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EXHIBIT 4.5
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
"Xxxxxxxx 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 "Xxxxxxxx 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 "Xxxxxxxx Warrants");
WHEREAS, the Company issued 923,078 shares of its Common Stock (the
"Investor Common Shares" and to together with the Xxxxxxxx Common Shares, the
"Common Shares") and warrants (the "Investor Warrants" and together with the
Xxxxxxxx Warrants, the "Warrants") to purchase up to an additional 461,540
shares of its Common Stock (the "Investor Warrant Shares" and together with the
Xxxxxxxx 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
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(a) the Company, (b) the Holders holding a majority of the Registrable
Securities, not including any Registrable Securities held by Xxxxx X. Xxxxxxxx
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 Xxxxxxxx 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 Xxxxxxxx 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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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
DIGITAL GENERATION SYSTEMS, INC.:
By: ____________________________________
Xxxxx X. Xxxxxxxxx
Chief Executive Officer
Address:
Digital Generation Systems, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
HOLDERS:
________________________________________
Signature
Address:
________________________________________
________________________________________
SIGNATURE PAGE TO DIGITAL GENERATION SYSTEMS, INC.
REGISTRATION RIGHTS AGREEMENT
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SCHEDULE A
Moon Doggie Family Partnership
00000 Xxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Integral Capital Partners IV, L.P.
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Integral Capital Partners IV MS Side Fund,
L.P.
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Pequot Private Equity Fund, LP
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Pequot Offshore Private Equity Fund, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Technology Crossover Ventures, L.P.
00 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Technology Crossover Ventures, C.V.
00 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
TCV II, V.O.F.
00 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Technology Crossover Ventures II, L.P.
00 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
TCV II (Q), L.P.
00 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
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TCV II Strategic Partners, L.P.
00 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Technology Crossover Ventures II, C.V.
00 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Lion Investments Limited
Carlton House
00 Xxxxxx Xxxx Xxxxxx
Xxxxxx X0X 0XX
XXXXXXX
Westpool Investment Trust plc
Carlton House
00 Xxxxxx Xxxx Xxxxxx
Xxxxxx X0X 0XX
XXXXXXX
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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: ________________________________________
________________________________________
________________________________________
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D. Stock Owned.
Fill in number of shares of Common Of Record Beneficially
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.
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
