EXHIBIT E
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
WARRANT TO PURCHASE COMMON STOCK
OF
DIGITAL GENERATION SYSTEMS, INC.
VOID AFTER DECEMBER 9, 2001
This Warrant is issued to Technology Crossover Ventures, L.P., or its
registered assigns ("Holder") by Digital Generation Systems, Inc., a
California corporation (the "Company"), on December 9, 1998 (the "Warrant Issue
Date"). This Warrant is issued pursuant to the terms of that certain Common
Stock and Warrant Purchase Agreement dated as of the date hereof (the "Purchase
Agreement") in connection with the Company's issuance to the Holder of shares of
the Company's Common Stock (the "Common Shares").
1. Purchase Shares. Subject to the terms and conditions hereinafter set
forth and set forth in the Purchase Agreement, the Holder is entitled, upon
surrender of this Warrant at the principal office of the Company (or at such
other place as the Company shall notify the holder hereof in writing), to
purchase from the Company up to thirty-five thousand six hundred thirty-nine
(35,639) fully paid and nonassessable shares of Common Stock of the Company, as
constituted on the Warrant Issue Date (the "Common Stock"). The number of shares
of Common Stock issuable pursuant to this Section 1 (the "Shares") shall be
subject to adjustment pursuant to Section 5 and Section 8 hereof.
2. Exercise Price. The purchase price for the Shares shall be $3.25, as
adjusted from time to time pursuant to Section 8 hereof (the "Exercise Price").
3. Exercise Period. This Warrant shall not be exercisable prior to
December 9,1999. Thereafter, this Warrant shall be exercisable as follows:
(a) This Warrant shall be exercisable with respect to 50% of the
Shares, in whole or in part with respect to such Shares, during the term
commencing on the date that the closing price of the Company's Common Stock on
the Nasdaq National Market has exceeded $10.00 per share (as adjusted for any
stock splits, stock dividends, recapitalizations or
the like) for at least twenty (20) of the preceding thirty (30) consecutive
trading days and ending on 5:00 p.m. on December 9, 2001.
(b) This Warrant shall become exercisable with respect to the
remaining Shares, in whole or in part, during the term commencing on the date
that the closing price of the Company's Common Stock on the Nasdaq National
Market has exceeded $15.00 per share (as adjusted for any stock splits, stock
dividends, recapitalizations or the like) for at least twenty (20) of the
preceding thirty (30) consecutive trading days and ending on 5:00 p.m. on
December 9, 2001.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant, together with a duly executed copy
of the form of Notice of Exercise attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of an amount equal to the aggregate
Exercise Price for the number of Shares being purchased.
5. Assumption of Warrant. If at any time, while this Warrant, or any
portion thereof, is outstanding and unexpired there shall be (i) an acquisition
of the Company by another entity by means of a merger, consolidation, or other
transaction or series of related transactions resulting in the exchange of the
outstanding shares of the Company's capital stock such that shareholders of the
Company prior to such transaction own, directly or indirectly, less than 50% of
the voting power of the surviving entity, or (ii) a sale or transfer of all or
substantially all of the Company's assets to any other person, then, as a part
of such acquisition, sale or transfer, lawful provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the Exercise
Price then in effect, the number of shares of stock or other securities or
property of the successor corporation resulting from such acquisition, sale or
transfer which a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such acquisition, sale or transfer if
this Warrant had been exercised immediately before such acquisition, sale or
transfer, all subject to further adjustment as provided in this Section 5; and,
in any such case, appropriate adjustment (as determined by the Company's Board
of Directors) shall be made in the application of the provisions herein set
forth with respect to the rights and interests thereafter of the Holder to the
end that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the number of Shares the Holder is
entitled to purchase) shall thereafter be applicable, as nearly as possible, in
relation to any shares of common stock or other securities or other property
thereafter deliverable upon the exercise of this Warrant.
6. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter (with appropriate
restrictive legends, if applicable), and in any event within thirty (30) days of
the delivery of the Notice of Exercise.
2
7. Issuance of Shares. The Company covenants that the Shares, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number of and
kind of securities purchasable upon exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the Company
shall at any time prior to the expiration of this Warrant subdivide its Common
Stock, by split-up or otherwise, or combine its Common Stock, or issue
additional shares of its Common Stock or Common Stock as a dividend with respect
to any shares of its Common Stock, the number of Shares issuable on the exercise
of this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend, or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the purchase price
payable per share, but the aggregate purchase price payable for the total number
of Shares purchasable under this Warrant (as adjusted) shall remain the same.
Any adjustment under this Section 8(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case of
any reclassification, capital reorganization, or change in the Common Stock of
the Company (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant, the kind and amount of shares
of stock and other securities and property receivable in connection with such
reclassification, reorganization, or change by a holder of the same number of
shares of Common Stock as were purchasable by the Holder immediately prior
to-such reclassification, reorganization, or change. In any such case
appropriate provisions shall be made with respect to the rights and interest of
the Holder so that the provisions hereof shall thereafter be applicable with
respect to any shares of stock or other securities and property deliverable upon
exercise hereof, and appropriate adjustments shall be made to the purchase price
per share payable hereunder, provided the aggregate purchase price shall remain
the same.
(c) Notice of Adjustment. When any adjustment is required to be made
in the number or kind of shares purchasable upon exercise of the Warrant, or in
the Exercise Price, the Company shall promptly notify the Holder of such event
and of the number of shares of Common Stock or other securities or property
thereafter purchasable upon exercise of this Warrant.
9. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional
3
shares the Company shall make a cash payment therefor on the basis of the
Exercise Price then in effect.
10. No Shareholder Rights. Prior to exercise of this Warrant, the Holder
shall not be entitled to any rights of a shareholder with respect to the Shares,
including (without limitation) the right to vote such Shares, receive dividends
or other distributions thereon, exercise preemptive rights or be notified of
shareholder meetings, and such holder shall not be entitled to any notice or
other communication concerning the business or affairs of the Company. However,
nothing in this Section 10 shall limit the right of the Holder to be provided
the notices required under this Warrant or the Purchase Agreement.
11. Transfers of Warrant. Subject to compliance with applicable federal
and state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity upon
written notice to the Company. The transfer shall be recorded on the books of
the Company upon the surrender of this Warrant, properly endorsed, to the
Company at its principal offices, and the payment to the Company of all transfer
taxes and other governmental charges imposed on such transfer. In the event of a
partial transfer, the Company shall issue to the Holders one or more appropriate
new warrants.
12. Successors and Assigns. The terms and provisions of this Warrant and
the Purchase Agreement shall inure to the benefit of, and be binding upon, the
Company and the Holders hereof and their respective successors and assigns.
13. Amendments and Waivers. Any term of this Warrant may be amended and
the observance of any term of this Warrant may be waived (either generally or in
a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Holder.
14. Notices. All notices required under this Warrant and shall be deemed
to have been given or made for all purposes (i) upon personal delivery, (ii)
upon confirmation receipt that the communication was successfully sent to the
applicable number if sent by facsimile; (iii) one day after being sent, when
sent by professional overnight courier service, or (iv) five days after posting
when sent by registered or certified mail. Notices to the Company shall be sent
to the principal office of the Company (or at such other place as the Company
shall notify the Holder hereof in writing). Notices to the Holder shall be sent
to the address of the Holder on the books of the Company (or at such other place
as the Holder shall notify the Company hereof in writing).
15. Attorneys' Fees. If any action of law or equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
16. Captions. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
4
17. Governing Law. This Warrant shall be governed by the laws of the
State of California as applied to agreements among California residents made and
to be performed entirely within the State of California.
[remainder of page intentionally left blank]
5
IN WITNESS WHEREOF, Digital Generation Systems, Inc. caused this Warrant
to be executed by an officer thereunto duly authorized.
DIGITAL GENERATION SYSTEMS, INC.
By: /s/ XXXXX X. XXXXXXXXX
----------------------------------------------
Xxxxx X. Xxxxxxxxx,
President and Chief Executive Officer
SIGNATURE PAGE TO WARRANT TO PURCHASE COMMON STOCK
OF DIGITAL GENERATION SYSTEMS, INC.
NOTICE OF EXERCISE
To: DIGITAL GENERATION SYSTEMS, INC.
The undersigned hereby elects to purchase _____________________ shares
of Common Stock of Digital Generation Systems, Inc., pursuant to the terms of
the attached Warrant and payment of the Exercise Price per share required under
such Warrant accompanies this notice.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
________________________________________
By:
_____________________________________
Address:
________________________________________
Date: ________________________________________
_________________
Name in which shares should be registered:
__________________________________________
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
WARRANT TO PURCHASE COMMON STOCK
OF
DIGITAL GENERATION SYSTEMS, INC.
VOID AFTER DECEMBER 9, 2001
This Warrant is issued to Technology Crossover Ventures, C.V., or its
registered assigns ("Holder") by Digital Generation Systems, Inc., a California
corporation (the "Company"), on December 9, 1998 (the "Warrant Issue Date").
This Warrant is issued pursuant to the terms of that certain Common Stock and
Warrant Purchase Agreement dated as of the date hereof (the "Purchase
Agreement") in connection with the Company's issuance to the Holder of shares of
the Company's Common Stock (the "Common Shares").
1. Purchase Shares. Subject to the terms and conditions hereinafter set
forth and set forth in the Purchase Agreement, the Holder is entitled, upon
surrender of this Warrant at the principal office of the Company (or at such
other place as the Company shall notify the holder hereof in writing), to
purchase from the Company up to two thousand eight hundred twenty-three (2,823)
fully paid and nonassessable shares of Common Stock of the Company, as
constituted on the Warrant Issue Date (the "Common Stock"). The number of shares
of Common Stock issuable pursuant to this Section 1 (the "Shares") shall be
subject to adjustment pursuant to Section 5 and Section 8 hereof.
2. Exercise Price. The purchase price for the Shares shall be $3.25, as
adjusted from time to time pursuant to Section 8 hereof (the "Exercise Price").
3. Exercise Period. This Warrant shall not be exercisable prior to
December 9, 1999. Thereafter, this Warrant shall be exercisable as follows:
(a) This Warrant shall be exercisable with respect to 50% of the
Shares, in whole or in part with respect to such Shares, during the term
commencing on the date that the closing price of the Company's Common Stock on
the Nasdaq National Market has exceeded $10.00 per share (as adjusted for any
stock splits, stock dividends, recapitalizations or
the like) for at least twenty (20) of the preceding thirty (30) consecutive
trading days and ending on 5:00 p.m. on December 9, 2001.
(b) This Warrant shall become exercisable with respect to the
remaining Shares, in whole or in part, during the term commencing on the date
that the closing price of the Company's Common Stock on the Nasdaq National
Market has exceeded $15.00 per share (as adjusted for any stock splits, stock
dividends, recapitalizations or the like) for at least twenty (20) of the
preceding thirty (30) consecutive trading days and ending on 5:00 p.m. on
December 9, 2001.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant, together with a duly executed copy
of the form of Notice of Exercise attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of an amount equal to the aggregate
Exercise Price for the number of Shares being purchased.
5. Assumption of Warrant. If at any time, while this Warrant, or any
portion thereof, is outstanding and unexpired there shall be (1) an acquisition
of the Company by another entity by means of a merger, consolidation, or other
transaction or series of related transactions resulting in the exchange of the
outstanding shares of the Company's capital stock such that shareholders of the
Company prior to such transaction own, directly or indirectly, less than 50% of
the voting power of the surviving entity, or (ii) a sale or transfer of all or
substantially all of the Company's assets to any other person, then, as a part
of such acquisition, sale or transfer, lawful provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the Exercise
Price then in effect, the number of shares of stock or other securities or
property of the successor corporation resulting from such acquisition, sale or
transfer which a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such acquisition, sale or transfer if
this Warrant had been exercised immediately before such acquisition, sale or
transfer, all subject to further adjustment as provided in this Section 5; and,
in any such case, appropriate adjustment (as determined by the Company's Board
of Directors) shall be made in the application of the provisions herein set
forth with respect to the rights and interests thereafter of the Holder to the
end that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the number of Shares the Holder is entitled
to purchase) shall thereafter be applicable, as nearly as possible, in relation
to any shares of common stock or other securities or other property thereafter
deliverable upon the exercise of this Warrant. .
6. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be ISSUED AS SOON as practicable thereafter (with appropriate
restrictive legends, if applicable), and in any event within thirty (30) days of
the delivery of the Notice of Exercise.
2
7. Issuance of Shares. The Company covenants that the Shares, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number of and
kind of securities purchasable upon exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the Company
shall at any time prior to the expiration of this Warrant subdivide its Common
Stock, by split-up or otherwise, or combine its Common Stock, or issue
additional shares of its Common Stock or Common Stock as a dividend with respect
to any shares of its Common Stock, the number of Shares issuable on the exercise
of this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend, or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the purchase price
payable per share, but the aggregate purchase price payable for the total number
of Shares purchasable under this Warrant (as adjusted) shall remain the same.
Any adjustment under this Section 8(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case of
any reclassification, capital reorganization, or change in the Common Stock of
the Company (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant, the kind and amount of shares
of stock and other securities and property receivable in connection with such
reclassification, reorganization, or change by a holder of the same number of
shares of Common Stock as were purchasable by the Holder immediately prior to
such reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the purchase price per
share payable hereunder, provided the aggregate purchase price shall remain the
same.
(c) Notice of Adjustment. When any adjustment is required to be made
in the number or kind of shares purchasable upon exercise of the Warrant, or in
the Exercise Price, the Company shall promptly notify the Holder of such event
and of the number of shares of Common Stock or other securities or property
thereafter purchasable upon exercise of this Warrant.
9. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional
3
shares the Company shall make a cash payment therefor on the basis of the
Exercise Price then in effect.
10. No Shareholder Rights. Prior to exercise of this Warrant, the Holder
shall not be entitled to any rights of a shareholder with respect to the Shares,
including (without limitation) the right to vote such Shares, receive dividends
or other distributions thereon, exercise preemptive rights or be notified of
shareholder meetings, and such holder shall not be entitled to any notice or
other communication concerning the business or affairs of the Company. However,
nothing in this Section 10 shall limit the right of the Holder to be provided
the notices required under this Warrant or the Purchase Agreement.
11. Transfers of Warrant. Subject to compliance with applicable federal
and state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity upon
written notice to the Company. The transfer shall be recorded on the books of
the Company upon the surrender of this Warrant, properly endorsed, to the
Company at its principal offices, and the payment to the Company of all transfer
taxes and other governmental charges imposed on such transfer. In the event of a
partial transfer, the Company shall issue to the Holders one or more appropriate
new warrants.
12. Successors and Assigns. The terms and provisions of this Warrant and
the Purchase Agreement shall inure to the benefit of, and be binding upon, the
Company and the Holders hereof and their respective successors and assigns.
13. Amendments and Waivers. Any term of this Warrant may be amended and
the observance of any term of this Warrant may be waived (either generally or in
a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Holder.
14. Notices. All notices required under this Warrant and shall be deemed
to have been given or made for all purposes (i) upon personal delivery, (ii)
upon confirmation receipt that the communication was successfully sent to the
applicable number if sent by facsimile; (iii) one day after being sent, when
sent by professional overnight courier service, or (iv) five days after posting
when sent by registered or certified mail. Notices to the Company shall be sent
to the principal office of the Company (or at such other place as the Company
shall notify the Holder hereof in writing). Notices to the Holder shall be sent
to the address of the Holder on the books of the Company (or at such other place
as the Holder shall notify the Company hereof in writing).
15. Attorneys' Fees. If any action of law or equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
16. Captions. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
4
17. Governing Law. This Warrant shall be governed by the laws of the
State of California as applied to agreements among California residents made and
to be performed entirely within the State of California.
[remainder of page intentionally left blank]
5
IN WITNESS WHEREOF, Digital Generation Systems, Inc. caused this Warrant
to be executed by an officer thereunto duly authorized.
DIGITAL GENERATION SYSTEMS, INC.
By: /s/ XXXXX X. XXXXXXXXX
-----------------------------------------
Xxxxx X. Xxxxxxxxx,
President and Chief Executive Officer
SIGNATURE PAGE TO WARRANT TO PURCHASE COMMON STOCK
OF DIGITAL GENERATION SYSTEMS, INC.
NOTICE OF EXERCISE
To: DIGITAL GENERATION SYSTEMS, INC.
The undersigned hereby elects to purchase __ shares of Common Stock of
Digital Generation Systems, Inc., pursuant to the terms of the attached Warrant
and payment of the Exercise Price per share required under such Warrant
accompanies this notice.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
----------------------------------------
By:
-------------------------------------
Address: ----------------------------------------
Date: ----------------------------------------
----------------
Name in which shares should be registered:
------------------------------------------
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED
UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
WAFT TO PURCHASE COMMON STOCK
OF
DIGITAL GENERATION SYSTEMS, INC.
VOID AFTER DECEMBER 9, 2001
This Warrant is issued to TCV II, V.O.F., or its registered assigns
("Holder") by Digital Generation Systems, Inc., a California corporation (the
"Company"), on December 9, 1998 (the "Warrant Issue Date"). This Warrant is
issued pursuant to the terms of that certain Common Stock and Warrant Purchase
Agreement dated as of the date hereof (the "Purchase Agreement") in connection
with the Company's issuance to the Holder of shares of the Company's Common
Stock (the "Common Shares").
1. Purchase Shares. Subject to the terms and conditions hereinafter set
forth and set forth in the Purchase Agreement, the Holder is entitled, upon
surrender of this Warrant at the principal office of the Company (or at such
other place as the Company shall notify the holder hereof in writing), to
purchase from the Company up to one thousand one hundred ninety-six (1,196)
fully paid and nonassessable shares of Common Stock of the Company, as
constituted on the Warrant Issue Date (the "Common Stock"). The number of shares
of Common Stock issuable pursuant to this Section 1 (the "Shares") shall be
subject to adjustment pursuant to Section 5 and Section 8 hereof.
2. Exercise Price. The purchase price for the Shares shall be $3.25, as
adjusted from time to time pursuant to Section 8 hereof (the "Exercise Price").
3. Exercise Period. This Warrant shall not be exercisable prior to
December 9,1999. Thereafter, this Warrant shall be exercisable as follows:
(a) This Warrant shall be exercisable with respect to 50% of the
Shares, in whole or in part with respect to such Shares, during the term
commencing on the date that the closing price of the Company's Common Stock on
the Nasdaq National Market has exceeded $10.00 per share (as adjusted for any
stock splits, stock dividends, recapitalizations or
the like) for at least twenty (20) of the preceding thirty (30) consecutive
trading days and ending on 5:00 p.m. On December 9, 2001.
(b) This Warrant shall become exercisable with respect to the
remaining Shares, in whole or in part, during the term commencing on the date
that the closing price of the Company's Common Stock on the Nasdaq National
Market has exceeded $15.00 per share (as adjusted for any stock splits, stock
dividends, recapitalizations or the like) for at least twenty (20) of the
preceding thirty (30) consecutive trading days and ending on 5:00 p.m. on
December 9, 2001.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant, together with a duly executed copy
of the form of Notice of Exercise attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of an amount equal to the aggregate
Exercise Price for the number of Shares being purchased.
5. Assumption of Warrant. If at any time, while this Warrant, or any
portion thereof, is outstanding and unexpired there shall be (i) an acquisition
of the Company by another entity by means of a merger, consolidation, or other
transaction or series of related transactions resulting in the exchange of the
outstanding shares of the Company's capital stock such that shareholders of the
Company prior to such transaction own, directly or indirectly, less than 50% of
the voting power of the surviving entity, or (ii) a sale or transfer of all or
substantially all of the Company's assets to any other person, then, as a part
of such acquisition, sale or transfer, lawful provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the Exercise
Price then in effect, the number of shares of stock or other securities or
property of the successor corporation resulting from such acquisition, sale or
transfer which a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such acquisition, sale or transfer if
this Warrant had been exercised immediately before such acquisition, sale or
transfer, all subject to further adjustment as provided in this Section 5; and,
in any such case, appropriate adjustment (as determined by the Company's Board
of Directors) shall be made in the application of the provisions herein set
forth with respect to the rights and interests thereafter of the Holder to the
end that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the number of shares the holder is entitled
to purchase) shall thereafter be applicable, as nearly as possible, in relation
to any shares of common stock or other securities or other property thereafter
deliverable upon the exercise of this Warrant.
6. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter (with appropriate
restrictive legends, if applicable), and in any event within thirty (30) days of
the delivery of the Notice of Exercise.
2
7. Issuance of Shares. The Company covenants that the Shares, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number of and
kind of securities purchasable upon exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the Company
shall at any time prior to the expiration of this Warrant subdivide its Common
Stock, by split-up or otherwise, or combine its Common Stock, or issue
additional shares of its Common Stock or Common Stock as a dividend with respect
to any shares of its Common Stock, the number of Shares issuable on the exercise
of this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend, or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the purchase price
payable per share, but the aggregate purchase price payable for the total number
of Shares purchasable under this Warrant (as adjusted) shall remain the same.
Any adjustment under this Section 8(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case of
any reclassification, capital reorganization, or change in the Common Stock of
the Company (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant, the kind and amount of shares
of stock and other securities and property receivable in connection with such
reclassification, reorganization, or change by a holder of the same number of
shares of Common Stock as were purchasable by the Holder immediately prior to
such reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the purchase price per
share payable hereunder, provided the aggregate purchase price shall remain the
same.
(c) Notice of Adjustment. When any adjustment is required to be made
in the number or kind of shares purchasable upon exercise of the Warrant, or in
the Exercise Price, the company shall promptly notify the Holder of such event
and of the number of shares of Common Stock or other securities or property
thereafter purchasable upon exercise of this Warrant.
9. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional
3
shares the Company shall make a cash payment therefor on the basis or the
Exercise Price then in effect.
10. No Shareholder Rights. Prior to exercise of this Warrant, the Holder
shall not be entitled to any rights of a shareholder with respect to the Shares,
including (without limitation) the right to vote such Shares, receive dividends
or other distributions thereon, exercise preemptive rights or be notified of
shareholder meetings, and such holder shall not be entitled to any notice or
other communication concerning the business or affairs of the Company. However,
nothing in this Section 10 shall limit the right of the Holder to be provided
the notices required under this Warrant or the Purchase Agreement.
11. Transfers of Warrant. Subject to compliance with applicable federal
and state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity upon
written notice to the Company. The transfer shall be recorded on the books of
the Company upon the surrender of this Warrant, property endorsed, to the
Company at its principal offices, and the payment to the Company of all transfer
taxes and other governmental charges imposed on such transfer. In the event of a
partial transfer, the Company shall issue to the Holders one or more appropriate
new warrants.
12. Successors and Assigns. The terms and provisions of this Warrant and
the Purchase Agreement shall inure to the benefit of, and be binding upon, the
Company and the Holders hereof and their respective successors and assigns.
13. Amendments and Waivers. Any term of this Warrant may be amended and
the observance of any term of this Warrant may be waived (either generally or in
a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Holder.
14. Notices. All notices required under this Warrant and shall be deemed
to have been given or made for all purposes (i) upon personal delivery, (ii)
upon confirmation receipt that the communication was successfully sent to the
applicable number if sent by facsimile; (iii) one day after being sent, when
sent by professional overnight courier service, or (iv) five days after posting
when sent by registered or certified mail. Notices to the Company shall be sent
to the principal office of the Company (or at such other place as the Company
shall notify the Holder hereof in writing). Notices to the Holder shall be sent
to the address of the Holder on the books of the Company (or at such other place
as the Holder shall notify the Company hereof in writing).
15. Attorneys' Fees. If any action of law or equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
16. Captions. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
4
17. Governing Law. This Warrant shall be governed by the laws of the
State of California as applied to agreements among California residents made and
to be performed entirely within the State of California.
[remainder of page intentionally left blank]
5
IN WITNESS WHEREOF, Digital Generation Systems, Inc. caused this Warrant
to be executed by an officer thereunto duly authorized.
DIGITAL GENERATION SYSTEMS, INC.
By: /s/ XXXXX XXXXXXXXX
---------------------------------------
Xxxxx Xxxxxxxxx,
President and Chief Executive Officer
SIGNATURE PAGE TO WARRANT TO PURCHASE COMMON STOCK
OF DIGITAL GENERATION SYSTEMS, INC.
NOTICE OF EXERCISE
To: DIGITAL GENERATION SYSTEMS, INC.
The undersigned hereby elects to purchase _____________________ shares
of Common Stock of Digital Generation Systems, Inc., pursuant to the terms of
the attached Warrant and payment of the Exercise Price per share required under
such Warrant accompanies this notice.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
----------------------------------------
By:
-------------------------------------
Address: ----------------------------------------
----------------------------------------
Date:
-----------------
Name in which shares should be registered:
------------------------------------------
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SUCH ACT.
WARRANT TO PURCHASE COMMON STOCK
OF
DIGITAL GENERATION SYSTEMS, INC.
VOID AFTER DECEMBER 9, 2001
This Warrant is issued to Technology Crossover Ventures II, L.P., or its
registered assigns ("Holder") by Digital Generation Systems, Inc., a California
corporation (the "Company"), on December 9, 1998 (the "Warrant Issue Date").
This Warrant is issued pursuant to the terms of that certain Common Stock and
Warrant Purchase Agreement dated as of the date hereof (the "Purchase
Agreement") in connection with the Company's issuance to the Holder of shares of
the Company's Common Stock (the "Common Shares").
1. Purchase Shares. Subject to the terms and conditions hereinafter set
forth and set forth in the Purchase Agreement, the Holder is entitled, upon
surrender of this Warrant at the principal office of the Company (or at such
other place as the Company shall notify the holder hereof in writing), to
purchase from the Company up to thirty-six thousand seven hundred ninety-eight
(36,798) fully paid and nonassessable shares of Common Stock of the Company, as
constituted on the Warrant Issue Date (the "Common Stock"). The number of shares
of Common Stock issuable pursuant to this Section 1 (the "Shares") shall be
subject to adjustment pursuant to Section 5 and Section 8 hereof.
2. Exercise Price. The purchase price for the Shares shall be $3.25, as
adjusted from time to time pursuant to Section 8 hereof (the "Exercise Price").
3. Exercise Period. This Warrant shall not be exercisable prior to
December 9, 1999. Thereafter, this Warrant shall be exercisable as follows:
(a) This Warrant shall be exercisable with respect to 50% of the
Shares, in whole or in part with respect to such Shares, during the term
commencing on the date that the closing price of the Company's Common Stock on
the Nasdaq National Market has exceeded $ 10.00 per share (as adjusted for any
stock splits, stock dividends, recapitalizations or
the like) for at least twenty (20) of the preceding thirty (30) consecutive
trading days and ending on 5:00 p.m. on December 9, 2001.
(b) This Warrant shall become exercisable with respect to the
remaining Shares, in whole or in part, during the term commencing on the date
that the closing price of the Company's Common Stock on the Nasdaq National
Market has exceeded $ 15.00 per share (as adjusted for any stock splits, stock
dividends, recapitalizations or the like) for at least twenty (20) of the
preceding thirty (30) consecutive trading days and ending on 5:00 p.m. on
December 9, 2001.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant, together with a duly executed
copy of the form of Notice of Exercise attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of an amount equal to the
aggregate Exercise Price for the number of Shares being purchased.
5. Assumption of Warrant. If at any time, while this Warrant, or any
portion thereof, is outstanding and unexpired there shall be (i) an acquisition
of the Company by another entity by means of a merger, consolidation, or other
transaction or series of related transactions resulting in the exchange of the
outstanding shares of the Company's capital stock such that shareholders of the
Company prior to such transaction own, directly or indirectly, less than 50% of
the voting power of the surviving entity, or (ii) a sale or transfer of all or
substantially all of the Company's assets to any other person, then, as a part
of such acquisition, sale or transfer, lawful provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the Exercise
Price then in effect, the number of shares of stock or other securities or
property of the successor corporation resulting from such acquisition, sale or
transfer which a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such acquisition, sale or transfer if
this Warrant had been exercised immediately before such acquisition, sale or
transfer, all subject to further adjustment as provided in this Section 5; and,
in any such case, appropriate adjustment (as determined by the Company's Board
of Directors) shall be made in the application of the provisions herein set
forth with respect to the rights and interests thereafter of the Holder to the
end that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the number of Shares the Holder is entitled
to purchase) shall thereafter be applicable, as nearly as possible, in relation
to any shares of common stock or other securities or other property thereafter
deliverable upon the exercise of this Warrant.
6. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this warrant, one or more certificates for the number of shares so
purchased shall be issued as soon as practicable thereafter (with appropriate
restrictive legends, if applicable), and in any event within thirty (30) days
of the delivery of the Notice of Exercise.
2
7. Issuance of Shares. The Company covenants that the Shares, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number of and
kind of securities purchasable upon exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the
Company shall at any time prior to the expiration of this Warrant subdivide its
Common Stock, by split-up or otherwise, or combine its Common Stock, or issue
additional shares of its Common Stock or Common Stock as a dividend with respect
to any shares of its Common Stock, the number of Shares issuable on the exercise
of this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend, or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the purchase price
payable per share, but the aggregate purchase price payable for the total number
of Shares purchasable under this Warrant (as adjusted) shall remain the same.
Any adjustment under this Section 8(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed.
upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case
of any reclassification, capital reorganization, or change in the Common Stock
of the Company (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant, the kind and amount of shares
of stock and other securities and property receivable in connection with such
reclassification, reorganization, or change by a holder of the same number of
shares of Common Stock as were purchasable by the Holder immediately prior to
such reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the purchase price per
share payable hereunder, provided the aggregate purchase price shall remain the
same.
(c) Notice of Adjustment. When any adjustment is required to be
made in the number or kind of shares purchasable upon exercise of the warrant,
or in the exercise price, the company shall promptly notify the holder of such
event and of the number of shares of Common Stock or other securities or
property thereafter purchasable upon exercise of this Warrant.
9. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional
3
shares the Company shall make a cash payment therefor on the basis of the
Exercise Price then in effect.
10. No Shareholder Rights. Prior to exercise of this Warrant, the Holder
shall not be entitled to any rights of a shareholder with respect to the Shares,
including (without limitation) the right to vote such Shares, receive dividends
or other distributions thereon, exercise preemptive rights or be notified of
shareholder meetings, and such holder shall not be entitled to any notice or
other communication concerning the business or affairs of the Company. However,
nothing in this Section 10 shall limit the right of the Holder to be provided
the notices required under this Warrant or the Purchase Agreement.
11. Transfers of Warrant. Subject to compliance with applicable federal
and state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity upon
written notice to the Company. The transfer shall be recorded on the books of
the Company upon the surrender of this Warrant, properly endorsed, to the
Company at its principal offices, and the payment to the Company of all transfer
taxes and other governmental charges imposed on such transfer. In the event of a
partial transfer, the Company shall issue to the Holders one or more appropriate
new warrants.
12. Successors and Assigns. The terms and provisions of this Warrant and
the Purchase Agreement shall inure to the benefit of, and be binding upon, the
Company and the Holders hereof and their respective successors and assigns.
13. Amendments and Waivers. Any term of this Warrant may be amended and
the observance of any term of this Warrant may be waived (either generally or in
a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Holder.
14. Notices. All notices required under this Warrant and shall be deemed
to have been given or made for all purposes (i) upon personal delivery, (ii)
upon confirmation receipt that the communication was successfully sent to the
applicable number if sent by facsimile; (iii) one day after being sent, when
sent by professional overnight courier service, or (iv) five days' after posting
when sent by registered or certified mail. Notices to the Company shall be sent
to the principal office of the Company (or at such other place as the Company
shall notify the Holder hereof in writing). Notices to the Holder shall be sent
to the address of the Holder on the books of the Company (or at such other place
as the Holder shall notify the Company hereof in writing).
15. Attorneys' Fees. If any action of law or equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
16. Captions. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
4
17. Governing Law. This Warrant shall be governed by the laws of the
State of California as applied to agreements among California residents made and
to be performed entirely within the State of California.
[remainder of page intentionally left blank]
5
IN WITNESS WHEREOF, Digital Generation Systems, Inc. caused this Warrant
to be executed by an officer thereunto duly authorized.
DIGITAL GENERATION SYSTEMS, INC.
By: /s/ XXXXX X. XXXXXXXXX
--------------------------------------
Xxxxx X. Xxxxxxxxx,
President and Chief Executive Officer
SIGNATURE PAGE TO WARRANT TO PURCHASE COMMON STOCK
OF DIGITAL GENERATION SYSTEMS, INC.
NOTICE OF EXERCISE
To: DIGITAL GENERATION SYSTEMS INC.
The undersigned hereby elects to purchase_____________________ shares of
Common Stock of Digital Generation Systems, Inc., pursuant to the terms of the
attached Warrant and payment of the Exercise Price per share required under such
Warrant accompanies this notice.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
-----------------------------------------
By:
--------------------------------------
Address:
------------------------------------------
------------------------------------------
Date:
-----------------
Name in which shares should be registered:
------------------------------------------
THIS WANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO
RULE 144 UNDER SUCH ACT.
WARRANT TO PURCHASE COMMON STOCK
OF
DIGITAL GENERATION SYSTEMS, INC.
VOID AFTER DECEMBER 9, 2001
This Warrant is issued to TCV II (Q), L.P., or its registered assigns
("Holder") by Digital Generation Systems, Inc., a California corporation (the
"Company"), on December 9, 1998 (the "Warrant Issue Date"). This Warrant is
issued pursuant to the terms of that certain Common Stock and Warrant Purchase
Agreement dated as of the date hereof (the "Purchase Agreement") in connection
with the Company's issuance to the Holder of shares of the Company's Common
Stock (the "Common Shares").
1. Purchase Shares. Subject to the terms and conditions hereinafter set
forth and set forth in the Purchase Agreement, the Holder is entitled, upon
surrender of this Warrant at the principal office of the Company (or at such
other place as the Company shall notify the holder hereof in writing), to
purchase from the Company up to twenty-eight thousand two hundred ninety-one
(28,291) fully paid and nonassessable shares of Common Stock of the Company, as
constituted on the Warrant Issue Date (the "Common Stock"). The number of shares
of Common Stock issuable pursuant to this Section 1 (the "Shares") shall be
subject to adjustment pursuant to Section 5 and Section 8 hereof.
2. Exercise Price. The purchase price for the Shares shall be $3.25, as
adjusted from time to time pursuant to Section 8 hereof (the "Exercise Price").
3. Exercise Period. This Warrant shall not be exercisable prior to
December 9,1999. Thereafter, this Warrant shall be exercisable as follows:
(a) This Warrant shall be exercisable with respect to 50% of the
Shares, in whole ox in part with respect to such Shares, during the term
commencing on the date that the closing price of the Company's Common Stock on
the* Nasdaq National Market has exceeded $10.00 per share (as adjusted for any
stock splits, stock dividends, recapitalizations or
the like) for at least twenty (20) of the preceding thirty (30) consecutive
trading days and ending on 5:00 p.m. on December 9, 2001.
(b) This Warrant shall become exercisable with respect to the
remaining Shares, in whole or in part, during the term commencing on the date
that the closing price of the Company's Common Stock on the Nasdaq National
Market has exceeded $15.00 per share (as adjusted for any stock splits, stock
dividends, recapitalizations or the like) for at least twenty (20) of the
preceding thirty (30) consecutive trading days and ending on 5:00 p.m. on
December 9, 2001.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant, together with a duly executed copy
of the form of Notice of Exercise attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of an amount equal to the aggregate
Exercise Price for the number of Shares being purchased.
5. Assumption of Warrant. If at any time, while this Warrant, or any
portion thereof, is outstanding and unexpired there shall be (i) an acquisition
of the Company by another entity by means of a merger, consolidation, or other
transaction or series of related transactions resulting in the exchange of the
outstanding shares of the Company's capital stock such that shareholders of the
Company prior to such transaction own, directly or indirectly, less than 50% of
the voting power of the surviving entity, or (ii) a sale or transfer of all or
substantially all of the Company's assets to any other person, then, as a part
of such acquisition, sale or transfer, lawful provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the Exercise
Price then in effect, the number of shares of stock or other securities or
property of the successor corporation resulting from such acquisition, sale or
transfer which a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such acquisition, sale or transfer if
this Warrant had been exercised immediately before such acquisition, sale or
transfer, all subject to further adjustment as provided in this Section 5; and,
in any such case, appropriate adjustment (as determined by the Company's Board
of Directors) shall be made in the application of the provisions herein set
forth with respect to the rights and interests thereafter of the Holder to the
end that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the number of Shares the Holder is entitled
to purchase) shall thereafter be applicable, as nearly as possible, in relation
to any shares of common stock or other securities or other property thereafter
deliverable upon the exercise of this Warrant.
6. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter (with appropriate
restrictive legends, if applicable), and in any event within thirty (30) days of
the delivery of the Notice of Exercise.
2
7. Issuance of Shares. The Company covenants that the Shares, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number of and
kind of securities purchasable upon exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions. Combinations and Other Issuances. If the Company
shall at any time prior to the expiration of this Warrant subdivide its Common
Stock, by split-up or otherwise, or combine its Common Stock, or issue
additional shares of its Common Stock or Common Stock as a dividend with respect
to any shares of its Common Stock, the number of Shares issuable on the exercise
of this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend, or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the purchase price
payable per share, but the aggregate purchase price payable for the total number
of Shares purchasable under this Warrant (as adjusted) shall remain the same.
Any adjustment under this Section 8(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case of
any reclassification, capital reorganization, or change in the Common Stock of
the Company (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant, the kind and amount of shares
of stock and other securities and property receivable in connection with such
reclassification, reorganization, or change by a holder of the same number of
shares of Common Stock as were purchasable by the Holder immediately prior to
such reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the purchase price per
share payable hereunder, provided the aggregate purchase price shall remain the
same.
(c) Notice of Adjustment. When any adjustment is required to be made
in the number or kind of shares purchasable upon exercise of the warrant, or in
the Exercise Price, the Company shall promptly notify the Holder of such event
and of the number of shares of Common Stock or other securities or property
thereafter purchasable upon exercise of this Warrant.
9. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional
3
shares the Company shall make a cash payment therefor on the basis of the
Exercise Price then in effect.
10. No Shareholder Rights. Prior to exercise of this Warrant, the Holder
shall not be entitled to any rights of a shareholder with respect to the Shares,
including (without limitation) the right to vote such Shares, receive dividends
or other distributions thereon, exercise preemptive rights or be notified of
shareholder meetings, and such holder shall not be entitled to any notice or
other communication concerning the business or affairs of the Company. However,
nothing in this Section 10 shall limit the right of the Holder to be provided
the notices required under this Warrant or the Purchase Agreement.
11. Transfers of Warrant. Subject to compliance with applicable federal
and state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity upon
written notice to the Company. The transfer shall be recorded on the books of
the Company upon the surrender of this Warrant, properly endorsed, to the
Company at its principal offices, and the payment to the Company of all transfer
taxes and other governmental charges imposed on such transfer. In the event of a
partial transfer, the Company shall issue to the Holders one or more appropriate
new warrants.
12. Successors and Assigns. The terms and provisions of this Warrant and
the Purchase Agreement shall inure to the benefit of, and be binding upon, the
Company and the Holders hereof and their respective successors and assigns.
13. Amendments and Waivers. Any term of this Warrant may be amended and
the observance of any term of this Warrant may be waived (either generally or in
a particular instance and either retroactively or prospectively, with the
written consent of the Company and the Holder.
14. Notices. All notices required under this Warrant and shall be deemed
to have been given or made for all purposes (i) upon personal delivery, (ii)
upon confirmation receipt that the communication was successfully sent to the
applicable number if sent by facsimile; (iii) one day after being sent, when
sent by professional overnight courier service, or (iv) five days after posting
when sent by registered or certified mail. Notices to the Company shall be sent
to the principal office of the Company (or at such other place as the Company
shall notify the Holder hereof in writing). Notices to the Holder shall be sent
to the address of the Holder on the books of the Company (or at such other place
as the Holder shall notify the Company hereof in writing).
15. Attorneys' Fees. If any action of law or equity is necessary to
enforce or interpret the terms of this warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
16. Captions. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
4
17. Governing Law. This Warrant shall be governed by the laws of the
State of California as applied to agreements among California residents made and
to be performed entirely within the State of California.
[remainder of page intentionally left blank]
5
IN WITNESS WHEREOF, Digital Generation Systems, Inc. caused this Warrant
to be executed by an officer thereunto duly authorized.
DIGITAL GENERATION SYSTEMS, INC.
By: /s/ XXXXX X. XXXXXXXXX
-----------------------------------------
Xxxxx X. Xxxxxxxxx,
President and Chief Executive Officer
SIGNATURE PAGE TO WARRANT TO PURCHASE COMMON STOCK
OF DIGITAL GENERATION SYSTEMS, INC.
NOTICE OF EXERCISE
To: DIGITAL GENERATION SYSTEMS, INC.
The undersigned hereby elects to purchase ____________________ shares of
Common Stock of Digital Generation Systems, Inc., pursuant to the terms of the
attached warrant and payment of the Exercise Price per share required under such
warrant accompanies this notice.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
with a view to distribution of such shares or any part thereof.
WARRANTHOLDER
----------------------------------------
By:
-------------------------------------
Address: ----------------------------------------
Date:
-------------------- ----------------------------------------
Name in which shares should be registered:
------------------------------------------
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SUCH ACT.
WANT TO PURCHASE COMMON STOCK
of
DIGITAL GENERATION SYSTEMS, INC.
VOID AFTER DECEMBER 9, 2001
This Warrant is issued to TCV II Strategic Partners, L.P., or its
registered assigns ("Holder") by Digital Generation Systems, Inc., a California
corporation (the "Company"), on December 9, 1998 (the "Warrant Issue Date").
This Warrant is issued pursuant to the terms of that certain Common Stock and
Warrant Purchase Agreement dated as of the date hereof (the "Purchase
Agreement") in connection with the Company's issuance to the Holder of shares of
the Company's Common Stock (the "Common Shares").
1. Purchase Shares. Subject to the terms and conditions hereinafter set
forth and set forth in the Purchase Agreement, the Holder is entitled, upon
surrender of this Warrant at the principal office of the Company (or at such
other place as the Company shall notify the holder hereof in Writing), to
purchase from the Company up to five thousand twenty (5,020) fully paid and
nonassessable shares of Common Stock of the Company, as constituted on the
Warrant Issue Date (the "Common Stock"). The number of shares of Common Stock
issuable pursuant to this Section I (the "Shares") shall be subject to
adjustment pursuant to Section 5 and Section 8 hereof.
2. Exercise Price. The purchase price for the Shares shall be $3.25, as
adjusted from time to time pursuant to Section 8 hereof (the "Exercise Price").
3. Exercise Period. This Warrant shall not be exercisable prior to
December 9, 1999. Thereafter, this Warrant shall be exercisable as follows:
(a) This Warrant shall be exercisable with respect to 50% of the
Shares, in whole or in part with respect to such Shares, during the term
commencing on the date that the closing price of the Company's Common Stock on
the Nasdaq National Market has exceeded $10.00 per share (as adjusted for any
stock splits, stock dividends, recapitalizations or
the like) for at least twenty (20) of the preceding thirty (30) consecutive
trading days and ending on 5:00 p.m. on December 9, 2001.
(b) This Warrant shall become exercisable with respect to the
remaining Shares, in whole or in part, during the term commencing on the date
that the closing price of the Company's Common Stock on the Nasdaq National
Market has exceeded $15.00 per share (as adjusted for any stock splits, stock
dividends, recapitalizations or the like) for at least twenty (20) of the
preceding thirty (30) consecutive trading days and ending on 5:00 p.m. on
December 9, 2001.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant, together with a duly executed copy
of the form of Notice of Exercise attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of an amount equal to the aggregate
Exercise Price for the number of Shares being purchased.
5. Assumption of Warrant. If at any time, while this Warrant, or any
portion thereof, is outstanding and unexpired there shall be (i) an acquisition
of the Company by another entity by means of a merger, consolidation, or other
transaction or series of related transactions resulting in the exchange of the
outstanding shares of the Company's capital stock such that shareholders of the
Company prior to such transaction own, directly or indirectly, less than 50% of
the voting power of the surviving entity, or (ii) a sale or transfer of all or
substantially all of the Company's assets to any other person, then, as a part
of such acquisition, sale or transfer, lawful provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the Exercise
Price then in effect, the number of shares of stock or other securities or
property of the successor corporation resulting from such acquisition, sale or
transfer which a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such acquisition, sale or transfer if
this Warrant had been exercised immediately before such acquisition, sale or
transfer, all subject to further adjustment as provided in this Section 5; and,
in any such case, appropriate adjustment (as determined by the Company's Board
of Directors) shall be made in the application of the provisions herein set
forth with respect to the rights and interests thereafter of the Holder to the
end that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the number of Shares the Holder is entitled
to purchase) shall thereafter be applicable, as nearly as possible, in relation
to any shares of common stock or other securities or other property thereafter
deliverable upon the exercise of this Warrant.
6. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter (with appropriate
restrictive legends, if applicable), and in any event within thirty (30) days of
the delivery of the Notice of Exercise.
2
7. Issuance of Shares. The Company covenants that the Shares, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number of and
kind of securities purchasable upon exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the Company
shall at any time prior to the expiration of this Warrant subdivide its Common
Stock, by split-up or otherwise, or combine its Common Stock, or issue
additional shares of its Common Stock or Common Stock as a dividend with respect
to any shares of its Common Stock, the number of Shares issuable on the exercise
of this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend, or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the purchase price
payable per share, but the aggregate purchase price payable for the total number
of Shares purchasable under this Warrant (as adjusted) shall remain the same.
Any adjustment under this Section 8(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case of
any reclassification, capital reorganization, or change in the Common Stock of
the Company (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant, the kind and amount of shares
of stock and other securities and property receivable in connection with such
reclassification, reorganization, or change by a holder of the same number of
shares of Common Stock as were purchasable by the Holder immediately prior to
such reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the purchase price per
share payable hereunder, provided the aggregate purchase price shall remain the
same.
(c) Notice of Adjustment. when any adjustment is required to be made
in the number or kind of shares purchasable upon exercise of the Warrant, or in
the Exercise Price, the Company shall promptly notify the Holder of such event
and of the number of shares of Common Stock or other securities or property
thereafter purchasable upon exercise of this Warrant.
9. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional
3
shares the Company shall make a cash payment therefor on the basis of the
Exercise Price then in effect.
10. No Shareholder Rights. Prior to exercise of this Warrant, the Holder
shall not be entitled to any rights of a shareholder with respect to the Shares,
including (without limitation) the right to vote such Shares, receive dividends
or other distributions thereon, exercise preemptive rights or be notified of
shareholder meetings, and such holder shall not be entitled to any notice or
other communication concerning the business or affairs of the Company. However,
nothing in this Section 10 shall limit the right of the Holder to be provided
the notices required under this Warrant or the Purchase Agreement.
11. Transfers of Warrant. Subject to compliance with applicable federal
and state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity upon
written notice to the Company. The transfer shall be recorded on the books of
the Company upon the surrender of this Warrant, properly endorsed, to the
Company at its principal offices, and the payment to the Company of all transfer
taxes and other governmental charges imposed on such transfer. In the event of a
partial transfer, the Company shall issue to the Holders one or more appropriate
new warrants.
12. Successors and Assigns. The terms and provisions of this Warrant and
the Purchase Agreement shall inure to the benefit of, and be binding upon, the
Company and the Holders hereof and their respective successors and assigns.
13. Amendments and Waivers. Any term of this Warrant may be amended and
the observance of any term of this Warrant may be waived (either generally or in
a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Holder.
14. Notices. All notices required under this Warrant and shall be deemed
to have been given or made for all purposes (i) upon personal delivery, (ii)
upon confirmation receipt that the communication was successfully sent to the
applicable number if sent by facsimile; (iii) one day after being sent, when
sent by professional overnight courier service, or (iv) five days after posting
when sent by registered or certified mail. Notices to the Company shall be sent
to the principal office of the Company (or at such other place as the Company
shall notify the Holder hereof in writing). Notices to the Holder shall be sent
to the address of the Holder on the books of the Company (or at such other
place as the Holder shall notify the Company hereof in writing).
15. Attorneys' Fees. If any action of law or equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
16. Captions. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of this Warrant
in construing or interpreting any provisions hereof.
4
17. Governing Law. This Warrant shall be governed by the laws of the
State of California as applied to agreements among California residents made and
to be performed entirely within the State of California.
[remainder of page intentionally left blank
5
IN WITNESS WHEREOF, Digital Generation Systems, Inc. caused this Warrant
to be executed by an officer thereunto duly authorized.
DIGITAL GENERATION SYSTEMS, INC.
By: /s/ XXXXX X. XXXXXXXXX
-------------------------------------------
Xxxxx X. Xxxxxxxxx,
President and Chief Executive Officer
SIGNATURE PAGE TO WARRANT TO PURCHASE COMMON STOCK
OF DIGITAL GENERATION SYSTEMS, INC.
NOTICE OF EXERCISE
To: DIGITAL GENERATION SYSTEMS, INC.
The undersigned hereby elects to purchase ____________________ shares of
Common Stock of Digital Generation Systems, Inc., pursuant to the terms of the
attached Warrant and payment of the Exercise Price per share required under such
Warrant accompanies this notice.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
________________________________________
By:
_____________________________________
Address:
________________________________________
________________________________________
Date:
______________________
Name in which shares should be registered:
__________________________________________
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SUCH ACT.
WARRANT TO PURCHASE COMMON STOCK
OF
DIGITAL GENERATION SYSTEMS, INC.
VOID AFTER DECEMBER 9, 2001
This Warrant is issued to Technology Crossover Ventures II, C.V., or its
registered assigns ("Holder") by Digital Generation Systems, Inc., a California
corporation (the "Company"), on December 9, 1998 (the "Warrant Issue Date").
This Warrant is issued pursuant to the terms of that certain Common Stock and
Warrant Purchase Agreement dated as of the date hereof (the "Purchase
Agreement") in connection with the Company's issuance to the Holder of shares of
the Company's Common Stock (the "Common Shares").
1. Purchase Shares. Subject to the terms and conditions hereinafter set
forth and set forth in the Purchase Agreement, the Holder is entitled, upon
surrender of this Warrant at the principal office of the Company (or at such
other place as the Company shall notify the holder hereof in writing), to
purchase from the Company up to five thousand six hundred eighteen (5,618) fully
paid and nonassessable shares of Common Stock of the Company, as constituted on
the Warrant Issue Date (the "Common Stock"). The number of shares of Common
Stock issuable pursuant to this Section 1 (the "Shares") shall be subject to
adjustment pursuant to Section 5 and Section 8 hereof.
2. Exercise Price. The purchase price for the Shares shall be $3.25, as
adjusted from time to time pursuant to Section 8 hereof (the "Exercise Price").
3. Exercise Period. This Warrant shall not be exercisable prior to
December 9,1999. Thereafter, this Warrant shall be exercisable as follows:
(a) This Warrant shall be exercisable with respect to 50% of the
Shares, in whole or in part with respect to such Shares, during the term
commencing on the date that the closing price of the Company's Common Stock on
the Nasdaq National Market has exceeded $10.00 per share (as adjusted for any
stock splits, stock dividends, recapitalizations or
the like) for at least twenty (20) of the preceding thirty (30) consecutive
trading days and ending on 5:00 p.m. on December 9, 2001.
(b) This Warrant shall become exercisable with respect to the
remaining Shares, in whole or in part, during the term commencing on the date
that the closing price of the Company's Common Stock on the Nasdaq National
Market has exceeded $15.00 per share (as adjusted for any stock splits, stock
dividends, recapitalizations or the like) for at least twenty (20) of the
preceding thirty (30) consecutive trading days and ending on 5:00 p.m. on
December 9, 2001.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant, together with a duly executed copy
of the form of Notice of Exercise attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of an amount equal to the aggregate
Exercise Price for the number of Shares being purchased.
5. Assumption of Warrant. If at any time, while this Warrant, or any
portion thereof, is outstanding and unexpired there shall be (i) an acquisition
of the Company by another entity by means of a merger, consolidation, or other
transaction or series of related transactions resulting in the exchange of the
outstanding shares of the Company's capital stock such that shareholders of the
Company prior to such transaction own, directly or indirectly, less than 50% of
the voting power of the surviving entity, or (ii) a sale or transfer of all or
substantially all of the Company's assets to any other person, then, as a part
of such acquisition, sale or transfer, lawful provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the Exercise
Price then in effect, the number of shares of stock or other securities or
property of the successor corporation resulting from such acquisition, sale or
transfer which a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such acquisition, sale or transfer if
this Warrant had been exercised immediately before such acquisition, sale or
transfer, all subject to further adjustment as provided in this Section 5; and,
in any such case, appropriate adjustment (as determined by the Company's Board
of Directors) shall be made in the application of the provisions herein set
forth with respect to the rights and interests thereafter of the Holder to the
end that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the number of Shares the Holder is entitled
to purchase) shall thereafter be applicable, as nearly as possible, in relation
to any shares of common stock or other securities or other property thereafter
deliverable upon the exercise of this Warrant.
6. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter (with appropriate
restrictive legends, if applicable), and in any event within thirty (30) days of
the delivery of the Notice of Exercise.
2
7. Issuance of Shares. The Company covenants that the Shares, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number of and
kind of securities purchasable upon exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the Company
shall at any time prior to the expiration of this Warrant subdivide its Common
Stock, by split-up or otherwise, or combine its Common Stock, or issue
additional shares of its Common Stock or Common Stock as a dividend with respect
to any shares of its Common Stock, the number of Shares issuable on the exercise
of this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend, or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the purchase price
payable per share, but the aggregate purchase price payable for the total number
of Shares purchasable under this Warrant (as adjusted) shall remain the same.
Any adjustment under this Section 8(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case of
any reclassification, capital reorganization, or change in the Common Stock of
the Company (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant, the kind and amount of shares
of stock and other securities and property receivable in connection with such
reclassification, reorganization, or change by a holder of the same number of
shares of Common Stock as were purchasable by the Holder immediately prior to
such reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the purchase price per
share payable hereunder, provided the aggregate purchase price shall remain the
same.
(c) Notice of Adjustment. When any adjustment is required to be made
in the number or kind of shares purchasable upon exercise of the Warrant, or in
the Exercise Price, the Company shall promptly notify the Holder of such event
and of the number of shares of Common Stock or other securities or property
thereafter purchasable upon exercise of this Warrant.
9. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional
3
shares the Company shall make a cash payment therefor on the basis of the
Exercise Price then in effect.
10. No Shareholder Rights. Prior to exercise of this Warrant, the Holder
shall not be entitled to any rights of a shareholder with respect to the Shares,
including (without limitation) the right to vote such Shares, receive dividends
or other distributions thereon, exercise preemptive rights or be notified of
shareholder meetings, and such holder shall not be entitled to any notice or
other communication concerning the business or affairs of the Company. However,
nothing in this Section 10 shall limit the right of the Holder to be provided
the notices required under this Warrant or the Purchase Agreement.
11. Transfers of Warrant. Subject to compliance with applicable federal
and state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity upon
written notice to the Company. The transfer shall be recorded on the books of
the Company upon the surrender of this Warrant, properly endorsed, to the
Company at its principal offices, and the payment to the Company of all transfer
taxes and other governmental charges imposed on such transfer. In the event of a
partial transfer, the Company shall issue to the Holders one or more appropriate
new warrants.
12. Successors and Assigns. The terms and provisions of this Warrant and
the Purchase Agreement shall inure to the benefit of, and be binding upon, the
Company and the Holders hereof and their respective successors and assigns.
13. Amendments and Waivers. Any term of this Warrant may be amended and
the observance of any term of this Warrant may be waived (either generally or in
a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Holder.
14. Notices. All notices required under this Warrant and shall be deemed
to have been given or made for all purposes (i) upon personal delivery, (ii)
upon confirmation receipt that the communication was successfully sent to the
applicable number if sent by facsimile; (iii) one day after being sent, when
sent by professional overnight courier service, or (iv) five days after posting
when sent by registered or certified mail. Notices to the Company shall be sent
to the principal office of the Company (or at such other place as the Company
shall notify the Holder hereof in writing). Notices to the Holder shall be sent
to the address of the Holder on the books of the Company (or at such other place
as the Holder shall notify the Company hereof in writing).
15. Attorneys' Fees. If any action of law or equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
16. Captions. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
4
17. Governing Law. This Warrant shall be governed by the laws of the
State of California as applied to agreements among California residents made and
to be performed entirely within the State of California.
[remainder of page intentionally left blank]
5
IN WITNESS WHEREOF, Digital Generation Systems, Inc. caused this Warrant
to be executed by an officer thereunto duly authorized.
DIGITAL GENERATION SYSTEMS, INC.
By: /s/ XXXXX X. XXXXXXXXX
-----------------------------------------
Xxxxx X. Xxxxxxxxx,
President and Chief Executive Officer
SIGNATURE PAGE TO WARRANT TO PURCHASE COMMON STOCK
OF DIGITAL GENERATION SYSTEMS, INC.
NOTICE OF EXERCISE
To: DIGITAL GENERATION SYSTEMS, INC.
The undersigned hereby elects to purchase ______________________ shares
of Common Stock of Digital Generation Systems, Inc., pursuant to the terms of
the attached Warrant and payment of the Exercise Price per share required under
such Warrant accompanies this notice.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
___________________________________
By:
________________________________
Address:
___________________________________
___________________________________
Date:
_____________________
Name in which shares should be registered:
__________________________________________
