EXHIBIT 10
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of the 17th day of December,
1999, 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
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WHEREAS, the Company issued 725,199 shares of its Common Stock (the "Common
Shares") to certain of the Holders in a private placement transaction pursuant
to that certain Common Stock Purchase Agreement dated December 17, 1999 (the
"Purchase Agreement"); and
WHEREAS, in order to induce the Holders to invest funds in the Company and
to enter into 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
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:
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1.1 Definitions. For purposes of this Section 1:
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(a) The term "Act" means the Securities Act of 1933, as amended.
(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
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 S-3 Registration.
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(a) The Company shall use diligent efforts to prepare and file,
on or before December 31, 2000, 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, 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.
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1.3 Obligations of the Company. When required under Section 1 to
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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 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.
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(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 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 1.3(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.
1.4 Information from Holders. It shall be a condition precedent
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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 1.4 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.
1.5 Expenses of Registration. All expenses of the Holders, except
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underwriting discounts (if any) or commissions, including (without limitation)
all registration, filing
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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.
1.6 Assignment of Registration Rights. The registration rights
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provided pursuant to Section 1.2 are not assignable.
1.7 Indemnification. With respect to all Registrable Securities
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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.7(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,
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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 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.7(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.7(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.7(b) exceed the net proceeds from the offering
received by Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.7 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 1.7, 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 1.7 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 1.7 shall
survive the completion of any offering of Registrable Securities in the
registration statement under this Section 1, and otherwise.
1.8 Termination of Registration Rights. The registration rights
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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 1.8, the Company shall have the right to withdraw the
registration statement, or any portion thereof, covering Registrable Securities.
2. Miscellaneous.
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2.1 General. Nothing in this Agreement, express or implied, is
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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
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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
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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
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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
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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
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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
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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 the Company and the Holders
holding a majority of the Registrable Securities.
2.8 Severability. If one or more provisions of this Agreement are
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held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and
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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
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understanding and agreement between the parties with regard to the subject
matter hereof.
2.10 Issuance of Common Shares. The Holders hereby consent to the
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issuance of the Common Shares pursuant to the terms set forth in the 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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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
DIGITAL GENERATION SYSTEMS, INC.:
By: /s/ Xxxxxxx X. Xxxxxx
____________________________________
Xxxxxxx X. Xxxxxx
Chief Executive Officer
Address:
Digital Generation Systems, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
SIGNATURE PAGE TO DIGITAL GENERATION SYSTEMS, INC.
REGISTRATION RIGHTS AGREEMENT
/s/ Xxxxx X. Xxxxxxxx
_______________________________________
Xxxxx X. Xxxxxxxx
Address:
0000 Xxxxx X'Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
SIGNATURE PAGE TO DIGITAL GENERATION SYSTEMS, INC.
REGISTRATION RIGHTS AGREEMENT
APPENDIX 1.4
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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.
Date.
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Fill in Date: ______________________________
Name. Print:
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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:
______________________________
______________________________
Address.
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Fill in your address: ______________________________
______________________________
______________________________
Appendix 1.4 - Page 1
D. Stock Owned.
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Fill in number of shares Of Record Beneficially
of Common Stock owned of
record and beneficially.
_____________________ ____________________
Aggregate Number of Shares of Common Stock to be Registered on Form S-3:
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_____________ Shares
F. Status.
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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.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
Appendix 1.4 - Page 2
