EXHIBIT 9
COMMON STOCK AND WARRANT
PURCHASE AGREEMENT
December 17, 1999
DIGITAL GENERATION SYSTEMS, INC.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT is made as of the
17/th/ day of December, 1999, by and among Digital Generation Systems, Inc., a
California corporation (the "Company"), and the investors, severally and not
jointly, listed on Schedule A hereto, each of which is herein referred to as an
"Investor."
WHEREAS, the Company desires to sell, and the Investors desire to
purchase, shares of the Company's Common Stock (the "Common Shares") with an
aggregate purchase price of three million seven hundred fifty thousand four
dollars and four cents ($3,750,004.04) and at a price per share equal to five
dollars and seventeen and one-tenth cents ($5.171) (the "Purchase Price"); and
WHEREAS, the Company desires to sell, and the Investors desire to
purchase for an aggregate purchase price of three hundred sixty-two dollars and
fifty-nine cents ($362.59), warrants, in the form attached hereto as Exhibit A
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(the "Warrants"), to purchase shares of the Company's Common Stock in an amount
equal to fifty percent (50%) of the number of Common Shares purchased by each
Investor pursuant to this Agreement (the "Warrant Shares") and with an exercise
price equal to the Purchase Price of the Common Shares.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of the Common Shares and the Warrants.
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1.1 Sale and Issuance of the Common Shares and the Warrants.
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(a) On or prior to the Closing (as defined below), the Company shall
have authorized (i) the sale and issuance to the Investors of the Common Shares,
(ii) the sale and issuance to the Investors of the Warrants and (iii) the
issuance of the Warrant Shares to be issued upon exercise of the Warrants.
(b) Subject to the terms and conditions of this Agreement, each
Investor agrees, severally and not jointly, to purchase at the Closing, and the
Company agrees to sell and issue to each Investor at the Closing, that number of
Common Shares set forth opposite such Investor's name on Schedule A hereto for
the purchase price set forth opposite such Investor's name on Schedule A hereto.
(c) Subject to the terms and conditions of this Agreement, each
Investor agrees, severally and not jointly, to purchase at the Closing, and the
Company agrees to sell and issue to each Investor at the Closing, a Warrant to
purchase that number of shares of the Company's Common Stock equal to fifty
percent (50%) of the number of Common Shares purchased by such Investor, for the
purchase price set forth opposite such Investor's name on Schedule A hereto.
The Company and each Investor agrees, severally and not jointly, that as of the
date hereof the purchase price of the Warrants is equal to the fair market value
of such warrants.
1.2 Closing. The purchase and sale of the Common Shares and the
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Warrants shall take place at the offices of the Company at 10:00 A.M., on
December 17, 1999, or at such other time and place as the Company and Investors
acquiring in the aggregate more than half of the Common
Shares and the Common Stock issuable or issued upon exercise of the Warrants
mutually agree upon orally or in writing (which time and place are designated as
the "Closing"). At the Closing (or as soon thereafter as is practicable) the
Company shall deliver to each Investor (a) a certificate representing the Common
Shares that such Investor is purchasing and (b) a Warrant to purchase that
number of shares of the Company's Common Stock as set forth in Section 1.1(c)
above, against payment of the purchase price therefor by check or wire transfer.
2. Representations and Warranties of the Company. The Company hereby
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represents and warrants to each Investor that:
2.1 Authorization. All corporate action on the part of the Company,
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its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the Registration Rights Agreement,
in the form attached hereto as Exhibit B (the "Registration Rights Agreement"),
the performance of all obligations of the Company hereunder and thereunder, and
the authorization, issuance (or reservation for issuance), sale and delivery of
the Common Shares and the Warrants being sold hereunder and the Warrant Shares
issuable upon conversion of the Warrants has been taken or will be taken prior
to the Closing, and this Agreement and the Registration Rights Agreement
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, and (iii) to the extent the indemnification
provisions contained in the Registration Rights Agreement may be limited by
applicable federal or state securities laws.
2.2 Valid Issuance of Common Shares and Warrants. The Common Shares
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and the Warrants that are being purchased by the Investors hereunder, when
issued, sold and delivered in accordance with the terms of this Agreement for
the consideration expressed herein, will be duly and validly issued, fully paid,
and nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and the Registration Rights
Agreement and under applicable state and federal securities laws. The Warrant
Shares issuable upon conversion of the Warrants purchased under this Agreement
have been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Company's Amended and Restated Articles of
Incorporation, will be duly and validly issued, fully paid, and nonassessable
and will be free of restrictions on transfer other than restrictions on transfer
under this Agreement and the Registration Rights Agreement and under applicable
state and federal securities laws.
2.3 Offering. Subject in part to the truth and accuracy of each
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Investor's representations set forth in Section 3 of this Agreement, the offer,
sale and issuance of the Common Shares and the Warrants as contemplated by this
Agreement are exempt from the registration requirements of any applicable state
and federal securities laws, and neither the Company nor any authorized agent
acting on its behalf will take any action hereafter that would cause the loss of
such exemption.
2.4 Additional Information. The Company has filed in a timely manner
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all documents that the Company was required to file under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), during the twelve (12)
months preceding the date of this Agreement (the "SEC Filings"). The SEC
Filings complied in all material respects with the requirements of the
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Exchange Act or the Securities Act of 1933, as amended (the "Act"), as the case
may be, as of their respective filing or effective dates, and the information
contained therein was true and correct in all material respects as of the date
or effective date of such documents, and each of the SEC Filings, as of such
date, did not contain an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3. Representations and Warranties of the Investors. Each Investor hereby
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represents and warrants that:
3.1 Authorization. Such Investor has full power and authority to
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enter into this Agreement and the Registration Rights Agreement, and each such
Agreement constitutes its valid and legally binding obligation, enforceable in
accordance with its terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies, and (iii) to the extent the indemnification provisions
contained in the Registration Rights Agreement may be limited by applicable
federal or state securities laws.
3.2 Purchase Entirely for Own Account. This Agreement is made with
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such Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Common Shares and the Warrant to be received by such Investor
and the Warrant Shares issuable upon exercise of the Warrant to be received by
such Investor (collectively, the "Securities") will be acquired for investment
for such Investor's own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, such Investor further
represents that such Investor does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Securities.
3.3 Disclosure of Information. Such Investor believes it has
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received all the information it considers necessary or appropriate for deciding
whether to purchase the Common Shares and the Warrant. Such Investor further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Common Shares and the Warrant and the business, properties, prospects and
financial condition of the Company.
3.4 Investment Experience. Such Investor is an investor in
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securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Common
Shares and the Warrant. If other than an individual, Investor also represents
it has not been organized for the purpose of acquiring the Common Shares and the
Warrant.
3.5 Accredited Investor. Such Investor is an "accredited investor"
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within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
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3.6 Restricted Securities. Such Investor understands that the
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Securities are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act only in certain limited circumstances. In this connection, such
Investor represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the Act.
3.7 Further Limitations on Disposition. Without in any way limiting
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the representations set forth above, such Investor further agrees not to make
any disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and the Registration Rights Agreement provided and to the extent
this Section 3 and such agreement are then applicable, and:
(a) There is then in effect a Registration Statement under the
Act, covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(b) (i) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, such Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company that
such disposition will not require registration of such shares under the Act. It
is agreed that the Company will not require opinions of counsel for transactions
made pursuant to SEC Rule 144 except in unusual circumstances.
(c) Notwithstanding the provisions of Paragraphs (a) and (b)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by an Investor that is a partnership to a partner of such
partnership or a retired partner of such partnership who retires after the date
hereof, or to the estate of any such partner or retired partner or the transfer
by gift, will or intestate succession of any partner to his or her spouse or to
the siblings, lineal descendants or ancestors of such partner or his or her
spouse, if the transferee agrees in writing to be subject to the terms hereof to
the same extent as if he or she were an original Investor hereunder.
3.8 Legends. It is understood that the certificates evidencing the
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Securities may bear one or all of the following legends:
(a) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
(b) Any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations and
Sections 417 and 418 of the California Corporations Code.
(c) Any legend required by applicable blue sky law.
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4. Conditions of Investors' Obligations at Closing. The obligations of
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each Investor under Section 1 of this Agreement are subject to the fulfillment
on or before the Closing of each of the following conditions, the waiver of
which shall not be effective against any Investor who does not consent thereto:
4.1 Representations and Warranties. The representations and
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warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
4.2 Performance. The Company shall have performed and complied with
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all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
4.3 Qualifications. All authorizations, approvals, or permits, if
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any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
4.4 Proceedings and Documents. All corporate and other proceedings
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in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Investors' special counsel, and they shall have received all such
counterpart original and certified or other copies of such documents as they may
reasonably request.
4.5 Registration Rights Agreement. The Company and each Investor
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shall have entered into the Registration Rights Agreement.
4.6 Minimum Funding. The Investors shall collectively deliver to the
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Company the aggregate Purchase Price.
4.7 Lock-Up. The Directors of the Company who are not parties hereto
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shall have executed and delivered to the Company letters to the effect that they
shall be bound by restrictions substantially similar to the restrictions set
forth in Section 6.1 hereof.
5. Conditions of the Company's Obligations at Closing. The obligations
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of the Company to each Investor under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by that
Investor:
5.1 Representations and Warranties. The representations and
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warranties of the Investors contained in Section 3 shall be true on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the Closing.
5.2 Payment of Purchase Price. The Investor shall have delivered the
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purchase price specified in Section 1.1.
5.3 Qualifications. All authorizations, approvals, or permits, if
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any, of any governmental authority or regulatory body of the United States or of
any state that are required in
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connection with the lawful issuance and sale of the Securities pursuant to this
Agreement shall be duly obtained and effective as of the Closing.
6. Miscellaneous.
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6.1 Lock-Up. Each Investor agrees, severally and not jointly, that
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without the prior written consent of the Board of Directors, the Investor will
not, directly or indirectly, sell, offer to sell, contract to sell, solicit an
offer to buy, grant any option for the purchase or sale of, assign, pledge,
distribute or otherwise transfer, dispose of or encumber any shares of the
Company's Common Stock, or any options, rights, warrants or other securities
convertible into or exercisable or exchangeable for the Company's Common Stock
or evidencing any right to purchase or subscribe for shares of the Company's
Common Stock, whether or not beneficially owned by the undersigned, for a period
of 180 days after the Closing. Each Investor agrees to cause its Affiliates (as
defined under the Securities Act of 1933) to comply with the foregoing
restrictions.
In furtherance of the foregoing, the Company and ChaseMellon
Shareholder Services, L.L.C., as Transfer Agent for the Company's Common Stock,
are hereby authorized to decline to make any transfer of securities if such
transfer would constitute a violation or breach of the provisions hereof. Each
Investor hereby consents to the placing of a stop-transfer order with the
Transfer Agent for such 180-day period with respect to any of the shares of the
Company's Common Stock registered in the name of such Investor or his Affiliates
or beneficially owned by such Investor or his affiliates.
6.2 Survival of Warranties. The warranties, representations and
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covenants of the Company and Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investors or the Company.
6.3 Successors and Assigns. Except as otherwise provided herein, the
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terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
6.4 Governing Law. This Agreement shall be governed by and construed
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under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
6.5 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.6 Titles and Subtitles. The titles and subtitles used in this
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Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.7 Notices. Unless otherwise provided, any notice required or
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permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal
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delivery to the party to be notified, deposit with a nationally recognized
overnight courier, confirmed facsimile or upon deposit with the United States
Post Office, by registered or certified mail, postage prepaid and addressed to
the party to be notified at the address or addresses indicated for such party on
the signature page hereof, or at such other address as such party may designate
by ten (10) days' advance written notice to the other parties.
6.8 Finder's Fee. Each party represents that it neither is nor will
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be obligated for any finders' fee or commission in connection with this
transaction. Each Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Investor or any of its officers, partners,
employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless each Investor from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
6.9 Expenses. Irrespective of whether the Closing is effected, each
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party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the Warrants or the Registration Rights Agreement, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
6.10 Amendments and Waivers. Any term of this Agreement may be
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amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of (a) the Company and (b) the
holders of two-thirds (2/3) of the Common Shares and the Common Stock issuable
or issued upon exercise of the Warrants. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.
6.11 Severability. If one or more provisions of this Agreement
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are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
6.12 Corporate Securities Law. THE SALE OF THE SECURITIES THAT
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ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES
OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
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6.13 Entire Agreement. This Agreement and the documents referred
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to herein constitute the entire agreement among the parties and no party shall
be liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
DIGITAL GENERATION SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇ ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
EXHIBIT A
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Form of Warrant
EXHIBIT B
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Registration Rights Agreement
