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EXHIBIT 4.3
DIGITAL GENERATION SYSTEMS, INC.
AMENDMENT AND RESTATEMENT NO. 5
TO
RIGHTS AGREEMENT
July 14, 1997
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TABLE OF CONTENTS
Page
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Section 1. Registration Rights 3
1.1 Certain Definitions 3
1.2 Company Registration 4
1.3 Form S-3 Registration 6
1.4 Expenses of Registration 7
1.5 Registration Procedures 8
1.6 Indemnification 8
1.7 Information by Holder 11
1.8 Rule 144 Reporting 11
1.9 Assignment of Registration Rights 11
1.10 Termination of Registration Rights 12
Section 2. Miscellaneous 12
2.1 Assignment 12
2.2 Third Parties 12
2.3 Governing Law 12
2.4 Counterparts 12
2.5 Notices 12
2.6 Severability 13
2.7 Amendments and Waivers 13
2.8 Effect of Amendment or Waiver 13
2.9 Rights of Holders 13
2.10 Delays or Omissions 13
2.11 Coordination of Prior Rights and Effectiveness 14
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DIGITAL GENERATION SYSTEMS, INC.
AMENDMENT AND RESTATEMENT NO. 5
TO
RIGHTS AGREEMENT
This AMENDMENT AND RESTATEMENT NO. 5 TO RIGHTS AGREEMENT (this "Rights
Agreement") is entered into as of July 14, 1997, by and among Digital Generation
Systems, Inc., a California corporation (the "Company"), purchasers of the
Company's Series A Convertible Preferred Stock listed on Exhibit A as New Rights
Holders and IndeNet, Inc., a Delaware corporation ("IndeNet" and, collectively,
with the purchasers of the Company's Series A Convertible Preferred Stock, the
"New Rights Holders") and certain securityholders of the Company listed on
Exhibit A attached hereto signing a counterpart signature page hereto (the
"Existing Rights Holders").
R E C I T A L S
A. On November 9, 1992, in connection with the Series A Preferred Stock
Purchase Agreement, the Company, certain holders of the Company's Series A
Preferred Stock, and Xxxx Xxxxxxxxx, Xxx Xxxxxx, Xxx Xxxxxxx and Xxxxx Xxxxxx
(the "Founders") entered into an Amendment and Restatement No. 1 to Rights
Agreement (the "Restatement No. 1"), which conferred upon "Shareholders" (as
that term is defined therein) certain rights including registration rights and
rights of first offer, and conferred upon certain Founders and holders of Series
A Preferred rights to co-sale.
B. On December 4, 1992, in connection with IAI Venture Partner II's
("IAI") (now "Coral Partners II") purchase of the Company's Series A Preferred
Stock pursuant to the Series A Preferred Stock Purchase Agreement dated December
4, 1992, the Company and certain parties to the Restatement and IAI entered into
the First Amendment to the Restatement No. 1 (the "First Amendment"), which
provided that IAI would be considered a "Shareholder" under the Restatement No.
1 to the same extent as if it had been one of the original parties to the
Restatement No. 1.
C. On January 22, 1993, in connection with the issuance to Phoenix
Leasing Incorporated ("Phoenix") of a warrant to purchase Series A Preferred
Stock (the "Series A Warrant") pursuant to an equipment lease agreement, the
Company and certain parties to the Restatement No. 1 and Phoenix entered into
the Second Amendment to the Restatement No. 1 (the "Second Amendment"), which
provided that Phoenix would be considered a "Shareholder" under the Restatement
No. 1 to the same extent as if it had been one of the original parties to the
Restatement No. 1.
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D. On March 10, 1994, in connection with the sale of Series B Preferred
Stock pursuant to the Series B Preferred Stock Purchase Agreement dated March
10, 1994, the Company, certain parties to the Restatement No. 1 and the holders
of Series B Preferred Stock (the "Series B Holders"), entered into the Third
Amendment (the "Third Amendment") which provided that the Series B Holders would
be considered "Shareholders" under the Restatement No. 1 to the same extent as
if they had been original parties to the Restatement No. 1.
E. On November 14, 1994, in connection with the sale of additional shares
of Series B Preferred Stock (the "New Series B Shares") to certain existing
Series B Holders, pursuant to the Amendment No. 1 to the Series B Stock Purchase
Agreement, the Company and the Existing Rights Holders entered into an Amendment
and Restatement No. 2 to Rights Agreement (the "Restatement No. 2"), amending
and restating the Restatement No. 1, as amended, to extend certain rights,
including registration rights and rights of first offer, to the New Series B
Shares.
F. On November 18, 1994, in connection with the sale of Series C
Preferred Stock pursuant to the Series C Preferred Stock Purchase Agreement
dated November 18, 1994, the Company, certain parties to the Restatement No. 2
and the holders of Series C Preferred Stock (the "Series C Holders") entered
into an Amendment and Restatement No. 3 to Rights Agreement (the "Restatement
No. 3") amending and restating the Restatement No. 2 to confer upon the Series C
Holders certain rights, including registration rights and rights of first offer.
G. On July 27, 1995, in connection with the sale of Series D Preferred
Stock pursuant to the Series D Preferred Stock Purchase Agreement dated [July
27, 1995], the Company, certain parties to the Restatement No. 3 and the holders
of Series D Preferred Stock (the "Series D Holders") entered into an Amendment
and Restatement No. 4 to Rights Agreement (the "Restatement No. 4") amending and
restating the Restatement No. 3 to confer upon the Series D Holders certain
rights, including registration rights and rights of first offer.
H. On December 6, 1995, in connection with the initial firm commitment
underwritten offering of the Common Stock of the Company, certain parties to the
Restatement No. 4 signed a letter (the "Waiver Letter") transmitting a Waiver,
Consent and Election (the "Waiver") waiving certain registration rights and
certain rights of first offer and co-sale.
I. The Company and the Existing Rights Holders, constituting the holders
of a majority of the Registrable Securities (as that term is defined in the
Restatement No. 4), in order to induce the New Rights Holders to purchase shares
in the Company, desire to enter into a new agreement, which will supersede the
Restatement No. 4, in its entirety, containing substantially similar provisions,
eliminating the provisions of the Restatement No. 4. waived pursuant to the
Waiver Letter and the Waiver, and granting registration rights to the holders of
Series A Convertible Preferred Stock purchased by them pursuant to that certain
Preferred Stock Purchase Agreement dated July [14], 1997 between the Company and
such holders of Series A Convertible Preferred Stock, as well as shares of
Common Stock issued to IndeNet (the "IndeNet Shares") pursuant to that certain
Stock Purchase Agreement (the "IndeNet Agreement") between the Company and
IndeNet dated July [14], 1997. The holders of the Company's securities listed
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on Exhibit A attached hereto are hereinafter referred to as "Shareholders" and
individually as a "Shareholder".
The parties hereto agree as follows:
Section 1. Registration Rights.
1.1 Certain Definitions. As used in this Rights Agreement, the following
definitions shall apply:
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Conversion Stock" means the shares of the Common Stock issuable or
issued upon conversion of the Shares, if applicable.
"Founders Securities" means the shares of the Common Stock held by the
Founders.
"Holder" means any holder of outstanding Registrable Securities;
provided, however, that for all purposes under this Section, the holder of any
Shares shall be deemed to be the Holder of the Registrable Securities into which
such Shares are then convertible.
"Initiating Holders" means Holders of not less than 50% of the
Registrable Securities.
"Registrable IndeNet Shares" means (i) from the date of this Agreement
until January 31, 1998, none of the IndeNet Shares, (ii) from February 1, 1998
through May 31, 1998, 100,000 of the IndeNet Shares, (iii) from June 1, 1998
until the date prior to the first anniversary of the date of this Agreement, an
aggregate of 200,000 of the IndeNet Shares, and (iv) from the first anniversary
of this Agreement and thereafter all of the IndeNet Shares.
"Registrable Securities" means (i) the Conversion Stock, (ii) the
Warrant Stock, (iii) the Registrable IndeNet Shares, and (iv) any shares of
Common Stock of the Company issued upon a dividend, recapitalization, or similar
event with respect to the Conversion Stock, the Registrable IndeNet Shares or
the Warrant Stock, provided, however, that Registrable Securities shall not
include any shares of Common Stock which have been registered and sold to the
public, any shares sold pursuant to Rule 144 (or successor rule) promulgated by
the Commission or Registrable Securities sold by a person in a transaction in
which rights under this Rights Agreement are not assigned.
"Registration Expenses" means all expenses incurred by the Company in
complying with Sections 1.2 and 1.3, including, without limitation, all
registration, qualification, filing fees, printing expenses, escrow fees, fees
and disbursements of counsel for the Company, blue sky fees and expenses, and
the expense of any special audits incident to or required by any
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such registration (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company), all reasonable fees
and disbursements of a single counsel designated by the Holders of a majority of
the Registrable Securities to be registered for any Holder. Registration
Expenses shall not include selling commissions, discounts or other compensation
paid to underwriters or other agents or brokers to effect the sale.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, as shall be in effect at the time.
"Shares" means shares of the Company's Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Series A Convertible Preferred Stock issued to the Shareholders and Common Stock
issued to IndeNet pursuant to the IndeNet Agreement.
"Warrant Stock" shall mean shares of Common Stock issuable upon
conversion of Shares of Series A Preferred Stock issuable upon exercise of
warrants issued by the Company to Phoenix.
The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act (and any post-effective amendments filed or
required to be filed), and the declaration or ordering of the effectiveness of
such registration statement.
1.2 Company Registration.
(a) Notice of Registration. If at any time or from time to time, the
Company shall determine to register any of its securities, either for its own
account or the account of a security holder or holders, other than a
registration relating solely to employee benefit plans, or a registration
relating solely to a Rule 145 transaction, the Company shall:
(i) promptly give to each Holder and to each Founder written
notice thereof; and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities and Founders Securities specified in a
written request by each Holder and by each Founder received by the Company
within fifteen (15) days after the Company mails such written notice, subject to
the provisions below.
(b) Underwriting. The right of any Holder and any Founder to
registration pursuant to this Section 1.2 shall be conditioned upon the
participation by such Holder or such Founder in such underwriting, if any, and
the inclusion of the Registrable Securities of such Holder or the Founders
Securities of such Founder in the underwriting to the extent provided herein.
All Holders and all Founders proposing to distribute their securities through
such
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underwriting shall (together with the Company and the other holders distributing
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by the Company. Notwithstanding any other provision of this Section 1.2, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit the
Registrable Securities and Founders Securities to be included in such
registration. The Company shall so advise all Holders and all Founders
distributing their securities through such underwriting, and there shall be
excluded from such registration and underwriting, to the extent necessary to
satisfy such limitation, first shares held by the Founders, then shares held by
Holders, then shares which the Company wishes to register for its own account.
As among the Holders as a group, the number of shares of Registrable Securities
that may be included in the registration and underwriting shall be allocated
among the Holders, in proportion, as nearly as practicable, to the respective
amounts of securities held by such Holders at the time of filing the
registration statement, provided that in no event shall the number of
Registrable Securities included in any such offering be reduced below 25% of the
total number of securities included in such offering. To facilitate the
allocation of shares in accordance with the above provisions, the Company may
round the number of shares allocated to any Holder or to any Founder to the
nearest 100 shares.
If any Holder or Founder disapproves of the terms of any such
underwriting, such Holder or Founder may elect to withdraw therefrom by written
notice to the Company and the managing underwriter. Any securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration. The
Registrable Securities so withdrawn shall also be withdrawn from registration,
and such Registrable Securities shall not be transferred in a public
distribution prior to sixty (60) days after the effective date of such
registration, or such other shorter period of time as the underwriters may
require. If, by the withdrawal of such Registrable Securities, a greater number
of Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters),
then the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional Registrable
Securities in the same proportion and manner used in determining the underwriter
limitation in this Section 1.2(b).
(c) Right to Terminate Registration. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section 1.2
prior to the effectiveness of such registration whether or not any Holder or any
Founder has elected to include securities in such registration.
(d) Amendment of Founders Rights. Any amendment to this Section 1.2
which adversely affects the rights of the Founders shall be effected only by an
amendment to this Agreement by the written consent of the holders of a majority
of the Common Stock held by the Founders, by a majority in interest of the
Shareholders and by the Company.
(e) No Limit on Piggyback Registrations. There is no limitation on
the number of times that a Holder or Founder may make a request for registration
pursuant to this Section 1.2.
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1.3 Form S-3 Registration. In case the Company shall receive from a Holder
or Holders a written request that the Company effect a registration on Form S-3
and any related qualification or compliance with respect to an amount of the
Registrable Securities owned by such Holder or Holders for which the anticipated
aggregate offering price would be at least $500,000, the Company shall:
(a) promptly give written notice of the proposed registration and any
related qualification or compliance to all other Holders; and
(b) as soon as practicable, effect 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 Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within 20
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:
(1) if Form S-3 is not available for such offering by the
Holders;
(2) if the Company shall furnish to the Holders a certificate
signed by 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 receipt of the initiating 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;
(3) 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 Section 1.3; provided, however, that
in any event, even if two such registrations will have occurred within such
twelve month period, IndeNet may, on one occasion on or after February 1, 1998,
but prior to the first anniversary of this Agreement, make a written request
that the Company effect a registration on Form S-3 and any related qualification
or compliance with respect to the Registrable IndeNet Shares; provided further
that the expected proceeds of such offering shall be at least $500,000, in which
case (i) no other Registrable Securities may participate in such registration
without the approval of IndeNet and the Company, and (ii) the 60 day deferral
permitted pursuant to subsection 1.3 (b)(2) shall not apply;
(4) 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 Securities
Act.
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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 (d), 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 Securities Act and any other governmental requirements or regulations)
covering the Registrable Securities and other securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Holders. Registrations effected pursuant to this Section 1.3 shall not be
counted as registrations effected pursuant to Section 1.2.
If the registration to be effected pursuant to this Section 1.3 is to be an
underwritten public offering, it shall be managed by an underwriter or
underwriters acceptable to the Company selected by a majority in interest of the
Holders requesting registration. In such event, the right of any Holder to
registration pursuant to this Section 1.3 shall be conditioned upon the
participation by such Holder in such underwriting and the inclusion of the
Registrable Securities of such Holder in the underwriting to the extent provided
herein. If the managing underwriter so selected determines that marketing
factors require a limitation of the number of shares to be underwritten, the
managing underwriter may limit the Registrable Securities held by such Holders
to be included in such registration, provided that no limitation shall apply to
the Registrable IndeNet Shares. The Company shall so advise such Holders, and
the number of shares of Registrable Securities that may be included in the
registration shall be allocated among such Holders in proportion to the
respective amounts of Registrable Securities which would be held by each of such
Holders at the time of filing of the registration statement; provided however,
that on one occasion, in respect of a registration request pursuant to this
Section 1.3 with expected gross proceeds to the Holders of more than
$15,000,000, at the written request of the holders of the Series A Convertible
Preferred, the number of shares of Registrable Securities that may be included
in such offering shall be allocated (x) first to IndeNet, (y) thereafter to the
holders of the Series A Convertible Preferred Shares for up to 75% of the total
offering among such Series A Preferred Stock Holders in proportion to the
respective amounts of Registrable Securities which would be held by each of such
Series A Preferred Stock Holders at the time of filing of the registration
statement, with the remainder allocated to all other Holders of Registrable
Securities in proportion to the respective amounts of Registrable Securities
which would be held by each of such Holders at the time of filing of the
registration statement. Any Registrable Securities that are so excluded from the
underwriting shall be excluded from the registration. As used throughout this
Section the term "Form S-3" shall be deemed to include any equivalent successor
form for registration pursuant to the Securities Act.
1.4 Expenses of Registration. All Registration Expenses incurred in
connection with the registration, qualification or compliance pursuant to
Sections 1.2 and 1.3 shall be borne by the Company.
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1.5 Registration Procedures. If and whenever the Company is required by
the provisions of this Section 1 to use its best efforts to effect promptly the
registration of Registrable Securities, the Company shall:
(a) Prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become and remain effective as provided herein
(provided, however, that before filing a registration statement or prospectus or
any amendments or supplements thereto, or comparable statements under securities
or blue sky laws of any jurisdiction, the Company will furnish to one counsel
for the Holders participating in the planned offering (selected by the majority
of the Registrable Securities) and the underwriters, if any, copies of all such
documents proposed to be filed (including all exhibits thereto), which documents
will be subject to the reasonable review and reasonable comment of such counsel,
and, with respect to demand registration rights pursuant to Section 1.3 hereof,
the Company shall not file any registration statement or amendment thereto or
any prospectus or supplement thereto to which the holders of a majority of the
Registrable Securities covered by such registration statement or the
underwriters, if any, shall reasonably object in writing).
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
current and to comply with the provisions of the Securities Act with respect to
the sale or other disposition of all Registrable Securities covered by such
registration statement, including such amendments and supplements as may be
necessary to reflect the intended method of disposition of the prospective
seller or sellers of such Registrable Securities, but for no longer than 180
days subsequent to the effective date of such registration in the case of a
registration statement on Form S-1 (or any similar form of registration
statement required to set forth substantially identical information) and for no
longer than 120 days in the case of a registration statement on Form S-3.
(c) Furnish to each prospective seller of Registrable Securities such
number of copies of a registration statement and the prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents, as such seller and the underwriter, if any, may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities of such seller.
(d) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
1.6 Indemnification. In the event any of the Registrable Securities or
Founders Securities are included in a registration statement under this Section
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(a) The Company will indemnify and hold harmless (to the fullest
extent permitted by law) each Holder, each of its officers and directors and
partners and such Holder's separate legal counsel and independent accountants,
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, and each Founder, and each underwriter, if any, and each person
who controls any underwriter within the meaning of Section 15 of the Securities
Act, against all expenses, claims, losses, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, preliminary, final or summary prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act applicable to the
Company in connection with any such registration, qualification or compliance,
and the Company will reimburse each such Holder, each of its officers and
directors, fiduciaries, employees, general and limited partners and such
Holders' separate legal counsel and independent accountants and each person
controlling such Holder, each Founder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses as
reasonably incurred in connection with investigating, preparing or defending any
such claim, loss, damage, liability or action, provided that the Company will
not be liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder, such Founder or underwriter and stated to be
specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected and each Founder will, if Founders Securities held
by such Founder are included in the securities as to which such registration,
qualification or compliance is being affected, indemnify the Company, each of
its directors and officers and its legal counsel and independent accountants,
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act, and each other such
Holder, each of its officers and directors and each person controlling such
Holder within the meaning of Section 15 of the Securities Act, and each other
such Founder, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or 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, and will reimburse
the Company, such Holders, such directors, officers, persons, such Founders,
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
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omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder or such
Founder, as the case may be, and stated to be specifically for use therein;
provided, however, that the obligations of each Holder and each Founder
hereunder shall be limited to an amount equal to the net proceeds to each such
Holder of Registrable Securities sold as contemplated herein and the proceeds to
each such Founder of Founders Securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 1.6(c) except to the extent that the failure
to give such notice is materially prejudicial to an Indemnifying Party's ability
to defend such action and provided further, that the Indemnifying Party shall
not assume the defense for matters as to which there is a conflict of interest
or separate and different defenses but shall continue to be liable for the costs
of such defense. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No Indemnifying Party shall be liable for indemnification hereunder
with respect to any settlement or consent to judgment, in connection with any
claim or litigation to which these indemnification provisions apply, that has
been entered into without the prior consent of the Indemnifying Party (which
consent will not be unreasonably withheld).
(d) If the indemnification provided for in this Section 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 herein,
then the Indemnifying Party, in lieu of indemnifying the Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party with
respect to such loss, liability, claim, damage or expense in the proportion that
is appropriate to reflect the relative fault of the Indemnifying Party and the
Indemnified Party 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 the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of 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) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting agreement
shall control.
(f) The obligations of the Company, Holders and Founders under this
Section 1.6 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.7 Information by Holder. Each Holder of Registrable Securities and each
Founder holding Founders Securities included in any registration shall furnish
to the Company such information regarding such Holder or such Founder and the
distribution proposed by such Holder or such Founder as the Company may request
in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 1.
1.8 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, the
Company shall use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, beginning ninety
(90) days after (i) the effective date of the first registration statement filed
by the Company for an offering of its securities to the general public, (ii) the
Company registers a class of securities under Section 12 of the Securities
Exchange Act of 1934, as amended, or (iii) the Company issues an offering
circular meeting the requirements of Regulation A under the Securities Act;
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act of 1934, as amended (at any time after it has become subject to
such reporting requirements);
(c) Furnish to any Holder promptly upon request a written statement
as to its compliance with the reporting requirements of Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Securities Exchange Act of 1934 (at
any time after it has become subject to such reporting requirements), a copy of
the most recent annual or quarterly report of the Company, and such other
reports and documents of the Company and other information in the possession of
or reasonably obtainable by the Company as a Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing a Holder to
sell any such securities without registration.
1.9 Assignment of Registration Rights. The rights to cause the Company to
register securities granted under this Section may be assigned to a transferee
or assignee in connection with the transfer or assignment of shares of
Registrable Securities only if such shares represent at least 1% of the
outstanding shares of the Company's Common Stock (assuming conversion of all
Preferred Stock to Common Stock) on the date of such assignment.
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1.10 Termination of Registration Rights. No Holder shall be entitled to
exercise any right provided for in this Section 1 after five (5) years following
the consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the initial firm
commitment underwritten offering of its securities to the general public.
Section 2. Miscellaneous.
2.1 Assignment. Except as otherwise expressly provided herein, the terms
and conditions of this Rights Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties hereto.
2.2 Third Parties. Nothing in this Rights Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Rights Agreement, except as expressly
provided herein.
2.3 Governing Law. This Rights Agreement shall be governed by and construed
under the laws of the State of California in the United States of America.
2.4 Counterparts. This Rights 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.
2.5 Notices.
(a) All notices, requests, demands and other communications under
this Rights Agreement or in connection herewith shall be given to or made upon
the respective parties as follows:
To Digital Generation
Systems, Inc.: Digital Generation Systems, Inc.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Secretary
To the Shareholders: at their respective addresses as set forth in the stock
purchase agreement pursuant to which their Shares were
purchased.
(b) All notices, requests, demands and other communications given or
made in accordance with the provisions of this Rights Agreement shall be in
writing, and shall be sent by airmail, return receipt requested, or by telex or
telecopy (facsimile) with confirmation of receipt, and shall be deemed to be
given or made when receipt is so confirmed.
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(c) Any party may, by written notice to the other, alter its address
or respondent, and such notice shall be considered to have been given ten (10)
days after the airmailing, telexing or telecopying thereof.
2.6 Severability. If one or more provisions of this Rights Agreement are
held to be unenforceable under applicable law, portions of such provisions, or
such provisions in their entirety, to the extent necessary, shall be severed
from this Rights Agreement, and the balance of this Rights Agreement shall be
enforceable in accordance with its terms.
2.7 Amendments and Waivers. Except as set forth in Section 1.2(d), any term
of this Rights Agreement may be amended and the observance of any term of this
Rights 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 of a majority of the Registrable Securities then
outstanding. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any Registrable Securities then
outstanding, each future holder of all such Registrable Securities, each Founder
and the Company.
2.8 Effect of Amendment or Waiver. Each Shareholder and its successors and
assigns acknowledge that by the operation of Section 2.7 hereof the holders of a
majority of the outstanding Registrable Securities, acting in conjunction with
the Company, will have the right and power to diminish or eliminate all rights
pursuant to this Rights Agreement, provided that any consent, waiver,
modification or amendment shall apply equally to all Holders.
2.9 Rights of Holders. Each holder of Registrable Securities shall have the
absolute right to exercise or refrain from exercising any right or rights that
such holder may have by reason of this Rights Agreement, including, without
limitation, the right to consent to the waiver or modification of any obligation
under this Rights Agreement, and such holder shall not incur any liability to
any other holder of any securities of the Company as a result of exercising or
refraining from exercising any such right or rights.
2.10 Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to any party to this Rights Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this Rights
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Rights Agreement, must be made in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Rights Agreement, or by law or otherwise afforded to
any holder, shall be cumulative and not alternative.
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2.11 Coordination of Prior Rights and Effectiveness. The Existing Rights
Holders hereby agree that the execution and delivery of this Rights Agreement is
an amendment and restatement of the Restatement No. 4 and the rights contained
in the Restatement No. 4 shall be null and void as of the execution hereof by
(a) the holders of a majority of the Registrable Securities, (b) the Company,
and (c) each of the New Rights Holders, whereupon Restatement No. 4 shall be
superseded in its entirety by the terms of this Rights Agreement.
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Signature page to Amendment and Restatement No. 5 to Rights Agreement
IN WITNESS WHEREOF, the parties hereto have executed this Rights Agreement
as of the day and year first above written.
COMPANY:
DIGITAL GENERATION SYSTEMS, INC.,
a California corporation
By:
--------------------------------------------------
Xxxxx Xxxxxxxxx, Chief Executive Officer
EXISTING RIGHTS HOLDERS:
XXXXX INVESTMENT PARTNERSHIP XXII
By:
--------------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
XXXXXXX EMERGING GROWTH PARTNERS, L.P.
By:
--------------------------------------------------
Xxx Xxxxxxxxxx, Managing General Partner
CROWN-XXXXX ASSOCIATES,
a Limited Partnership
By:
--------------------------------------------------
Xxxx X. Xxxxx, Xx., General Partner
CROWN ASSOCIATES III,
A Limited Partnership
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By:
--------------------------------------------------
Xxxx X. Xxxxx, Xx., General Partner
THE CROWN TRUST
By:
--------------------------------------------------
Xxxx Xxxxxxx, Trust Administrator
SIERRA VENTURES IV, a
California Limited Partnership
By its General Partner,
XXXXXXX XXXXXX & XXXXXX ASSOCIATES,
a California Limited Partnership
By:
--------------------------------------------------
Xxxx Xxxxxx, General Partner
SIERRA VENTURES IV INTERNATIONAL,
a California Limited Partnership
By its General Partner,
XXXXXXX XXXXXX & XXXXXX ASSOCIATES,
a California Limited Partnership
By:
--------------------------------------------------
Xxxx Xxxxxx, General Partner
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Signature page to Amendment and Restatement No. 5 to Rights Agreement
AT&T VENTURE COMPANY, L.P.
By:
--------------------------------------------------
Xxxx Xxxxxxx, General Partner
KLEINER, PERKINS, XXXXXXXX & XXXXX VI, L.P.
By:
--------------------------------------------------
Xxxxx Xxxxx, General Partner
KPCB VI FOUNDER'S FUND
By:
--------------------------------------------------
Xxxxx Xxxxx, General Partner
XXXXXXXX ASSOCIATES FUND II
By:
--------------------------------------------------
Xxxxxxx Xxxxxxxxx, General Partner
XXXXXXXX VII
By:
--------------------------------------------------
Xxxxxxx Xxxxxxxxx, General Partner
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Signature page to Amendment and Restatement No. 5 to Rights Agreement
CORAL PARTNERS II, a limited partnership
By:
--------------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
------------------------------------------------------
X. X. Xxxxxx
------------------------------------------------------
Xxxxx X. Xxxxxx
------------------------------------------------------
Xxxxx X. Xxxxxxxx
------------------------------------------------------
Xxxxx X. Watchmaker
XXXX XXXXXXXX INC.
Custodian FBO Xxxxx Xxxxx SEP/XXX
By:
--------------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
XXXXX VENTURES III, L.P.
By:
--------------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
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Signature page to Amendment and Restatement No. 5 to Rights Agreement
FOUNDERS:
------------------------------------------------------
Xxxx Xxxxxxxxx
------------------------------------------------------
Xxxxxx Xxxxxx
NEW RIGHTS HOLDERS
INDENET, INC.
By:
--------------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
PEQUOT PRIVATE EQUITY FUND, L.P.
By:
--------------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
PEQUOT PARTNERS FUND, L.P.
By:
--------------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
Signature page to Amendment and Restatement No. 5 to Rights Agreement
PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC.
By:
--------------------------------------------------
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Name:
-------------------------------------------
Title:
-------------------------------------------
PEQUOT INTERNATIONAL FUND, INC.
By:
--------------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
GENERAL ELECTRIC CAPTIAL
INFORMATION TECHNOLOGY SOLUTIONS
By:
--------------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
TECHNOLOGY CROSSOVER VENTURES, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management, L.L.C.,
Its: General Partner
By:
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
Signature page to Amendment and Restatement No. 5 to Rights Agreement
TECHNOLOGY CROSSOVER VENTURES, C.V.
a Netherlands Antilles Limited Partnership
By: Technology Crossover Management, L.L.C.,
Its: Investment General Partner
By:
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
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TCV II, V.O.F.
a Netherlands Antilles General Partnership
By: Technology Crossover Management II, L.L.C.,
Its: Investment General Partner
By:
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
TECHNOLOGY CROSSOVER VENTURES II, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II, L.L.C.,
Its: General Partner
By:
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
Signature page to Amendment and Restatement No. 5 to Rights Agreement
TCV II (Q), L.P.
a Delaware General Partnership
By: Technology Crossover Management II, L.L.C.,
Its: General Partner
By:
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
TCV II STRATEGIC PARTNERS, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II, L.L.C.,
Its: General Partner
By:
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
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TECHNOLOGY CROSSOVER VENTURES II, C.V.
a Netherlands Antilles Limited Partnership
By: Technology Crossover Management II, L.L.C.,
Its: Investment General Partner
By:
--------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
INTEGRAL CAPITAL PARTNERS III, L.P.
By: Integral Capital Management III, L.P.,
Its: General Partner
By:
--------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: a General Partner
Signature page to Amendment and Restatement No. 5 to Rights Agreement
INTEGRAL CAPITAL PARTNERS
INTERNATIONAL III, L.P.
By: Integral Capital Management III, L.P.,
Its: Investment General Partner
By:
--------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: a General Partner
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EXHIBIT A
NEW RIGHTS HOLDERS
IndeNet, Inc.
Pequot Private Equity Fund, L.P.
Pequot Partners Fund, L.P.
Pequot Offshore Private Equity Fund, Inc.
Pequot International Fund, Inc.
General Electric Information Technology Solutions
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.
TCV II Strategic Partners, L.P.
Technology Crossover Ventures II, C.V.
Integral Capital Partners III, L.P.
Integral Capital Partners International III, L.P.
EXISTING RIGHTS HOLDERS
Xxxxx Investment Partnership XXII
Xxxxxxx Emerging Growth Partners, L.P.
Crown-Xxxxx Associates, a Limited Partnership
Crown Associates III, A Limited Partnership
The Crown Trust
Sierra Ventures IV
Sierra Ventures IV International
AT&T Venture Company, L.P.
Kleiner, Perkins, Xxxxxxxx & Xxxxx VI, L.P.
KPCB VI Founder's Fund
Xxxxxxxx Associates Fund II
Xxxxxxxx VII
Coral Partners II (formerly "IAI Venture Partners II")
X.X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxxx X. Watchmaker
Xxxx Xxxxxxxx Inc
Custodian FBO Xxxxx Xxxxx SEP/XXX
Xxxxx Ventures III, L.P.
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FOUNDERS
Xxxx Xxxxxxxxx
Xxxxxx Xxxxxxx
Xxxxxx Xxxxxx
Xxxxxxx Xxxxxx
SHAREHOLDERS
Xxxxx Xxxxx
Xxxx Xxxxxxxxx
AT&T Venture Company, L.P.
Xxxxxx X. Xxxxxxx and Xxxxxx Xxxxxx Xxxxxxx, JTWROS
X.X. Xxxxxx
Coral Partners II (formerly "IAI Venture Partners II")
Xxxx Xxxxxxxx Inc.
Custodian FBO Xxxxx Xxxxx SEP/XXX
Xxxxxx X. Xxxxxx
Xxxxx Xxxxxxxxx
Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
Xxxxx X. Xxxxxx
Xxx Gettelmen
Xxxxx Ventures III, L.P.
Xxxx X. Xxxxxxxx
Xxxxx Xxxx
H. Xxxxxx Xxxxxxxxx
Xxxx X. Xxxxxxxx
Xxxxx X. Xxxxxx
Xxxxxxx Xxxxxxx Xxxxxxxx & Xxxxx VI
Xxxxx Xxxxxxx
KPC&B Founder's Fund
Xxxx Xxxxxxx
Xxxxxxxx Associates Fund
Xxxxxxxx VII
Xxxxxx X. Xxxxxxxxxx
Xxxxx X. XxXxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxx and Xxx Xxxx
Phoenix Leasing Incorporated
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Xxxxxxx Xxxxxxxx
Sierra Ventures IV
Sierra Ventures IV International
Xxxxx Xxxxx
Stanford University
Xxxxx Xxxxxxxxx
Xxxxxx-Xxx Xxxxx
Xxxx Xxxxxx
Xxxx Xxxxxxx
Xxxxx X. Watchmaker
Xxxxxxx Xxxxxxxxx
WS Investment Company 92B
Xxxx Xxxxxxxx
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