EXHIBIT 1
DIGITAL GENERATION SYSTEMS, INC.
COMMON STOCK SUBSCRIPTION AGREEMENT
The undersigned ("Subscriber") hereby offers to purchase 714,285 shares of
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the Common Stock (the "Shares") of Digital Generation Systems, Inc., a
California corporation (the "Company") at a price of $2.80 per share, and is
herewith delivering payment for such Shares by check or wire transfer payable to
the Company.
1. Subscriber, by offering to purchase the Shares, (a) hereby represents and
warrants to the Company that all information provided by Subscriber herewith is
true and correct and (b) hereby represents and warrants to the Company as
follows:
a. Investment. Subscriber is acquiring the Shares for investment for
Subscriber's own account, not as a nominee or agent, and not with the view
to, or for resale in connection with, any distribution thereof in violation
of applicable securities laws. Subscriber understands that such Shares have
not been, and will not be, registered under the Securities Act of 1933, as
amended, (the "Securities Act") by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent and the
accuracy of such Subscriber's representations as expressed herein.
b. Rule 144. Subscriber acknowledges that the Shares must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. Subscriber is aware of the
provisions of Rule 144 promulgated under the Securities Act which permit
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, except
as otherwise permitted under Rule 144(k), if applicable, (i) the
availability of certain current public information about the Company, (ii)
the resale occurring not less than one year after a party has purchased and
fully paid for the shares to be sold, (iii) the sale being effected through
a "broker's transaction" or in transactions directly with a "market maker"
(as provided by Rule 144(f)) and (iv) the number of shares being sold
during any three-month period not exceeding specified limitations.
c. Legends. Subscriber agrees that each certificate or other document
evidencing any of the Shares shall be endorsed with the legend set forth
below. Subscriber agrees not to transfer the Shares represented by any such
certificate without complying with the restrictions on transfer described
in the legend endorsed on such certificate.
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THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, OR
ASSIGNED IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION, WITHOUT AN
OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL FOR THE COMPANY,
STATING
THAT SUCH SALE, TRANSFER, OR ASSIGNMENT IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF SAID ACT. THIS CERTIFICATE MUST BE SURRENDERED TO THE
CORPORATION OR ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE TRANSFER
OF ANY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE.
d. Access to Data. Subscriber has requested and received from the Company all
the information Subscriber considers necessary or appropriate for deciding
whether to purchase the Shares. Subscriber has had an opportunity to ask
questions of and receive answers from management of the Company concerning
the Company, the Company's business and financial affairs and the
Subscriber's purchase of Shares hereunder. Subscriber has had such
questions answered to Subscriber's satisfaction. Subscriber understands
that any information contained in any written documentation or made by
management during discussions with the Company were intended to describe
the aspects of the Company's business and prospects which the Company
believes to be material, but such information does not necessarily provide
a thorough exhaustive description. Subscriber acknowledges that any
estimates or projections as to events that may occur in the future were
based upon the best judgment of the Company's management at the time such
estimates or projections were made and that whether or not such estimates
or projections will depend upon the Company's achieving its overall
business objectives, including the availability of funds resulting from the
sale of the Shares. Subscriber acknowledges there is no assurance that any
projections will be attained.
e. Preexisting Personal or Business Relationship. Subscriber either has a
preexisting personal or business relationship with the Company or any of
its officers, directors or controlling persons or, by reason of
Subscriber's business or financial experience, could be reasonably assumed
to have the capacity to protect Subscriber's own interests in connection
with the purchase of the Shares.
f. Authorization. This agreement, upon acceptance by the Company, will
constitute a valid and legally binding obligation of Subscriber,
enforceable in accordance with its terms.
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g. Brokers or Finders. There are no arrangements or claims for brokerage or
finders' fees or agents' commissions or any similar charges in connection
with this agreement or any transaction contemplated hereby based on any
arrangement or agreement known to Subscriber.
h. No Reliance on Third Parties. In purchasing the Shares, Subscriber is not
relying upon any representation or assurance from any person.
i. Risk of Investment. Subscriber understands the risks inherent in new
ventures and the risks associated with unproven technologies such as those
of the Company, and Subscriber has experience in investing in such
ventures. Subscriber can bear the entire loss of his investment in the
Company.
j. No Legal Tax or Investment Advice. Subscriber understands that nothing in
this Agreement or any other materials presented to Subscriber or
information provided by the Company's management in connection with the
purchase and sale of the Shares constitutes legal, tax, or investment
advice. Subscriber has consulted such legal, tax, and investment advisors
as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Shares.
2. Address. Subscriber's address listed below is true and correct.
3. Subscriber understands that the final number of Shares which may be
purchased by Subscriber will be determined by the Company and that this
offer to purchase Shares is subject to acceptance, in whole or in part, by
the Company. Funds not accepted for the purchase of Shares will be
refunded.
4. Subject to acceptance by the Company of Subscriber's offer to purchase
Shares hereunder and upon receipt of Subscriber's payments, the Company
will cause a stock certificate representing the Shares purchased by
Subscriber to be prepared, and the Company will cause such stock
certificate to be transmitted to the Subscriber at the address shown below.
5. By accepting below, the Company undertakes, within 60 days of the closing
of the round in which the Shares are purchased, to use its diligent efforts
to prepare and file a registration statement with the Securities and
Exchange Commission on Form S-3 registering the shares under the Securities
Act of 1933, as amended, and hereby represents, warrants, covenants and
agrees as to the matters set forth on Annex I attached hereto.
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IN WITNESS WHEREOF, Subscriber hereby executes this Agreement as of August 12,
1998.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Signature
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Print Name
Address: 17340 Club Hill Drive
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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(Do not write below this line.)
Accepted as to 714,285 Shares as of August 12, 1998.
Digital Generation Systems, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
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ANNEX I TO SUBSCRIPTION AGREEMENT
By executing the attached Subscription Agreement (the "Agreement"), the Company
hereby represents and warrants to Subscriber that: (a) the Shares have been duly
authorized and, when issued, will be duly and validly issued, fully paid and
non-assessable; (b) the Company has registered its Common Stock pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the Common Stock is listed and traded on the NASDAQ National Market
and the Company has timely filed all material required to be filed pursuant to
all reporting obligations under either Section 13(a) or 15(d) of the Exchange
Act for a period of at least twelve (12) months immediately preceding the offer
or sale of the Shares; (c) the Company has legally available sufficient
authorized and unissued Common Stock as may be reasonably necessary to effect
the sale and issuance of the Shares; (d) the Agreement has been duly and validly
authorized by the Company and, when executed and delivered by the Company, will
be the valid and binding agreement of the Company enforceable in accordance with
its terms; (e) the execution and delivery of the Agreement by the Company, the
issuance of the Shares, and the consummation by the Company of the other
transactions contemplated by the Agreement, do not and will not conflict with or
result in a breach by the Company of any of the terms or provisions of, or
constitute a default under, the articles of incorporation or by-laws of the
Company, or any material agreement or instrument to which the Company is a party
or by which it or any of its properties or assets are bound, or any material
existing applicable law, rule, or regulation or any applicable decree, judgment,
or order of any court or other governmental body having jurisdiction over the
Company or any of its properties or assets, except such conflict, breach or
default which would not have a material adverse effect on the transactions
contemplated herein; and (f) no authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the stockholders of the Company is required to be obtained
by the Company for the issuance and sale of the Shares to Subscriber as
contemplated by the Agreement, except such authorizations, approvals and
consents that have been obtained.
By accepting Subscriber's offer to purchase the Shares, the Company hereby
agrees to enter into a separate registration rights agreement with Subscriber
(and any other purchasers of common stock of the Company in the same round in
which the Shares are purchased) granting Subscriber the demand registration
rights contained in Section 1.3 of the Amendment and Restatement No. 5 to Rights
Agreement entered into as of July 14, 1997 by and among the Company and certain
of its securityholders, which rights shall apply to the registration statement
on Form S-3 referred to in Section 5 of the Agreement. The demand registration
rights so granted will be exercisable no earlier than sixty (60) days following
the closing of the round in which the Shares are purchased. Nothing in this
Section 2 is intended to limit the Company's obligations under section 5 of the
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Agreement to file the Form S-3. Notwithstanding anything herein to the contrary,
the Form S-3 shall be maintained effective by the Company until the earlier of
(i) the date as to which Subscriber may sell all of the Shares without
registration in a single transaction pursuant to Rule 144(k) or (ii) the date on
which Subscriber has sold all of the Shares to the public.
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