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EXHIBIT 10.41
WARRANT PURCHASE AGREEMENT
December 9, 1998
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TABLE OF CONTENTS
Page
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1. Purchase and Sale of the Warrant......................................1
1.1 Sale and Issuance of the Warrant.............................1
1.2 Closing......................................................1
2. Representations and Warranties of the Company.........................1
2.1 Authorization................................................1
2.2 Valid Issuance of the Warrant................................2
2.3 Offering.....................................................2
2.4 Non-Contravention............................................2
2.5 Capitalization...............................................3
2.6 Legal Proceedings............................................3
2.7 No Violations................................................3
2.8 Governmental Permits, Etc....................................3
2.9 Financial Statements.........................................3
2.10 No Material Adverse Charge...................................4
2.11 Additional Information.......................................4
2.12 Intellectual Property........................................4
2.13 Listing......................................................4
3. Representations and Warranties of the Investors.......................4
3.1 Authorization................................................4
3.2 Purchase Entirely for Own Account............................5
3.3 Investment Experience........................................5
3.4 Accredited Investor..........................................5
3.5 Restricted Securities........................................5
3.6 Further Limitations on Disposition...........................5
3.7 Legends......................................................6
4. Conditions of Investors'Obligations at Closing........................6
4.1 Representations and Warranties...............................6
4.2 Performance..................................................6
4.3 Qualifications...............................................6
4.4 Proceedings and Documents....................................7
4.5 Registration Rights Agreement................................7
5. Conditions of the Company's Obligations at Closing....................7
5.1 Representations and Warranties...............................7
5.2 Payment of Purchase Price....................................7
5.3 Qualifications...............................................7
6. Miscellaneous.........................................................7
6.1 Survival of Warranties.......................................7
6.2 Successors and Assigns.......................................7
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6.3 Governing Law................................................7
6.4 Counterparts.................................................7
6.5 Titles and Subtitles.........................................8
6.6 Notices......................................................8
6.7 Finder's Fee.................................................8
6.8 Expenses.....................................................8
6.9 Amendments and Waivers.......................................8
6.10 Severability.................................................8
6.11 Corporate Securities Law.....................................8
6.12 Entire Agreement.............................................9
SCHEDULE A Schedule of Investors
EXHIBIT A Form of Warrant
EXHIBIT B Registration Rights Agreement
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DIGITAL GENERATION SYSTEMS, INC.
WARRANT PURCHASE AGREEMENT
THIS WARRANT PURCHASE AGREEMENT is made as of the 9th day of
December, 1998, by and among Digital Generation Systems, Inc., a California
corporation (the "Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "Investor").
WHEREAS, the Company desires to sell, and the Investor desires to
purchase for an aggregate purchase price of four thousand dollars ($4,000), a
warrant, in the form attached hereto as Exhibit A (the "Warrant"), to purchase
one million four hundred sixty and sixty-seven (1,460,067) shares of the
Company's Common Stock (the "Warrant Shares") and with an exercise price equal
three dollars and twenty-five cents ($3.25) (the "Purchase Price").
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of the Warrant.
1.1 Sale and Issuance of the Warrant.
(a) On or prior to the Closing, the Company shall have
authorized (i) the sale and issuance to the Investor of the Warrant and (iii)
the issuance of the Warrant Shares to be issued upon exercise of the Warrant.
(b) Subject to the terms and conditions of this Agreement,
the Investor agrees to purchase at the Closing, and the Company agrees to sell
and issue to Investor at the Closing, a Warrant to purchase the Warrant Shares,
for the purchase price set forth such Investor's name on Schedule A hereto.
1.2 Closing. The purchase and sale of the Warrant shall take
place at the offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 10:00 A.M.,
on December 9, 1998, or at such other time and place as the Company and the
Investor mutually agree upon orally or in writing (which time and place are
designated as the "Closing"). At the Closing the Company shall deliver to the
Investor a Warrant to purchase the Warrant Shares, against payment of the
purchase price therefor by check or wire transfer.
2. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Investor that:
2.1 Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement and the Registration
Rights Agreement, in the form attached hereto as Exhibit B (the "Registration
Rights Agreement"), the performance of all obligations of the Company hereunder
and thereunder, and the authorization, issuance (or reservation for issuance),
sale and delivery of the Warrant being sold hereunder and the Warrant Shares
issuable upon conversion of the
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Warrant has been taken or will be taken prior to the Closing, and this Agreement
and the Registration Rights Agreement constitute valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
the Registration Rights Agreement may be limited by applicable federal or state
securities laws.
2.2 Valid Issuance of the Warrant. The Warrant that is being
purchased by the Investor hereunder, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and nonassessable, and will
be free of restrictions on transfer other than restrictions on transfer under
this Agreement and the Registration Rights Agreement and under applicable state
and federal securities laws. The Warrant Shares issuable upon conversion of the
Warrant purchased under this Agreement have been duly and validly reserved for
issuance and, upon issuance in accordance with the terms of the Company's
Amended and Restated Articles of Incorporation, will be duly and validly issued,
fully paid, and nonassessable and will be free of restrictions on transfer other
than restrictions on transfer under this Agreement and the Registration Rights
Agreement and under applicable state and federal securities laws. The Company
agrees that, prior to the expiration of the Warrant, the Company will at all
time have authorized and reserved, and will keep available, solely for issuance
or delivery upon the exercise of the Warrant, the number of shares of Common
Stock as from time to time shall be issuable upon the exercise of the Warrant.
2.3 Offering. Subject in part to the truth and accuracy of the
Investor's representations set forth in Section 3 of this Agreement, the offer,
sale and issuance of the Common Shares and the Warrants as contemplated by this
Agreement are exempt from the registration requirements of any applicable state
and federal securities laws, and neither the Company nor any authorized agent
acting on its behalf will take any action hereafter that would cause the loss of
such exemption.
2.4 Non-Contravention. To the best of the Company's knowledge,
the execution and delivery of this Agreement and the Warrant, the issuance of
the Warrant Shares to be issued by the Company upon conversion of the Warrant,
and the consummation of the transactions contemplated hereby will not conflict
with or constitute a violation of, or default (with the passage of time or
otherwise) under, any material agreement or instrument to which the Company is a
party or by which it is bound or the Articles of Incorporation (the "Charter")
or the Bylaws of the Company nor result in the creation or imposition of any
lien, encumbrance, claim, security interest or restriction whatsoever upon any
of the material properties or assets of the Company or an acceleration of
indebtedness pursuant to any obligation, agreement or condition contained in any
material bond, debenture, note or any other evidence of indebtedness or any
material indenture, mortgage, deed of trust or any either agreement or
instrument to which the Company is a party or by which the Company is bound or
to which any of the property or assets of the Company is subject, nor conflict
with, or result in a violation of, any law, administrative regulation, ordinance
or order of any court or governmental agency, arbitration panel or authority
applicable to the Company. No consent, approval, authorization or other order
of, or
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registration, qualification or filing with, any regulatory body, administrative
agency, or other governmental body in the United States, other than with respect
to "blue sky" laws, is required for the valid issuance and sale of the Warrant
and the Warrant Shares to be issued pursuant to this Agreement (other than such
as have been made or obtained).
2.5 Capitalization. All documents that the Company was required
to file under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), during the twelve (12) months preceding the date of this Agreement (the
"SEC Filings") accurately reflected the capitalization of the Company as of
their respective filing or effective dates, as the case may be. The Warrant
Shares and the shares of Common Stock of the Company issuable upon conversion of
that certain Warrant No. 2 to Purchase Common Stock of even date herewith issued
to the Investor (together, the "Combined Shares") represent greater than fifty
percent (50%) of the sum of (a) the Combined Shares and (b) the number of shares
of Common Stock of the Company issuable upon exercise of those warrants issued
pursuant to that certain Common Stock and Warrant Purchase Agreement of even
date herewith, by and among the Company and certain investors.
2.6 Legal Proceedings. Except as disclosed in the SEC Filings,
there is no material legal or governmental proceeding pending or, to the
knowledge of the Company, threatened or contemplated to which the Company is or
may be a party or of which the business or property of the Company is or may be
subject.
2.7 No Violations. Except as disclosed in the SEC Filings, the
Company is not in violation of its Charter or Bylaws, in violation of any law,
administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company, which
violation, individually or in the aggregate, would have a material adverse
effect on the business or financial condition of the Company, or in default in
any material respect in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness in any indenture, mortgage, deed of trust or any other agreement or
instrument to which the Company is a party or by which the Company is bound or
by which the properties of the Company are bound or affected, which default,
individually or in the aggregate, would have a material adverse effect on the
business or financial condition of the Company or which would otherwise have a
material adverse effect on the Investor, and there exists no condition which,
with the passage of time or the giving of notice or both, would constitute a
material default under any such document or instrument or result in the
imposition of any material penalty or the acceleration of any indebtedness.
2.8 Governmental Permits, Etc. Except as disclosed in the SEC
Filings, the Company has all necessary franchises, licenses, certificates and
other authorizations from any foreign, federal, state or local government or
governmental agency, department, or body that are currently necessary for the
operation of the business of the Company as currently conducted, the absence of
which would have a material adverse effect on the business or operations of the
Company.
2.9 Financial Statements. Except as disclosed in the SEC Filings,
the financial statements of the Company and the related notes contained in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997
and its Quarterly Report on
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Form 10-Q for the quarter ended September 30, 1998, present fairly the financial
position of the Company as of the dates indicated therein and its results of
operations and cash flows for the periods therein specified. Such financial
statements (including the related notes) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods therein specified.
2.10 No Material Adverse Charge. Except as disclosed in the SEC
Filings, since September 30, 1998, there has not been any material adverse
change in its business, financial condition or results of operations.
2.11 Additional Information. The Company has filed in a timely
manner all SEC Filings. The SEC Filings complied in all material respects with
the requirements of the Exchange Act or the Securities Act of 1933, as amended
(the "Securities Act"), as the case may be, as of their respective filing or
effective dates, and the information contained therein was true and correct in
all material respects as of the date or effective date of such documents, and
each of the SEC Filings, as of such date, did not contain an untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
2.12 Intellectual Property. Except to the extent that the failure
to comply with any of the following statements would not have a material adverse
effect on the business or operations of the Company, the Company hereby
represents and warrants that as of the date hereof:
(a) the Company has the right to use all intellectual
property (the "Intellectual Property") now used by it in its business;
(b) the Company owns all right, title and interest in and
to, all of the intellectual property it owns, free and clear of any liens or
encumbrances;
(c) in any case in which the Company does not own
Intellectual Property, it has good and valid licenses for the same which are in
full force and effect; and
(d) no claims have been asserted with respect to the use of
any such Intellectual Property or challenging or questioning the validity or
effectiveness of any such license or agreement.
2.13 Listing. The Company shall use its best efforts to comply
with all requirements of the National Association of Securities Dealers, Inc.
with respect to the issuance of the Warrant Shares and the listing of the
Warrant Shares on the Nasdaq National Market.
3. Representations and Warranties of the Investor. The Investor
hereby represents and warrants that:
3.1 Authorization. Such Investor has full power and authority to
enter into this Agreement and the Registration Rights Agreement, and each such
Agreement constitutes its valid and legally binding obligation, enforceable in
accordance with its terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of
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general application affecting enforcement of creditors' rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies, and (iii) to the extent the
indemnification provisions contained in the Registration Rights Agreement may be
limited by applicable federal or state securities laws.
3.2 Purchase Entirely for Own Account. This Agreement is made
with such Investor in reliance upon such Investor's representation to the
Company, which by such Investor's execution of this Agreement such Investor
hereby confirms, that the Warrant to be received by such Investor and the
Warrant Shares issuable upon exercise of the Warrant to be received by such
Investor (collectively, the "Securities") will be acquired for investment for
such Investor's own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, such Investor further
represents that such Investor does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Securities.
3.3 Investment Experience. Such Investor is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Warrant. If
other than an individual, Investor also represents it has not been organized for
the purpose of acquiring the Warrant.
3.4 Accredited Investor. Such Investor is an "accredited
investor" within the meaning of Securities and Exchange Commission ("SEC") Rule
501 of Regulation D, as presently in effect.
3.5 Restricted Securities. Such Investor understands that the
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act, only in certain limited circumstances. In this connection, such
Investor represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the Act.
3.6 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, such Investor further agrees not
to make any disposition of all or any portion of the Securities unless and until
the transferee has agreed in writing for the benefit of the Company to be bound
by this Section 3 and the Registration Rights Agreement provided and to the
extent this Section 3 and such agreement are then applicable, and:
(a) There is then in effect a Registration Statement under
the Securities Act of 1933, as amended, covering such proposed disposition and
such disposition is made in accordance with such Registration Statement; or
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(b) (i) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, such Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company that
such disposition will not require registration of such shares under the Act. It
is agreed that the Company will not require opinions of counsel for transactions
made pursuant to SEC Rule 144 except in unusual circumstances.
(c) Notwithstanding the provisions of Paragraphs (a) and (b)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by an Investor that is a partnership to a partner of such
partnership or a retired partner of such partnership who retires after the date
hereof, or to the estate of any such partner or retired partner or the transfer
by gift, will or intestate succession of any partner to his or her spouse or to
the siblings, lineal descendants or ancestors of such partner or his or her
spouse, if the transferee agrees in writing to be subject to the terms hereof to
the same extent as if he or she were an original Investor hereunder.
3.7 Legends. It is understood that the certificates evidencing
the Securities may bear one or all of the following legends:
(a) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
(b) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the California Corporations Code.
(c) Any legend required by applicable blue sky law.
4. Conditions of Investor's Obligations at Closing. The
obligations of the Investor under Section 1 of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions:
4.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
4.2 Performance. The Company shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing.
4.3 Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
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4.4 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Investor's special counsel, and they shall have received all such
counterpart original and certified or other copies of such documents as they may
reasonably request.
4.5 Registration Rights Agreement. The Company and the Investor
shall have entered into the Registration Rights Agreement.
5. Conditions of the Company's Obligations at Closing. The
obligations of the Company to the Investor under this Agreement are subject to
the fulfillment on or before the Closing of each of the following conditions by
that Investor:
5.1 Representations and Warranties. The representations and
warranties of the Investor contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing.
5.2 Payment of Purchase Price. The Investor shall have delivered
the purchase price specified in Section 1.1.
5.3 Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
6. Miscellaneous.
6.1 Survival of Warranties. The warranties, representations and
covenants of the Company and the Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investor or the Company.
6.2 Successors and Assigns. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
6.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
6.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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6.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified, deposit
with a nationally recognized overnight courier, confirmed facsimile or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.
6.7 Finder's Fee. Each party represents that it neither is nor
will be obligated for any finders' fee or commission in connection with this
transaction. The Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Investor or any of its officers, partners,
employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless each Investor
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers, employees or
representatives is responsible.
6.8 Expenses. Irrespective of whether the Closing is effected,
each party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the Warrant or the Registration Rights Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
6.9 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of (a) the Company and (b) the
Investor. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any securities purchased under this
Agreement at the time outstanding (including securities into which such
securities are convertible), each future holder of all such securities, and the
Company.
6.10 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
6.11 Corporate Securities Law. THE SALE OF THE SECURITIES THAT
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE
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ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL,
UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100,
25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO
THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.
6.12 Entire Agreement. This Agreement and the documents referred
to herein constitute the entire agreement among the parties and no party shall
be liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
DIGITAL GENERATION SYSTEMS, INC.
By:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
President and Chief Executive Officer
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
INVESTOR:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO DIGITAL GENERATION SYSTEMS, INC.
WARRANT PURCHASE AGREEMENT
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SCHEDULE A
SCHEDULE OF INVESTORS
NAME AND ADDRESS PURCHASE PRICE
---------------- OF WARRANT
--------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ $ 4,000.00
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EXHIBIT A
Form of Warrant
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SUCH ACT.
WARRANT TO PURCHASE COMMON STOCK
OF
DIGITAL GENERATION SYSTEMS, INC.
VOID AFTER DECEMBER 9, 2001
This Warrant is issued to _________________________, or its
registered assigns ("Holder") by Digital Generation Systems, Inc., a California
corporation (the "Company"), on December 9, 1998 (the "Warrant Issue Date").
This Warrant is issued pursuant to the terms of that certain Common Stock and
Warrant Purchase Agreement dated as of the date hereof (the "Purchase
Agreement") in connection with the Company's issuance to the Holder of shares of
the Company's Common Stock (the "Common Shares").
1. Purchase Shares. Subject to the terms and conditions
hereinafter set forth and set forth in the Purchase Agreement, the Holder is
entitled, upon surrender of this Warrant at the principal office of the Company
(or at such other place as the Company shall notify the holder hereof in
writing), to purchase from the Company up to __________________ (_________)
fully paid and nonassessable shares of Common Stock of the Company, as
constituted on the Warrant Issue Date (the "Common Stock"). The number of shares
of Common Stock issuable pursuant to this Section 1 (the "Shares") shall be
subject to adjustment pursuant to Section 5 and Section 8 hereof.
2. Exercise Price. The purchase price for the Shares shall be
$3.25, as adjusted from time to time pursuant to Section 8 hereof (the "Exercise
Price").
3. Exercise Period. This Warrant shall not be exercisable prior
to December 9, 1999. Thereafter, this Warrant shall be exercisable as follows:
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3.1 This Warrant shall be exercisable with respect to 50% of the
Shares, in whole or in part with respect to such Shares, during the term
commencing on the date that the closing price of the Company's Common Stock on
the Nasdaq National Market has exceeded $10.00 per share (as adjusted for any
stock splits, stock dividends, recapitalizations or the like) for at least
twenty (20) of the preceding thirty (30) consecutive trading days and ending on
5:00 p.m. on December 9, 2001.
3.2 This Warrant shall become exercisable with respect to the
remaining Shares, in whole or in part, during the term commencing on the date
that the closing price of the Company's Common Stock on the Nasdaq National
Market has exceeded $15.00 per share (as adjusted for any stock splits, stock
dividends, recapitalizations or the like) for at least twenty (20) of the
preceding thirty (30) consecutive trading days and ending on 5:00 p.m. on
December 9, 2001.
4. Method of Exercise. While this Warrant remains outstanding
and exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
4.1 the surrender of the Warrant, together with a duly executed
copy of the form of Notice of Exercise attached hereto, to the Secretary of the
Company at its principal offices; and
4.2 the payment to the Company of an amount equal to the
aggregate Exercise Price for the number of Shares being purchased.
5. Assumption of Warrant. If at any time, while this Warrant, or
any portion thereof, is outstanding and unexpired there shall be (i) an
acquisition of the Company by another entity by means of a merger,
consolidation, or other transaction or series of related transactions resulting
in the exchange of the outstanding shares of the Company's capital stock such
that shareholders of the Company prior to such transaction own, directly or
indirectly, less than 50% of the voting power of the surviving entity, or (ii) a
sale or transfer of all or substantially all of the Company's assets to any
other person, then, as a part of such acquisition, sale or transfer, lawful
provision shall be made so that the Holder shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
acquisition, sale or transfer which a holder of the shares deliverable upon
exercise of this Warrant would have been entitled to receive in such
acquisition, sale or transfer if this Warrant had been exercised immediately
before such acquisition, sale or transfer, all subject to further adjustment as
provided in this Section 5; and, in any such case, appropriate adjustment (as
determined by the Company's Board of Directors) shall be made in the application
of the provisions herein set forth with respect to the rights and interests
thereafter of the Holder to the end that the provisions set forth herein
(including provisions with respect to changes in and other adjustments of the
number of Shares the Holder is entitled to purchase) shall thereafter be
applicable, as nearly as possible, in relation to any shares of common stock or
other securities or other property thereafter deliverable upon the exercise of
this Warrant.
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6. Certificates for Shares. Upon the exercise of the purchase
rights evidenced by this Warrant, one or more certificates for the number of
Shares so purchased shall be issued as soon as practicable thereafter (with
appropriate restrictive legends, if applicable), and in any event within thirty
(30) days of the delivery of the Notice of Exercise.
7. Issuance of Shares. The Company covenants that the Shares,
when issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number
of and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:
8.1 Subdivisions, Combinations and Other Issuances. If the
Company shall at any time prior to the expiration of this Warrant subdivide its
Common Stock, by split-up or otherwise, or combine its Common Stock, or issue
additional shares of its Common Stock or Common Stock as a dividend with respect
to any shares of its Common Stock, the number of Shares issuable on the exercise
of this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend, or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the purchase price
payable per share, but the aggregate purchase price payable for the total number
of Shares purchasable under this Warrant (as adjusted) shall remain the same.
Any adjustment under this Section 8(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.
8.2 Reclassification, Reorganization and Consolidation. In case
of any reclassification, capital reorganization, or change in the Common Stock
of the Company (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant, the kind and amount of shares
of stock and other securities and property receivable in connection with such
reclassification, reorganization, or change by a holder of the same number of
shares of Common Stock as were purchasable by the Holder immediately prior to
such reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the purchase price per
share payable hereunder, provided the aggregate purchase price shall remain the
same.
8.3 Notice of Adjustment. When any adjustment is required to be
made in the number or kind of shares purchasable upon exercise of the Warrant,
or in the Exercise Price, the Company shall promptly notify the Holder of such
event and of the number of shares of Common Stock or other securities or
property thereafter purchasable upon exercise of this Warrant.
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9. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.
10. No Shareholder Rights. Prior to exercise of this Warrant, the
Holder shall not be entitled to any rights of a shareholder with respect to the
Shares, including (without limitation) the right to vote such Shares, receive
dividends or other distributions thereon, exercise preemptive rights or be
notified of shareholder meetings, and such holder shall not be entitled to any
notice or other communication concerning the business or affairs of the Company.
However, nothing in this Section 10 shall limit the right of the Holder to be
provided the notices required under this Warrant or the Purchase Agreement.
11. Transfers of Warrant. Subject to compliance with applicable
federal and state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity upon
written notice to the Company. The transfer shall be recorded on the books of
the Company upon the surrender of this Warrant, properly endorsed, to the
Company at its principal offices, and the payment to the Company of all transfer
taxes and other governmental charges imposed on such transfer. In the event of a
partial transfer, the Company shall issue to the Holders one or more appropriate
new warrants.
12. Successors and Assigns. The terms and provisions of this
Warrant and the Purchase Agreement shall inure to the benefit of, and be binding
upon, the Company and the Holders hereof and their respective successors and
assigns.
13. Amendments and Waivers. Any term of this Warrant may be
amended and the observance of any term of this Warrant may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the Holder.
14. Notices. All notices required under this Warrant and shall be
deemed to have been given or made for all purposes (i) upon personal delivery,
(ii) upon confirmation receipt that the communication was successfully sent to
the applicable number if sent by facsimile; (iii) one day after being sent, when
sent by professional overnight courier service, or (iv) five days after posting
when sent by registered or certified mail. Notices to the Company shall be sent
to the principal office of the Company (or at such other place as the Company
shall notify the Holder hereof in writing). Notices to the Holder shall be sent
to the address of the Holder on the books of the Company (or at such other place
as the Holder shall notify the Company hereof in writing).
15. Attorneys' Fees. If any action of law or equity is necessary
to enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
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16. Captions. The section and subsection headings of this Warrant
are inserted for convenience only and shall not constitute a part of this
Warrant in construing or interpreting any provision hereof.
17. Governing Law. This Warrant shall be governed by the laws of
the State of California as applied to agreements among California residents made
and to be performed entirely within the State of California.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Digital Generation Systems, Inc. caused this
Warrant to be executed by an officer thereunto duly authorized.
DIGITAL GENERATION SYSTEMS, INC.
By:_____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
President and Chief Executive Officer
SIGNATURE PAGE TO WARRANT TO PURCHASE COMMON STOCK
OF DIGITAL GENERATION SYSTEMS, INC.
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NOTICE OF EXERCISE
To: DIGITAL GENERATION SYSTEMS, INC.
The undersigned hereby elects to purchase _________________
shares of Common Stock of Digital Generation Systems, Inc., pursuant to the
terms of the attached Warrant and payment of the Exercise Price per share
required under such Warrant accompanies this notice.
The undersigned hereby represents and warrants that the
undersigned is acquiring such shares for its own account for investment purposes
only, and not with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
----------------------------------------
By:
-------------------------------------
Address:
----------------------------------------
----------------------------------------
Date:
--------------------------
Name in which shares should be registered:
-----------------------------------------
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EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of the 9th day of
December, 1998, by and between Digital Generation Systems, Inc., a California
corporation (the "Company"), and each of the persons listed on Schedule A hereto
(collectively, the "Holders").
RECITALS
WHEREAS, the Company issued 2,920,134 shares of its Common Stock
(the "▇▇▇▇▇▇▇▇ Common Shares") to a Holder in a private placement transaction
pursuant to that certain Common Stock Subscription Agreement dated September 29,
1998 (the "Subscription Agreement") and effective as of December 9, 1998;
WHEREAS, the Company issued warrants to purchase up to an
additional 3,008,527 shares of its Common Stock (the "▇▇▇▇▇▇▇▇ Warrant Shares")
to such Holder pursuant to that certain Warrant No. 1 to Purchase Common Stock
and Warrant No. 2 to Purchase Common Stock, each dated December 9, 1998 and
issued to the Moon Doggie Family Partnership (the "▇▇▇▇▇▇▇▇ Warrants");
WHEREAS, the Company issued 923,078 shares of its Common Stock
(the "Investor Common Shares" and to together with the ▇▇▇▇▇▇▇▇ Common Shares,
the "Common Shares") and warrants (the "Investor Warrants" and together with the
▇▇▇▇▇▇▇▇ Warrants, the "Warrants") to purchase up to an additional 461,540
shares of its Common Stock (the "Investor Warrant Shares" and together with the
▇▇▇▇▇▇▇▇ Warrant Shares, the "Warrant Shares") to certain of the Holders in a
private placement transaction pursuant to that certain Common Stock and Warrant
Purchase Agreement dated December 9, 1998 (the "Purchase Agreement"); and
WHEREAS, in order to induce the Holders to invest funds in the
Company and to enter into the Subscription Agreement, the Warrants and the
Purchase Agreement, the Company and the Holders agreed to enter into this
Agreement and hereby agree that this Agreement shall govern the rights of the
Holders to cause the Company to register the Common Shares and the Warrant
Shares and certain other matters as set forth herein.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and agrees as
follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "ACT" means the Securities Act of 1933, as
amended.
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(b) The term "1934 ACT" shall mean the Securities
Exchange Act of 1934, as amended.
(c) The terms "REGISTER," "REGISTERED," and
"REGISTRATION" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration statement or
document.
(d) The term "REGISTRABLE SECURITIES" means the Common
Shares and the Warrant Shares issued or issuable upon exercise of the Warrants
and any Common Stock of the Company issued as a dividend or other distribution
with respect to the Common Shares or the Warrant Shares.
(e) The term "RULE 144" shall mean Rule 144 promulgated
under the Act, as amended, or any similar successor rule thereto that may be
promulgated by the SEC.
(f) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2 Initial S-3 Registration.
(a) The Company shall use diligent efforts to prepare and
file, on or before December 31, 1998, a registration statement on Form S-3 and
any related qualification or compliance with respect to all of the Common Shares
owned by the Holders so as to permit or facilitate the sale and distribution of
the Holders' Common Shares.
(b) Notwithstanding the foregoing, the Company shall not
be obligated to effect any such registration, qualification or compliance,
pursuant to this Section 1.2:
(i) if Form S-3 is not available for such offering by
the Holders;
(ii) if the Company shall furnish to the Holders a
certificate signed by the chief executive officer or the president of the
Company stating that in the good faith judgment of the board of directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for such Form S-3 registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than sixty (60) days after such date,
provided that such right to defer filing shall be exercised by the Company not
more than once in any twelve (12) month period; or
(iii) in any jurisdiction in which the Company would
be required to execute a general consent to service of process in effecting such
registration,
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qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Act.
(c) Subject to the foregoing, the Company shall effect
such registration, qualification, or compliance (including, without limitation,
the execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky (except that in no event shall the
Company be required to qualify to do business as a foreign corporation in any
jurisdiction where it would not, but for the requirements of this paragraph (c),
be required to be so qualified, to subject itself to taxation in any such
jurisdiction or to consent to general service of process in any such
jurisdiction) or other state securities laws and appropriate compliance with
applicable regulations issued under the Act and any other governmental
requirements or regulations) covering the Common Shares and other securities so
entitled to be registered as soon as practicable in accordance with the terms
hereof.
1.3 Subsequent S-3 Registration. In case the Company shall
receive from either (x) the Holders of at least forty (40%) of the Warrant
Shares issued or issuable upon exercise of the Investor Warrants or (y) the
Holders of at least fifty percent (50%) of the Warrant Shares issued or issuable
upon exercise of the Warrants, a written request or requests that the Company
effect a registration on Form S-3 and any related qualification or compliance
with respect to all or a part of the Warrant Shares owned by such Holder or
Holders, the Company shall:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) use all commercially reasonable efforts to effect, as
soon as practicable, such registration and all such qualifications and
compliances as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Holders' Warrant Shares as are
specified in such request, together with all or such portion of the Warrant
Shares of any other Holders joining in such request as are specified in a
written request given within fifteen (15) days after receipt of such written
notice from the Company, provided, however, that the Company shall not be
obligated to effect any such registration, qualification or compliance, pursuant
to this section 1.3:
(i) if Form S-3 is not available for such offering by
the Holders;
(ii) if the Holders, together with the holders of any
other securities of the Company entitled to inclusion in such registration,
propose to sell Warrant Shares and such other securities entitled to inclusion
in such registration (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $1,500,000;
(iii) if the Company shall furnish to the Holders a
certificate signed by the Chief Executive Officer or President of the Company
stating that in the good faith judgment of the board of directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for such Form S-3 registration to be effected at such time, in
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which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than one hundred twenty (120)
days after receipt of the request of the Holder or Holders under this Section
1.3; provided, however, that the Company shall not utilize this right more than
once in any twelve (12) month period;
(iv) if the Company has, within the twelve (12) month
period preceding the date of such request, already effected two (2)
registrations on Form S-3 for the Holders pursuant to this Agreement; or
(v) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Warrant Shares and other securities so
entitled to be registered as soon as practicable after receipt of the request or
requests of the Holders.
1.4 Obligations of the Company. When required under Section 1
to effect the registration of the Registrable Securities, the Company shall:
(a) Prepare and file with the SEC, a registration
statement on Form S-3 with respect to such Registrable Securities and use all
commercially reasonable efforts to cause such registration statement to become
effective, and, subject to the provisions below, use commercially reasonable
efforts to keep such registration statement effective:
(i) In the event of a registration under Section 1.2
hereof, until the earlier of (A) the date on which all of the Common Shares held
by each Holder can be sold without registration in a single transaction pursuant
to Rule 144(k) of the Act, or (B) the date on which all of the Common Shares
have been sold to the public; or
(ii) In the event of a registration under Section 1.3
hereof, upon the request of the Holders of a majority of the Warrant Shares
registered thereunder, for a period of up to one hundred twenty (120) days or,
for such earlier period as is necessary to complete the distribution
contemplated in the registration statement;
(b) If at any time after a registration statement becomes
effective, the Company advises the Holders in writing that the registration
statement shall 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, or any prospectus comprising a part of such
registration statement shall 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, in light of the circumstances under which they were
made, not misleading or the occurrence or existence of any pending corporate
development that, in the reasonable discretion of the Company, makes it
appropriate to suspend the availability of the registration statement and the
related prospectus, the Company shall give notice to the Holders that the
availability of the registration statement is suspended and the Holders shall
suspend any further
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sale of Registrable Securities pursuant to the registration statement until the
Holders have been informed in writing that the registration statement is
available. The Company shall be entitled to exercise its right to suspend the
availability of the registration statement for a period of not more than sixty
(60) days in any three (3) month period, not to exceed in the aggregate ninety
(90) days in any twelve (12) month period.
(c) Subject to subsections 1.4(a) and (b), prepare and
file with the SEC such amendments and supplements to such registration statement
and the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such registration statement.
(d) Furnish to the Holders requesting registration such
numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act, and such other documents as they
may reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(e) Use commercially reasonable efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders; provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Act.
1.5 Information from Holders. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Section 1 with respect to the Registrable Securities of a Holder that such
Holder shall furnish to the Company the information requested on Appendix 1.5
hereto, which shall include such information regarding itself, himself or
herself, any of the Registrable Securities held by it, him or her, and the
intended method of disposition of such securities, and such other information as
shall be reasonably requested by the Company and required to effect the
registration of any of the Registrable Securities.
1.6 Expenses of Registration. All expenses of the Holders,
except underwriting discounts (if any) or commissions, including (without
limitation) all registration, filing and qualification fees, printers' and
accounting fees, and fees and disbursements of counsel for the Company shall be
borne by the Company; provided, however, that the Company shall not be required
to pay any professional fees incurred by any of the Holders.
1.7 Assignment of Registration Rights. The registration
rights provided pursuant to Section 1.2 are not assignable. The rights to cause
the Company to register the Warrant Shares pursuant to Section 1.3 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities that after such assignment or transfer, holds all of
the Warrant Shares issuable or issued upon conversion of the Warrants that were
previously held by such Holder, provided: (a) the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or
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assignee and the securities with respect to which such registration rights are
being assigned; (b) such transferee or assignee agrees in writing to be bound by
and subject to the terms and conditions of this Agreement; and (c) such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act.
1.8 Indemnification. With respect to all Registrable
Securities included in the registration statement referred to in this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners or officers, directors and
shareholders of each Holder, and each person, if any, who controls such Holder
within the meaning of the Act or the 1934 Act, against any losses, claims,
damages or liabilities (joint or several) to which they may become subject under
the Act, the 1934 Act or any state securities laws, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively, a "VIOLATION"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) any 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 violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities laws or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities laws; and the Company will reimburse each such Holder or controlling
person for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
subsection l.8(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder or controlling person; provided further, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Holder, or any person controlling such Holder,
from whom the person asserting any such losses, claims, damages or liabilities
purchased shares in the offering, if a copy of the prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Holder to
such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the shares to such person, and if the
prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage or liability.
(b) To the extent permitted by law, each Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers, each person, if any, who controls the Company within the meaning of
the Act, any other Holder selling securities in such registration statement and
any controlling person of any such other Holder, against any
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losses, claims, damages or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Act, the 1934 Act or any state
securities laws, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by Holder
expressly for use in connection with such registration; and Holder will
reimburse any person intended to be indemnified pursuant to this subsection
l.8(b), for any legal or other expenses reasonably incurred by such person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subsection l.8(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder (which consent shall not be unreasonably
withheld), provided that in no event shall any indemnity under this subsection
l.8(b) exceed the net proceeds from the offering received by Holder.
(c) Promptly after receipt by an indemnified party under
this Section 1.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.8, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding.
(d) If the indemnification provided for in this Section
1.8 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
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(e) The obligations of each Holder under this Section 1.8
shall survive the completion of any offering of Registrable Securities in the
registration statement under this Section 1, and otherwise.
1.9 Termination of Registration Rights. The registration
rights provided in this Section 1 shall terminate with respect to a particular
Holder if all Registrable Securities held by such Holder may be sold pursuant to
Rule 144 in any three (3) month period. Upon the termination of registration
rights pursuant to this Section 1.9, the Company shall have the right to
withdraw the registration statement, or any portion thereof, covering
Registrable Securities.
2. Miscellaneous.
2.1 General. Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
2.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
2.3 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.4 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
2.5 Notices. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed facsimile transmission, nationally recognized overnight
courier service, or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
2.6 Expenses. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
2.7 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of
8
30
(a) the Company, (b) the Holders holding a majority of the Registrable
Securities, not including any Registrable Securities held by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
or the Moon Doggie Family Partnership, and (c) the Moon Doggie Family
Partnership.
2.8 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
2.9 Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof and is intended to supersede in their entirety any and all
registration rights granted to certain of the Holders in connection with the
purchase of the ▇▇▇▇▇▇▇▇ Common Shares pursuant to Paragraph 2 of Annex 1 to the
Subscription Agreement, including, without limitation, the requirement set forth
in Section 7 the Subscription Agreement that the Company undertake, within sixty
(60) days of the closing of the round in which the ▇▇▇▇▇▇▇▇ Common Shares were
purchased, to use its diligent efforts to prepare and file a registration
statement with the SEC on Form S-3 registering such shares under the Act.
2.10 Issuance of Common Shares, Warrants and Warrant Shares.
The Holders hereby consent to the issuance of the Common Shares, Warrants and
Warrant Shares pursuant to the terms set forth in the Warrants, Subscription
Agreement and Purchase Agreement. The Holders further agree to take any and all
actions reasonably necessary to evidence and effect such consent, including, but
not limited to, executing any necessary shareholder consents or proxies and
voting all voting securities of the Company then held by such Holder at any
shareholder meeting in favor of approving the aforementioned issuances.
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31
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
DIGITAL GENERATION SYSTEMS, INC.:
By:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chief Executive Officer
Address:
Digital Generation Systems, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
HOLDERS:
----------------------------------------
Signature
Address:
----------------------------------------
----------------------------------------
SIGNATURE PAGE TO DIGITAL GENERATION SYSTEMS, INC.
REGISTRATION RIGHTS AGREEMENT
32
SCHEDULE A
Moon Doggie Family Partnership
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Integral Capital Partners IV, L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Integral Capital Partners IV MS Side Fund,
L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Pequot Private Equity Fund, LP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Pequot Offshore Private Equity Fund, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Technology Crossover Ventures, L.P.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Technology Crossover Ventures, C.V.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TCV II, V.O.F.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Technology Crossover Ventures II, L.P.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TCV II (Q), L.P.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
33
TCV II Strategic Partners, L.P.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Technology Crossover Ventures II, C.V.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Lion Investments Limited
Carlton House
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Westpool Investment Trust plc
Carlton House
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
34
APPENDIX 1.5
SHAREHOLDER INFORMATION QUESTIONNAIRE:
All information furnished below by the undersigned for use in the Registration
Statement on Form S-3 is, and on the date such shares registered thereunder,
will be true, correct, and complete in all material respects, and does not, and
on the date on which the undersigned sells such shares, will not, contain any
untrue statement of a material fact or omit to state any material fact necessary
to make such information not misleading. By completing and returning this
information statement, the undersigned hereby consents to the use of his or her
name, address, and share ownership information in the Form S-3 of Digital
Generation Systems, Inc.
A. Date.
Fill in Date: ______________________________
B. Name. Print:
Print and sign name or names ______________________________
exactly as name or names appear on
share certificate. If certificate is held ______________________________
in more than one name, all must sign.
Sign:
------------------------------
------------------------------
C. Address.
Fill in your address: ______________________________
------------------------------
------------------------------
35
D. Stock Owned.
Fill in number of shares of Of Record Beneficially
Common Stock owned of record
and beneficially.
--------------------- --------------------
E. Aggregate Number of Shares of Common Stock to be Registered on Form S-3:
_____________ Shares
F. Status.
The signatory hereto is an individual ( ), partnership ( ), corporation ( ),
or other, as more fully described below ( ). The signatory is not acting in a
fiduciary capacity or as a nominee in selling shares in the public offering,
except as indicated below.
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