thereto),
the Irrevocable Instructions and the Custody Agreement (if a party
thereto) and the consummation of the transactions herein and therein
contemplated will not, in any material respect, conflict with or result in
a breach or violation of any of the terms or provisions of, or constitute
a default under, any statute, indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder is bound or to
which any of the property or assets of such Selling Stockholder is
subject, nor will such action result in any violation of the provisions of
the Certificate of Incorporation or By-laws of such Selling Stockholder if
such Selling Stockholder is a corporation, the Limited Liability Company
Agreement of such Selling Stockholder if such Selling Stockholder is a
limited liability company, the Partnership Agreement of such Selling
Stockholder if such Selling Stockholder is a partnership or any statute or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over such Selling Stockholder or the property of such
Selling Stockholder;
(iii) Such Selling Stockholder, immediately after the Separation and
prior to each Time of Delivery (as defined in Section 5(a) hereof), will
have good and valid title to the Shares to be sold by such Selling
Stockholder hereunder, free and clear of all adverse claims within the
meaning of the New York Uniform Commercial Code; and, upon delivery of
such Shares and payment therefor pursuant hereto, the several Underwriters
will acquire a "security entitlement" and become "protected purchasers"
(provided that such Underwriter has no notice of an adverse claim) each
within the meaning of the New York Uniform Commercial Code, with respect
to the shares purchased by them;
(iv) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares;
(v) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by such
Selling Stockholder with respect to such Selling Stockholder expressly for
use therein, such Preliminary Prospectus and the Registration Statement
did, and the Prospectus and any further amendments or supplements to the
Registration Statement and the Prospectus, when they become effective or
are filed with
10
the Commission, as the case may be, will conform in all material respects
to the requirements of the Act and the rules and regulations of the
Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; the
Underwriters and the Company acknowledge and agree that, for all purposes
of this Agreement, the only information furnished to the Company by any
Selling Stockholder with respect to such Selling Stockholder expressly for
use in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto are the statements
pertaining to the name of the Selling Stockholder and the number of shares
owned and the number of share proposed to be sold by such Selling
Stockholder.
(vi) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Stockholder will deliver to you prior to or at
the First Time of Delivery (as hereinafter defined) a properly completed
and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations
in lieu thereof);
(vii) Irrevocable instructions (the "Irrevocable Instructions") to
deliver the Firm Shares to be sold by such Selling Stockholder hereunder
pursuant to this Agreement have been duly executed and delivered by such
Selling Stockholder to The Bank of New York (the "Transfer Agent"); a
Custody Agreement with respect to the Optional Shares to be sold by such
Selling Stockholder hereunder pursuant to this Agreement, in the form
heretofore furnished to the Representatives (the "Custody Agreement"),
shall have been duly executed and delivered by such Selling Stockholder
(other than the Custody Agreement with respect to the Optional Shares to
be sold by Vivendi Universal Entertainment LLLP, which Custody Agreement
will be duly executed and delivered by DWA Escrow) to The Bank of New
York, as custodian (the "Custodian"); and such Selling Stockholder has
duly executed and delivered a Power of Attorney (if a party thereto), in
the form heretofore furnished to you (the "Power of Attorney"), appointing
the persons indicated in Schedule II hereto, and each of them, as such
Selling Stockholder's attorneys-in-fact (the "Attorneys-in-Fact") with
authority to execute and deliver this Agreement on behalf of such Selling
Stockholder, to determine the purchase price to be paid by the
Underwriters to the Selling Stockholders as provided in Section 2 hereof,
to authorize the delivery of the Shares to be sold by such Selling
Stockholder hereunder and otherwise to act on behalf of such Selling
Stockholder in connection with the transactions contemplated by this
Agreement; and
(viii) The Shares to be sold by each Selling Stockholder are subject
to the interests of the Underwriters hereunder; the arrangements made by
such Selling Stockholder pursuant to the Irrevocable Instructions or the
Custody Agreement, as applicable, and the appointment by such Selling
Stockholder of the Attorneys-in-Fact by the Power of Attorney, are to that
extent irrevocable; the obligations of the Selling Stockholders hereunder
shall not be terminated by operation of law, whether by the death or
incapacity of any individual Selling Stockholder or, in the case of an
estate or trust, by the death or incapacity of any executor or trustee or
the termination of such estate or trust, or in the case of a partnership
or corporation, by the dissolution of such partnership or corporation, or
by the occurrence of any other event; if any individual Selling
Stockholder or any such executor or trustee should die or become
incapacitated, or if any such estate or trust should be terminated, or if
any such partnership or
11
corporation should be dissolved, or if any other such event should occur,
before the delivery of the Shares hereunder, certificates representing the
Shares shall be delivered by or on behalf of the Selling Stockholders in
accordance with the terms and conditions of this Agreement and of the
Irrevocable Instructions or the Custody Agreement, as applicable; and
actions taken by the Attorneys-in-Fact pursuant to the Powers of Attorney
shall be as valid as if such death, incapacity, termination, dissolution
or other event had not occurred, regardless of whether or not the Transfer
Agent, the Custodian, the Attorneys-in-Fact, or any of them, shall have
received notice of such death, incapacity, termination, dissolution or
other event.
2. Subject to the terms and conditions herein set forth, (a) the Company
and each of the Selling Stockholders agree, severally and not jointly, to sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company and each of the Selling Stockholders,
at a purchase price per share of $[ ], the number of Firm Shares (to be adjusted
by you so as to eliminate fractional shares) determined by multiplying the
aggregate number of Shares to be sold by the Company and each of the Selling
Stockholders as set forth opposite their respective names in Schedule II hereto
by a fraction, the numerator of which is the aggregate number of Firm Shares to
be purchased by such Underwriter as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the aggregate
number of Firm Shares to be purchased by all of the Underwriters from the
Company and all of the Selling Stockholders hereunder and (b) in the event and
to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, each of the Selling Stockholders agrees,
severally and not jointly, to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from each of the
Selling Stockholders, at the purchase price per share set forth in clause (a) of
this Section 2, that portion of the number of Optional Shares as to which such
election shall have been exercised (to be adjusted by you so as to eliminate
fractional shares) determined by multiplying such number of Optional Shares by a
fraction the numerator of which is the maximum number of Optional Shares which
such Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the Underwriters are entitled to purchase
hereunder.
The Selling Stockholders, as and to the extent indicated in Schedule II
hereto hereby grant, severally and not jointly, to the Underwriters the right to
purchase at their election up to 4,350,000 Optional Shares, at the purchase
price per share set forth in the paragraph above, for the sole purpose of
covering sales of shares in excess of the number of Firm Shares, provided that
the purchase price per Optional Share shall be reduced by an amount per share
equal to any dividends or distributions declared by the Company and payable on
the Firm Shares but not payable on the Optional Shares. Any such election to
purchase Optional Shares shall be made in proportion to the maximum number of
Optional Shares to be sold by each Selling Stockholder as set forth in Schedule
II hereto. Any such election to purchase Optional Shares may be exercised only
by written notice from you to the Attorneys-in-Fact, given within a period of 30
calendar days after the date of this Agreement and setting forth the aggregate
number of Optional Shares to be purchased and the date on which such Optional
Shares are to be delivered, as determined by you but in no event earlier than
the First Time of Delivery (as defined in Section 5(a) hereof) or, unless you
and the Attorneys-in-Fact otherwise agree in writing, earlier than two or later
than ten business days after the date of such notice.
3. The Company hereby confirms its engagement of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. as,
and ▇▇▇▇▇▇▇, Sachs & Co. hereby confirms its agreement with the Company to
render services as,
12
a "qualified independent underwriter" within the meaning of Rule 2720(b)(15) of
the National Association of Securities Dealers, Inc. (the "NASD") with respect
to the offering and sale of the Stock. ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., in its capacity as
qualified independent underwriter and not otherwise, is referred to herein as
the "QIU". As compensation for the services of the QIU hereunder, the Company
agrees to pay the QIU $10,000 on the First Time of Delivery.
4. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
5. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as the Representatives may request upon at least forty-eight hours' prior
notice to the Company and the Selling Stockholders shall be delivered by or on
behalf of the Company and the Selling Stockholders to the Representatives,
through the facilities of the Depository Trust Company ("DTC"), for the account
of such Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer of Federal (same-day) funds to the
account specified by the Company and each of the Selling Stockholders to the
Representatives at least forty-eight hours in advance. The time and date of such
delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m., New
York time, on November __, 2004 or such other time and date as the
Representatives, the Company and the Selling Stockholders may agree upon in
writing, and, with respect to the Optional Shares, 9:30 a.m., New York time, on
the date specified by the Representatives in the written notice given by the
Representatives of the Underwriters' election to purchase such Optional Shares,
or such other time and date as the Representatives, the Company and the Selling
Stockholders may agree upon in writing. Such time and date for delivery of the
Firm Shares is herein called the "First Time of Delivery", such time and date
for delivery of the Optional Shares, if not the First Time of Delivery, is
herein called the "Second Time of Delivery", and each such time and date for
delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 8 hereof, including the cross receipt
for the Shares and any additional documents requested by the Underwriters
pursuant to Section 8(l) hereof, will be delivered at the offices of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the
"Closing Location"), and the Shares will be delivered at the office of DTC or
its designated custodian. A meeting will be held at the Closing Location at 3:00
p.m., New York City time, on the New York Business Day next preceding such Time
of Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 5, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close.
6. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Act; to make no
further amendment or any supplement to the Registration Statement or
Prospectus, which shall be disapproved by you promptly after reasonable
13
notice thereof; to advise you, promptly after it receives notice thereof,
of the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish you with copies thereof;
to advise you, promptly after it receives notice thereof, of the issuance
by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or prospectus or suspending any such qualification, promptly to
use its best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply
with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete
the distribution of the Shares, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(c) Prior to 3:00 P.M., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to
furnish the Underwriters with written and electronic copies of the
Prospectus in New York City in such quantities as you may reasonably
request, and, if the delivery of a prospectus is required at any time
prior to the expiration of nine months after the time of issue of the
Prospectus in connection with the offering or sale of the Shares and if at
such time any events shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary during such
period to amend or supplement the Prospectus in order to comply with the
Act to prepare and furnish without charge to each Underwriter and to any
dealer in securities as many written and electronic copies as you may from
time to time reasonably request of an amended Prospectus or a supplement
to the Prospectus which will correct such statement or omission or effect
such compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Shares at any time nine
months or more after the time of issue of the Prospectus, upon your
request but at the expense of such Underwriter, to prepare and deliver to
such Underwriter as many written and electronic copies as you may request
of an amended or supplemented Prospectus complying with Section 10(a)(3)
of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and
the rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158);
14
(e) During the period beginning from the date hereof and continuing
to and including the date that is 180 days after the date of the
Prospectus (the "Initial Lock-Up Period"), not to offer, sell, contract to
sell, pledge, hedge or otherwise dispose of, or file with the Commission a
registration statement under the Securities Act relating to, except as
provided hereunder, any securities of the Company that are substantially
similar to the Shares, including but not limited to any securities that
are convertible into or exchangeable for, or that represent the right to
receive, Stock or any such substantially similar securities, without the
prior written consent of the Representatives (other than pursuant to
employee stock option plans existing on, or upon the conversion or
exchange of convertible or exchangeable securities outstanding as of, the
date of this Agreement, in each case as disclosed in the Prospectus);
provided, however, that if (i) during the last 17 days of the Initial
Lock-Up Period, the Company releases earnings results or announces
material news or a material event or (ii) prior to the expiration of the
Initial Lock-Up Period, the Company announces that it will release
earnings results during the 15-day period following the last day of the
Initial Lock-Up Period, then in each case the Initial Lock-Up Period will
be automatically extended until the expiration of the 18-day period
beginning on the date of release of the earnings results or the
announcement of the material news or material event, as applicable, unless
the Representatives waive, in writing, such extension; provided, however,
that such extension will in no event extend later than June 1, 2005;
provided further, that the Company will provide the Representatives and
any co-managers and each stockholder subject to the Lock-Up Period with
prior notice of any such announcement that gives rise to an extension of
the Initial Lock-Up Period; provided that the foregoing restrictions shall
not apply to (A) the issuance by the Company of shares of Stock upon the
exercise of an option or warrant or upon the conversion or exchange of
convertible or exchangeable securities in each case outstanding on the
date of the prospectus, (B) the issuance of Stock or grant of an option to
purchase Stock under the Company's stock plans described in the
Prospectus, (C) the filing of a registration statement on or after March
15, 2005 with respect to a follow-on secondary offering by DWA Escrow and
the DWA Escrow partners or (D) at the election of the Company, a follow-on
secondary offering to occur on or after April 15, 2005.
(f) Prior to the date that is 180 days after the date of the
Prospectus, to provide written notice to the Underwriters and to each of
the Company's directors and executive officers and the Selling
Stockholders of the date of the expiration of the Lock-Up Period, as
determined pursuant to clause (e) above;
(g) To furnish to its stockholders within the time periods
established by the Commission's rules and regulations after the end of
each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the Company
and its consolidated subsidiaries certified by independent public
accountants) and, within the time periods established by the Commission's
rules and regulations after the end of each of the first three quarters of
each fiscal year (beginning with the fiscal quarter ending after the
effective date of the Registration Statement), to furnish to its
stockholders consolidated summary financial information of the Company and
its subsidiaries for such quarter in reasonable detail (including, in each
case, by posting such information on the Company's website or by
submitting such information to the Commission via ▇▇▇▇▇ so that such
information is available at ▇▇▇.▇▇▇.▇▇▇ or at another website accessible
by the stockholders without charge);
(h) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders generally,
and to deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the Commission
or any national securities exchange on which any class of securities of
the Company is listed; and (ii) such additional information concerning the
business and financial condition of the
15
Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission) (including, in each case, by
posting such information on the Company's website or by submitting such
information to the Commission via ▇▇▇▇▇ so that such information is
available at ▇▇▇.▇▇▇.▇▇▇ or at another website accessible by the
stockholders without charge);
(i) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(j) To use its best efforts to list, subject to notice of issuance,
the Shares on the New York Stock Exchange (the "Exchange");
(k) To file with the Commission such information on Form 10-Q or
Form 10-K as may be required by Rule 463 under the Act;
(l) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the
date of this Agreement, and the Company shall at the time of filing either
pay to the Commission the filing fee for the Rule 462(b) Registration
Statement or give irrevocable instructions for the payment of such fee
pursuant to Rule 111(b) under the Act;
(m) Upon request of any Underwriter, to furnish, or cause to be
furnished, to such Underwriter an electronic version of the Company's
trademarks, servicemarks and corporate logo for use on the website, if
any, operated by such Underwriter for the purpose of facilitating the
on-line offering of the Shares (the "License"); provided, however, that
the License shall be used solely for the purpose described above, is
granted without any fee and may not be assigned or transferred; and
(n) Not to take, directly or indirectly, any action designed to or
that would constitute or that might reasonably be expected to cause or
result in, under the Securities and Exchange Act of 1934, as amended, or
otherwise, stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares.
7. The Company covenants and agrees with the several Underwriters and the
Selling Stockholders that the Company will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Shares under the Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares;
(iii) all expenses in connection with the qualification of the Shares for
offering and sale under state securities laws as provided in Section 6(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
16
connection with such qualification and in connection with the Blue Sky survey
(iv) all fees and expenses in connection with listing the Shares on the New York
Stock Exchange; (V) the filing fees incident to, and the fees and disbursements
of counsel for the Underwriters in connection with, securing any required review
by the National Association of Securities Dealers, Inc. of the terms of the sale
of the Shares; (vi) the cost of preparing stock certificates; (vii) the cost and
charges of any transfer agent or registrar; (viii) the compensation of the QIU,
limited to the amount set forth in Section 3; and (ix) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section.
Each Selling Stockholder will pay or cause to be paid all costs and
expenses incident to the performance of such Selling Stockholder's obligations
hereunder which are not otherwise specifically provided for in this Section,
including (i) any fees and expenses of counsel for such Selling Stockholder,
(ii) such Selling Stockholder's pro rata share of the fees and expenses of the
Attorneys-in-Fact and the Custodian, if applicable, and (iii) all expenses and
taxes incident to the sale and delivery of the Shares to be sold by such Selling
Stockholder to the Underwriters hereunder. In connection with the preceding
sentence, the Representatives agree to pay New York State stock transfer tax,
and each Selling Stockholder agrees to reimburse the Representatives for
associated carrying costs if such tax payment is not rebated on the day of
payment and for any portion of such tax payment not rebated.
It is understood, however, that the Company shall bear, and the Selling
Stockholders shall not be required to pay or to reimburse the Company for, the
cost of any other matters not directly relating to the sale and purchase of the
Shares pursuant to this Agreement, and that, except as provided in this Section,
and Sections 9, 10 and 13 hereof, the Underwriters will pay all of their own
costs and expenses, including the fees of their counsel, stock transfer taxes on
resale of any of the Shares by them, and any advertising expenses connected with
any offers they may make.
8. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company, DreamWorks L.L.C. and of the Selling Stockholders herein are, at
and as of such Time of Delivery, true and correct, the condition that the
Company and the Selling Stockholders shall have performed all of its and their
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in accordance
with Section 6(a) hereof; if the Company has elected to rely upon Rule
462(b), the Rule 462(b) Registration Statement shall have become effective
by 10:00 P.M., Washington, D.C. time, on the date of this Agreement; no
stop order suspending the effectiveness of the Registration Statement or
any part thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and all
requests for additional information on the part of the Commission shall
have been complied with to your reasonable satisfaction;
(b) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters,
shall have furnished to you such written opinion and negative assurance
statement with respect to such matters as you may reasonably request,
dated such Time of Delivery, and such counsel shall have received such
papers and information as they may reasonably request to enable them to
pass upon such matters;
17
(c) Cravath, Swaine & ▇▇▇▇▇ LLP, counsel for the Company, shall have
furnished to you their written opinion, dated such Time of Delivery, in
form and substance satisfactory to you, substantially to the effect set
forth in Annex II(a) hereto;
(d) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq., General Counsel of the Company, shall
have furnished to you her written opinion, dated such Time of Delivery, in
form and substance satisfactory to you, substantially to the effect set
forth in Annex II(b) hereto;
(e) The respective counsel for each of the Selling Stockholders, as
indicated in Schedule II hereto, each shall have furnished to you their
written opinion with respect to each of the Selling Stockholders for whom
they are acting as counsel, dated such First Time of Delivery, in form and
substance satisfactory to you, substantially to the effect set forth in
Annex II(c) hereto;
(f) On the date of the Prospectus at a time prior to the execution
of this Agreement, at 9:30 a.m., New York City time, on the effective date
of any post-effective amendment to the Registration Statement filed
subsequent to the date of this Agreement and also at each Time of
Delivery, Ernst & Young LLP shall have furnished to you a letter or
letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you, to the effect set forth in Annex I hereto
(the executed copy of the letter delivered prior to the execution of this
Agreement is attached as Annex I(a) hereto and a draft of the form of
letter to be delivered on the effective date of any post-effective
amendment to the Registration Statement and as of each Time of Delivery is
attached as Annex I(b) hereto);
(g) (i) None of Animation or the Company or any of its subsidiaries
shall have sustained since the date of the latest audited financial
statements included in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in
the Prospectus, and (ii) since the respective dates as of which
information is given in the Prospectus there shall not have been any
change in the capital stock or long-term debt of Animation or the Company
or any of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, owner's equity or results of operations of Animation
or the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is in the judgment of the Representatives
so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Shares being
delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(h) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act,
and (ii) no such organization shall have publicly announced that it has
under surveillance or review, with possible negative implications, its
rating of any of the Company's debt securities;
(i) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the
18
Exchange; (ii) a suspension or material limitation in trading in the
Company's securities on the Exchange; (iii) a general moratorium on
commercial banking activities declared by either Federal or New York State
authorities or a material disruption in commercial banking or securities
settlement or clearance services in the United States; (iv) the outbreak
or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war or (v) the
occurrence of any other calamity or crisis or any change in financial,
political or economic conditions in the United States or elsewhere, if the
effect of any such event specified in clause (iv) or (v) in the judgment
of the Representatives makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered at
such Time of Delivery on the terms and in the manner contemplated in the
Prospectus;
(j) Certificates in negotiable form representing all of the Optional
Shares to be sold by such Selling Stockholder hereunder upon the Second
Time of Delivery will have been placed in custody under a Custody
Agreement and delivered by, or on behalf of, such Selling Stockholder to
the Custodian;
(k) The Shares at such Time of Delivery shall have been duly listed,
subject to notice of issuance, on the Exchange;
(l) The Company shall have complied with the provisions of Section
6(c) hereof with respect to the furnishing of prospectuses by the second
New York Business Day next succeeding the date of this Agreement;
(m) The Company and the Selling Stockholders shall have furnished or
caused to be furnished to you at such Time of Delivery certificates of
officers of the Company and of the Selling Stockholders, respectively,
satisfactory to you as to the accuracy of the representations and
warranties of the Company and the Selling Stockholders, respectively,
herein at and as of such Time of Delivery, as to the performance by the
Company and the Selling Stockholders of all of their respective
obligations hereunder to be performed at or prior to such Time of
Delivery, and as to such other matters as you may reasonably request, and
the Company shall have furnished or caused to be furnished certificates as
to the matters set forth in subsections (a) and (g) of this Section;
(n) The transactions contemplated by the Separation Agreement shall
have been consummated other than those transactions that, by their terms,
will occur after the date of the Prospectus;
(o) The assets contributed by DreamWorks L.L.C. to the Company in
connection with the Separation constitute all of the assets (i) of
DreamWorks L.L.C. used or held for use in the operation or conduct of
Animation and (ii) necessary for the operation or conduct of Animation as
presently conducted; and
(p) All obligations of the Company and its subsidiaries under (i)
the Credit Agreement, dated as of August 22, 2002, between DreamWorks
L.L.C., JPMorgan Chase Bank, as administrative agent, and the other agents
and lending banks from time to time party thereto, as may be amended,
modified, restated or replaced at any time and (ii) the Subordinated Loan
Agreement, dated as of December 15, 2000, as amended by the letter
agreement dated as of December 20, 2000, and the subordinated note related
thereto, shall have been terminated.
19
9. (a) The Company and DreamWorks L.L.C., jointly and severally, will
indemnify and hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company and DreamWorks L.L.C. shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the Prospectus
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representatives or any Selling Stockholder expressly for use therein; provided
further, that DreamWorks L.L.C. shall be released from its liabilities under
this Section 9 upon the closing of the sale of the Firm Shares hereunder.
(b) Each of the Selling Stockholders, severally but not jointly, will
indemnify and hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Selling Stockholder with respect to such
Selling Stockholder expressly for use therein; and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that such Selling
Stockholder shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement by the Company or in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives expressly for use therein; provided, further, that
the liability of a Selling Stockholder pursuant to this subsection (b) shall not
exceed the net proceeds from the offering (before deducting expenses) received
by such Selling Stockholder (including any proceeds received in connection with
the sale of any Optional Shares).
(c) Each Underwriter will indemnify and hold harmless the Company,
DreamWorks L.L.C. and each Selling Stockholder against any losses, claims,
damages or liabilities to which the Company or such Selling Stockholder may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained
20
in any Preliminary Prospectus, the Registration Statement or the Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives expressly for use therein; and will reimburse the Company and
each Selling Stockholder for any legal or other expenses reasonably incurred by
the Company or such Selling Stockholder in connection with investigating or
defending any such action or claim as such expenses are incurred, provided,
however, that each Underwriter shall be released from its liabilities to
DreamWorks L.L.C. under this Section 9 upon the closing of the sale of the Firm
Shares hereunder.
(d) Promptly after receipt by an indemnified party under subsection (a),
(b) or (c) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 9 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a),
(b) or (c) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each applicable
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (d) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Stockholders on the one hand
and the Underwriters on the other in connection with the
21
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the Selling Stockholders
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Stockholders on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, each of the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this subsection (e)
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (e). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (e) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), (i) no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission and (ii) no Selling Stockholder shall be required
to contribute any amount in excess of the net proceeds from the offering (before
deducting expenses) received by such Selling Stockholder (including any proceeds
received in connection with the sale of any Optional Shares). No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(e) to contribute are several in proportion to their respective underwriting
obligations and not joint. For purposes of this subsection (e), the benefits and
faults attributable to the Company shall also be attributable to DreamWorks
L.L.C. until the closing of the sale of the Firm Shares hereunder. The Selling
Stockholders' obligations in this subsection (e) to contribute are several in
proportion to the number of Shares sold by each Selling Stockholder and not
joint.
(f) The obligations of the Company, DreamWorks L.L.C. and the Selling
Stockholders under this Section 9 shall be in addition to any liability which
the Company, DreamWorks L.L.C. and the respective Selling Stockholders may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section 9 shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer, director or member
of the Company (including any person who, with his or her consent, is named in
the Registration Statement as about to become a director of the Company) and of
DreamWorks L.L.C. and to each person, if any, who controls the Company,
DreamWorks L.L.C. or any Selling Stockholder within the meaning of the Act.
10. (a) The Company and DreamWorks L.L.C., jointly and severally, will
indemnify and hold harmless ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., in its capacity as QIU,
against any losses, claims,
22
damages or liabilities, joint or several, to which the QIU may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
an untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading or (iii) any act or omission to act or any
alleged act or omission to act by ▇▇▇▇▇▇▇, Sachs & Co. as QIU in connection with
any transaction contemplated by this Agreement or undertaken in preparing for
the purchase, sale and delivery of the Shares, except as to this clause (iii) to
the extent that any such loss, claim, damage or liability results from the gross
negligence or bad faith of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. in performing the services as
QIU, and will reimburse the QIU for any legal or other expenses reasonably
incurred by the QIU in connection with investigating or defending any such
action or claim as such expenses are incurred, provided, however, that
DreamWorks L.L.C. shall be released from its liabilities under this Section 10
upon the closing of the sale of the Firm Shares hereunder.
(b) Each of the Selling Stockholders, severally but not jointly, will
indemnify and hold harmless ▇▇▇▇▇▇▇, Sachs & Co., in its capacity as QIU,
against any losses, claims, damages or liabilities, joint or several, to which
the QIU may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) an untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any act or
omission to act or any alleged act or omission to act by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. as
QIU in connection with any transaction contemplated by this Agreement or
undertaken in preparing for the purchase, sale and delivery of the Shares,
except as to this clause (iii) to the extent that any such loss, claim, damage
or liability results from the gross negligence or bad faith of ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
Co. in performing the services as QIU, and in the case of (i) or (ii) above,
only to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such Selling Stockholder with respect to such Selling Stockholder
expressly for use therein; and will reimburse the QIU for any legal or other
expenses reasonably incurred by the QIU in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that such Selling Stockholder shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement by the Company or in
reliance upon and in conformity with written information furnished to the
Company by the QIU with respect to its serving in such capacity expressly for
use therein; provided, further, that the liability of a Selling Stockholder
pursuant to this subsection (b) shall not exceed the net proceeds from the
offering (before deducting expenses) received by such Selling Stockholder
(including any proceeds received in connection with the sale of any Optional
Shares).
(c) Each Underwriter will indemnify and hold harmless ▇▇▇▇▇▇▇, Sachs &
Co., in its capacity as QIU, against any losses, claims, damages or liabilities
to which the Company or such Selling Stockholder may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based
23
upon (i) an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any act or
omission to act or any alleged act or omission to act by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. as
QIU in connection with any transaction contemplated by this Agreement or
undertaken in preparing for the purchase, sale and delivery of the Shares,
except as to this clause (iii) to the extent that any such loss, claim, damage
or liability results from the gross negligence or bad faith of ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
Co. in performing the services as QIU, and in the case of (i) or (ii) above,
only to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives expressly for use
therein; and will reimburse the QIU for any legal or other expenses reasonably
incurred by the QIU in connection with investigating or defending any such
action or claim as such expenses are incurred.
(d) The QIU will indemnify and hold harmless the Company, DreamWorks
L.L.C., each Selling Stockholder and each Underwriter against any losses,
claims, damages or liabilities to which the Company, such Selling Stockholder or
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by the QIU with
respect to its serving in such capacity expressly for use therein; and will
reimburse the Company, each Selling Stockholder and each Underwriter for any
legal or other expenses reasonably incurred by the Company, such Selling
Stockholder or such Underwriter in connection with investigating or defending
any such action or claim as such expenses are incurred, provided, however, that
the QIU shall be released from its liabilities to DreamWorks L.L.C. under this
Section 10 upon the closing of the sale of the Firm Shares hereunder, provided
further that the Company, each Selling Stockholder and each Underwriter
acknowledge and agree that the only information furnished to the Company by the
QIU expressly for use in the Preliminary Prospectus, the Registration Statement
or the Prospectus or any amendment or supplement thereto are the statements
pertaining to name of the QIU.
(e) Promptly after receipt by an indemnified party under subsection (a),
(b), (c) or (d) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the
24
indemnified party, be counsel to the indemnifying party), and, after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal expenses of other counsel
or any other expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of any indemnified
party.
(f) If the indemnification provided for in this Section 10 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a),
(b), (c) or (d) above in respect of any losses, claims, damages or liabilities
(or actions in respect thereof) referred to therein, then each applicable
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company, the Selling Stockholders, the
Underwriters and the QIU (in its capacity as QIU) from the offering of the
Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the indemnified party failed
to give the notice required under subsection (e) above, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company, the Selling Stockholders, the
Underwriters and the QIU (in its capacity as QIU) in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Stockholders on the one hand and the QIU on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Stockholders, as set
forth in the table on the cover page of the Prospectus, bear to the fee payable
to the QIU pursuant to Section 3 hereof. The relative benefits received by the
Underwriters on the one hand and the QIU on the other shall be deemed to be in
the same proportion as the total underwriting discounts and commissions received
by the Underwriters, as set forth in the table on the cover page of the
Prospectus, bear to the fee payable to the QIU pursuant to Section 3 hereof. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company, the Selling Stockholders, the Underwriters or the QIU and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, each of the Selling
Stockholders, the Underwriters and the QIU agree that it would not be just and
equitable if contributions pursuant to this subsection (e) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this subsection
(e). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this subsection (e) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), (i) no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares
25
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission and (ii) no Selling Stockholder shall be required to
contribute any amount in excess of the net proceeds from the offering (before
deducting expenses) received by such Selling Stockholder (including any proceeds
received in connection with the sale of any Optional Shares). No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this subsection (e), the benefits
and faults attributable to the Company shall also be attributable to DreamWorks
L.L.C. until the closing of the sale of the Firm Shares hereunder. The Selling
Stockholders' obligations in this subsection (e) to contribute are several in
proportion to the number of Shares sold by each Selling Stockholder and not
joint.
(g) The obligations of the Company, DreamWorks L.L.C. and the Selling
Stockholders under this Section 10 shall be in addition to any liability which
the Company, DreamWorks L.L.C. and the respective Selling Stockholders may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls the QIU within the meaning of the Act; and the
obligations of QIU under this Section 10 shall be in addition to any liability
which the QIU may otherwise have and shall extend, upon the same terms and
conditions, to each officer, director or member of the Company (including any
person who, with his or her consent, is named in the Registration Statement as
about to become a director of the Company) and of DreamWorks L.L.C. and to each
person, if any, who controls the Company, DreamWorks L.L.C. or any Selling
Stockholder within the meaning of the Act.
11. (a) If any Underwriter shall default in its obligation to purchase the
Shares which it has agreed to purchase hereunder at a Time of Delivery, you may
in your discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such Shares,
then the Company and the Selling Stockholders shall be entitled to a further
period of thirty-six hours within which to procure another party or other
parties satisfactory to you to purchase such Shares on such terms. In the event
that, within the respective prescribed periods, you notify the Company and the
Selling Stockholders that you have so arranged for the purchase of such Shares,
or the Company and the Selling Stockholders notify you that they have so
arranged for the purchase of such Shares, you or the Company and the Selling
Stockholders shall have the right to postpone a Time of Delivery for a period of
not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh of
the aggregate number of all the Shares to be purchased at such Time of Delivery,
then the Company and the Selling Stockholders shall have the right to require
each non-defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of
26
Shares which such Underwriter agreed to purchase hereunder) of the Shares of
such defaulting Underwriter or Underwriters for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Stockholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased exceeds one-eleventh of the
aggregate number of all of the Shares to be purchased at such Time of Delivery,
or if the Company and the Selling Stockholders shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to the Second Time of Delivery, the obligations of the
Underwriters to purchase and of the Selling Stockholders to sell the Optional
Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company or the Selling Stockholders, except
for the expenses to be borne by the Company and the Selling Stockholders and the
Underwriters as provided in Section 7 hereof and the indemnity and contribution
agreements in Section 9 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
12. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Stockholders and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or any of the Selling Stockholders, or any officer
or director or controlling person of the Company, or any controlling person of
any Selling Stockholder, and, except for those of DreamWorks L.L.C., shall
survive delivery of and payment for the Shares.
13. If this Agreement shall be terminated pursuant to Section 11 hereof,
neither the Company nor the Selling Stockholders shall then be under any
liability to any Underwriter except as provided in Sections 3, 7, 9 and 10
hereof; but, if for any other reason any Shares are not delivered by or on
behalf of the Company and the Selling Stockholders as provided herein,
Dreamworks L.L.C. will reimburse the Underwriters through the Representatives
for all out-of-pocket expenses approved in writing by the Representatives,
including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Shares not so delivered, but the Company and the Selling Stockholders shall then
be under no further liability to any Underwriter in respect of the Shares not so
delivered except as provided in Sections 3, 7, 9, and 10 hereof.
14. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly on behalf of you as the Representatives; and in all
dealings with any Selling Stockholder hereunder, you and the Company shall be
entitled to act and rely upon any statement, request, notice or agreement on
behalf of such Selling Stockholder made or given by any or all of the
Attorneys-in-Fact for such Selling Stockholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the Representatives in care of ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
Co., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Registration
Department and in care of ▇.▇. ▇▇▇▇▇▇ Securities Inc., ▇▇▇ ▇▇▇▇
▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: Syndicate Desk; if to any Selling
Stockholder shall be delivered or sent by mail, telex or facsimile transmission
to counsel for such Selling Stockholder at its address set forth in Schedule II
hereto; if to the signatories of the Lock-Up Agreements or any of them shall be
delivered or sent by mail, telex or facsimile transmission to the address set
forth opposite each such signatory's name in the relevant Lock-Up Agreement; and
if to the Company shall be delivered or sent by mail, telex or facsimile
transmission to the address of the Company set forth in the Registration
Statement, Attention: Office of the General Counsel; provided, however, that any
notice to an Underwriter pursuant to Section 6(f) or Section 9(d) hereof shall
be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriters' Questionnaire or telex
constituting such Questionnaire, which address will be supplied to the Company
or the Selling Stockholders by you on request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
15. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company, DreamWorks L.L.C. and the Selling
Stockholders and, to the extent provided in Sections 9 and 12 hereof, the
officers, directors and members of the Company and each person who controls the
Company, DreamWorks L.L.C., any Selling Stockholder or any Underwriter, and
their respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Shares from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
16. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
17. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
18. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
19. The Company and the Selling Stockholders are authorized, subject to
applicable law, to disclose any and all aspects of this potential transaction
that are necessary to support any U.S. federal income tax benefits expected to
be claimed with respect to such transaction, and all materials of any kind
(including tax opinions and other tax analyses) related to those benefits,
without the Underwriters imposing any limitation of any kind.
If the foregoing is in accordance with your understanding, please sign and
return to us eight counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters, the Company
and each of the Selling Stockholders. It is understood that your acceptance of
this letter on behalf of each of the Underwriters is pursuant to the authority
set forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Company and the Selling Stockholders for examination, upon
request, but without warranty on your part as to the authority of the signers
thereof.
Any person executing and delivering this Agreement as Attorney-in-Fact for
a Selling Stockholder represents by so doing that he has been duly appointed as
Attorney-in-Fact by
28
such Selling Stockholder pursuant to a validly existing and binding
Power-of-Attorney which authorizes such Attorney-in-Fact to take such action.
Very truly yours,
DREAMWORKS ANIMATION SKG, INC.
By: ________________________________
Name:
Title:
DREAMWORKS L.L.C.
By: ________________________________
Name:
Title:
DW INVESTMENT II, INC.
By: ________________________________
Name:
Title:
▇▇▇ ENTERTAINMENT, L.L.C.
KADOKAWA
CHEMICAL INVESTMENTS, INC.
MICROSOFT CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By: ________________________________
Name:
Title:
As Attorney-in-Fact acting on behalf
of each of the Selling
Stockholders named in Schedule II
to this Agreement
29
VIVENDI UNIVERSAL ENTERTAINMENT LLLP
By: _______________________________
Name:
Title:
30
THOMSON INC.
By: _______________________________
Name:
Title:
Accepted as of the date hereof
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
By: ________________________________
(▇▇▇▇▇▇▇, Sachs & Co.)
▇.▇. ▇▇▇▇▇▇ Securities Inc.
By: ________________________________
Name:
Title:
On behalf of each of the Underwriters