-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KHEQ2KX8iO48Z2GoR447sLVzT4ABrObcUW5QYiC0/jEkSDBoDlO6rrAxzDKs+FOw mxOYqG+iPMSaqXc4q5ek2g== 0000928385-98-002595.txt : 19981222 0000928385-98-002595.hdr.sgml : 19981222 ACCESSION NUMBER: 0000928385-98-002595 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19981221 GROUP MEMBERS: GINSBURG SCOTT K GROUP MEMBERS: MOON DOGGIE FAMILY PARTNERSHIP, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DIGITAL GENERATION SYSTEMS INC CENTRAL INDEX KEY: 0000934448 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] IRS NUMBER: 943140772 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-49603 FILM NUMBER: 98773037 BUSINESS ADDRESS: STREET 1: 875 BATTERY ST STREET 2: STE 1850 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4155466600 MAIL ADDRESS: STREET 1: 875 BATTERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94111 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GINSBURG SCOTT K CENTRAL INDEX KEY: 0001013565 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 17340 CLUB HILL DR CITY: DALLAS STATE: TX ZIP: 75248 MAIL ADDRESS: STREET 1: 17340 CLUB HILL DR CITY: DALLAS STATE: TX ZIP: 75248 SC 13D 1 SCHEDULE 13D Page 1 of 10 ------------------------------- OMB APPROVAL ------------------------------- OMB Number: 3235-0145 EXPIRES: OCTOBER 31, 1997 ESTIMATED AVERAGE BURDEN HOURS PER RESPONSE . . . 14.90 ------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 DIGITAL GENERATION SYSTEMS, INC. (NAME OF ISSUER) COMMON STOCK, NO PAR VALUE PER SHARE (TITLE OF CLASS OF SECURITIES) 253921100 --------- (CUSIP NUMBER) SCOTT K. GINSBURG C/O DIGITAL GENERATION SYSTEMS, INC. 875 BATTERY STREET SAN FRANCISCO, CALIFORNIA 94111 (415) 276-6600 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS) WITH A COPY TO: JOHN D. WATSON, JR. LATHAM & WATKINS 1001 PENNSYLVANIA AVENUE, N.W. SUITE 1300 WASHINGTON, D.C. 20004 (202) 637-2200 DECEMBER 9, 1998 ---------------- (DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. Note: Schedules filed in paper format shall include a signed original and five copies of this schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 253921100 Page 2 of 10 Pages --------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Scott K. Ginsburg - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS PF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 1,084,685 --------------------------------------------------------- NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED 2,920,134/1/ BY EACH --------------------------------------------------------- REPORTING PERSON 9 SOLE DISPOSITIVE POWER WITH 1,084,685 --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 2,920,134/1/ - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,004,819/1/ - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 15.3% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! /1/ Consists of 2,920,134 shares held of record by Moon Doggie Family Partnership, L.P., a partnership of which Mr. Ginsburg is the sole general partner. Mr. Ginsburg, in such capacity, holds voting and dispositive power over these shares. CUSIP No. 253921100 Page 3 of 10 Pages --------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Moon Doggie Family Partnership, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER -0- --------------------------------------------------------- NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED 2,920,134/1//2/ BY EACH --------------------------------------------------------- REPORTING PERSON 9 SOLE DISPOSITIVE POWER WITH -0- --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 2,920,134/1//2/ - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,920,134/2/ - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 11.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! /2/Does not include an additional 3,008,527 shares of Common Stock which are subject to warrants issued to Moon Doggie Family Partnership, L.P. The warrants are not exercisable prior to December 9, 1999. See Item 5. CUSIP No. 253921100 Page 4 of 10 Pages --------- INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. ITEM 1. SECURITY AND ISSUER. This statement relates to the common stock, no par value per share (the "Common Stock") of Digital Generation Systems, Inc., a California corporation (the "Issuer"). The Issuer's principal executive offices are located at 875 Battery Street, San Francisco, California 94111. ITEM 2. IDENTITY AND BACKGROUND. (a) This statement is filed by Scott K. Ginsburg and by Moon Doggie Family Partnership, L.P., (each a "Reporting Person" and together, the "Reporting Persons"). (b) The address of the Reporting Persons is 17340 Club Hill Drive, Dallas, Texas 75248. (c) Present Principal Business or Employment: (1) Scott K. Ginsburg: (i) Investor; (ii) Chairman of the Board of Directors and Chief Executive Officer of the Issuer; (iii) Director/3/ StarGuide Digital Networks, Inc. 300 East Second Street Suite 1510 Reno, Nevada 89501 (2) Moon Doggie Family Partnership, L.P. ("Moon Doggie"): Investment Partnership (d) and (e) During the last five years neither Reporting Person has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) nor (ii) been a party to any civil proceeding of a judicial or administrative body of competent jurisdiction, and is or was, as a result of such proceeding, subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or finding any violation with respect to such laws. (f) Mr. Ginsburg is a citizen of the United States. Moon Doggie is a Delaware partnership. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Mr. Ginsburg purchased 714, 285 shares of Common Stock of the Issuer at a price of $2.80 per share pursuant to a Common Stock Subscription Agreement dated as of August 12, 1998 by and among the Issuer, Mr. Ginsburg and certain other purchasers (the "First Common Stock Subscription Agreement"). Mr. Ginsburg purchased a total of 370,400 shares of Common Stock of the Issuer in thirty- three separate, open-market transactions on the date, in the quantities and for prices listed below. - -------------------- /3/ Mr. Ginsburg is expected to be named Chairman of the Board of Directors of StarGuide Digital Network, Inc. in the near future. CUSIP No. 253921100 Page 5 of 10 Pages ---------
NUMBER DATE NUMBER OF SHARES PRICE - --------------------------------------------------------------------- 1 08/03/98 5,000 3.027 - --------------------------------------------------------------------- 2 08/03/98 2,500 3.090 - --------------------------------------------------------------------- 3 08/03/98 1,000 3.152 - --------------------------------------------------------------------- 4 08/03/98 1,000 3.246 - --------------------------------------------------------------------- 5 08/03/98 15,500 3.277 - --------------------------------------------------------------------- 6 08/03/98 13,500 3.263 - --------------------------------------------------------------------- 7 08/04/98 25,000 3.243 - --------------------------------------------------------------------- 8 08/05/98 1,000 2.902 - --------------------------------------------------------------------- 9 08/07/98 10,000 2.891 - --------------------------------------------------------------------- 10 08/12/98 42,500 3.345 - --------------------------------------------------------------------- 11 08/12/98 7,500 3.340 - --------------------------------------------------------------------- 12 08/13/98 5,000 3.371 - --------------------------------------------------------------------- 13 08/13/98 1,000 3.309 - --------------------------------------------------------------------- 14 08/13/98 22,500 3.277 - --------------------------------------------------------------------- 15 08/13/98 1,000 3.246 - --------------------------------------------------------------------- 16 08/13/98 7,500 3.215 - --------------------------------------------------------------------- 17 08/13/98 5,000 3.340 - --------------------------------------------------------------------- 18 08/14/98 15,500 3.457 - --------------------------------------------------------------------- 19 08/17/98 15,900 3.527 - --------------------------------------------------------------------- 20 08/20/98 2,500 3.152 - --------------------------------------------------------------------- 21 08/21/98 5,000 3.215 - --------------------------------------------------------------------- 22 08/24/98 40,000 3.509 - --------------------------------------------------------------------- 23 08/25/98 1,000 3.496 - --------------------------------------------------------------------- 24 08/25/98 49,000 3.527 - --------------------------------------------------------------------- 25 08/25/98 25,000 3.527 - --------------------------------------------------------------------- 26 08/26/98 10,000 3.527 - --------------------------------------------------------------------- 27 08/27/98 15,000 3.382 - --------------------------------------------------------------------- 28 09/02/98 1,000 3.340 - --------------------------------------------------------------------- 29 09/02/98 2,000 3.371 - --------------------------------------------------------------------- 30 09/02/98 4,000 3.402 - --------------------------------------------------------------------- 31 09/02/98 7,000 3.496 - --------------------------------------------------------------------- 32 09/02/98 7,000 3.527 - --------------------------------------------------------------------- 33 09/02/98 4,000 3.590 - ---------------------------------------------------------------------
Moon Doggie purchased 2,920,134 shares of Common Stock of the Issuer on December 9, 1998 pursuant to a Common Stock Subscription Agreement dated as of September 29, 1998, as amended by a letter agreement between Moon Doggie and the Issuer dated as of December 9, 1998 (as amended, the "Second Common Stock Subscription Agreement"), for a total purchase price of $8,000,000. Mr. Ginsburg purchased all shares of Common Stock of the Issuer with personal funds. Moon Doggie purchased all shares of Common Stock of the Issuer with funds contributed to it by its partners. Mr. Ginsburg maintains ownership of certain of his shares of Common Stock in a margin account with Goldman, Sachs & Co. that includes other investments and cash balances of Mr. Ginsburg and pursuant to which Mr. Ginsburg routinely borrows funds. Indebtedness incurred by Mr. Ginsburg under the account may be deemed to have been borrowed to acquire certain of the shares of Common Stock owned by Mr. Ginsburg. CUSIP No. 253921100 Page 6 of 10 Pages --------- ITEM 4. PURPOSE OF TRANSACTION. Mr. Ginsburg initially acquired shares of Common Stock of the Issuer pursuant to the First Common Stock Purchase Agreement and in open-market purchases as a result of his belief that the Common Stock represented an attractive investment. Mr. Ginsburg subsequently concluded that the Issuer could benefit from his radio broadcasting management background and experience and his strategic planning skills. As a result, Mr. Ginsburg entered into negotiations with the Issuer regarding expanding the role to be played by Mr. Ginsburg in the Issuer and its business. Pursuant to these negotiations, Mr. Ginsburg caused Moon Doggie to purchase the Common Stock of the Issuer pursuant to the Second Common Stock Purchase Agreement with the intent that Mr. Ginsburg, through Moon Doggie, would effect the control and management of the Issuer. Substantially contemporaneously with such purchase, Mr. Ginsburg was named Chairman and CEO of the Issuer. Mr. Ginsburg believes that his holding or controlling a significant interest in the Issuer assists in aligning the interests of management and shareholders. In his role as Chairman and CEO, Mr. Ginsburg will be responsible for the strategic direction of the Issuer, the development and implementation of its consolidation strategy and developing and maintaining financial community relationships. In a separate transaction, Mr. Ginsburg also has recently acquired voting control of StarGuide Digital Network, Inc. ("StarGuide"), a privately held company that, through an affiliated partnership, is engaged in businesses that may be complementary to business conducted or proposed to be conducted by the Issuer. Mr. Ginsburg may in the future pursue transactions that could result in combining all or certain operations of the Issuer, on the one hand, and StarGuide and its affiliated partnership, on the other hand. As of the date hereof, however, no such transaction is planned or proposed. Each of Mr. Ginsburg and Moon Doggie may acquire, from time to time, additional shares of the Common Stock or other securities of the Issuer in the open market, in privately negotiated transactions, by exchange offer, by exercise of warrants or options or otherwise. Depending on the factors discussed herein, each of Mr. Ginsburg and Moon Doggie may, from time to time, retain or sell all or a portion of his or its holdings of the shares of Common Stock in the open market or in privately negotiated transactions. Any action taken by Mr. Ginsburg or Moon Doggie will be dependent upon a review of numerous factors, including, among other things, the availability of shares of the Common Stock for purchase and the price levels of such shares; general market and economic conditions; ongoing evaluation of the Issuer's business operations and investment opportunities; the actions of others in management and the Board of Directors of the Issuer; and other future developments. Although the foregoing reflects activities presently contemplated by Mr. Ginsburg and Moon Doggie with respect to the Issuer, the foregoing is subject to change at any time. Other than described above, neither Mr. Ginsburg nor Moon Doggie has any present plans or proposals which relate to or would result in: (i) the acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer; (ii) an extraordinary corporate transaction, such as a merger, reorganization or liquidation involving the Issuer; (iii) a sale or transfer of a material amount of assets of the Issuer; (iv) any material change in the present capitalization of dividend policy of the Issuer; (v) any other material change in the Issuer's business or corporate structure; (vi) changes in the Issuer's certificate of incorporation or by-laws or other actions which may impede the acquisition of control of the Issuer by any persons; (vii) causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (viii) a class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12 (g) (4) of the Securities Exchange Act of 1934, as amended; or (ix) any action similar to those enumerated above . ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. CUSIP No. 253921100 Page 7 of 10 Pages --------- (a) Scott K. Ginsburg: 4,024,819 shares of Common Stock representing approximately 15.3% of the outstanding Common Stock. This amount includes 2,920,134 shares of Common Stock held of record by Moon Doggie, of which Mr. Ginsburg is the sole general partner. Mr. Ginsburg, in his capacity as sole general partner, holds voting and dispositive power over these shares. By virtue of Mr. Ginsburg's control of Moon Doggie, Mr. Ginsburg may be deemed to have beneficial ownership of the shares held of record by Moon Doggie. Moon Doggie: 2,920,134 shares of Common Stock of the Issuer representing approximately 11.3% of the outstanding Common Stock. This amount does not include 3,008,527 shares of Common Stock which are subject to warrants issued to Moon Doggie, which warrants are not exercisable prior to December 9, 1999. See Item 6. (b) Scott K. Ginsburg has sole voting and dispositive power over 1,084,685 shares of Common Stock, representing approximately 4.2% of the outstanding Common Stock. Mr. Ginsburg, as sole general partner of Moon Doggie, has voting and dispositive power over 2,920,134 shares of Common Stock, representing approximately 11.2% of the outstanding Common Stock. Mr. Ginsburg may be deemed to have beneficial ownership of the shares held of record by Moon Doggie. See response to Item 5(a) above for additional information. Moon Doggie has voting and dispositive power over 2,920,134 shares of Common Stock, representing approximately 11.3% of the outstanding Common Stock. Because Mr. Ginsburg is the sole general partner of Moon Doggie and, as such, controls Moon Doggie, Moon Doggie may be deemed to share such voting and dispositive power over these shares of Common Stock with Mr. Ginsburg. See response to Item 5(a) for additional information. (c) On December 9, 1998, Moon Doggie purchased 2,920,134 shares of Common Stock for a total purchase price of $8,000,000, or approximately $2.74 per share, pursuant to the Second Common Stock Subscription Agreement. (d) No person other than Mr. Ginsburg or Moon Doggie has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock of the Issuer owned by Mr. Ginsburg or Moon Doggie. (e) [Not Applicable] ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS, OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. (a) On August 12, 1998, the Issuer and Mr. Ginsburg entered into the First Common Stock Subscription Agreement for the purchase of 714,285 shares of Common Stock at a purchase price of $2.80 per share. In connection with such purchase, the Issuer granted Mr. Ginsburg certain registration rights with respect to the purchased shares. The foregoing summary of such agreement is qualified in its entirety by reference to Exhibit 1 which is hereby incorporated by reference. (b) On September 25, 1998, the Issuer and Mr. Ginsburg entered into the Second Common Stock Subscription Agreement for the purchase of shares of Common Stock with an aggregate purchase price not to exceed $8 million, nor to be less than $6 million. This agreement was amended by that certain letter agreement dated December 9, 1998 by and between the Issuer and Moon Doggie. In connection with such purchase, the Issuer has granted to Moon Doggie certain demand registration rights which may not be exercised for a period of sixty days following Moon Doggie's purchase of such shares. The foregoing summary of such agreement is qualified in its entirety by reference to Exhibit 2 and Exhibit 3, each of which is hereby incorporated by reference. CUSIP No. 253921100 Page 8 of 10 Pages --------- (c) In connection with the purchase of shares of Common Stock by Moon Doggie pursuant to the Second Common Stock Subscription Agreement, the Issuer and Moon Doggie have entered into that certain Warrant Purchase Agreement dated December 9, 1998, pursuant to which the Issuer has issued to Moon Doggie (i) a warrant to purchase up to 1,460,067 shares of Common Stock at a purchase price of $3.25 per share (subject to certain adjustments) (the "First Warrant") and (ii) a warrant to purchase up to 1,548,460 at a purchase price of $3.25 per share (subject to certain adjustments) (the "Second Warrant"). The First Warrant is void after December 9, 2001 and is not exercisable prior to December 9, 1999 and, thereafter, is 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 prices of the company's common stock on the Nasdaq National Market has exceeded $10.00 per share for at least twenty (20) of the preceding thirty (30) consecutive trading days and ending on 5:00 p.m. on December 9, 2001. The remaining shares shall become exercisable, 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 for at least twenty (20) of the preceding thirty (30) consecutive trading days and ending on 5:00 p.m. on December 9, 2001. The Second Warrant is void after December 9, 2003 and is not exercisable prior to December 9, 1999 and, thereafter, is exercisable only with respect to that portion of the shares that have vested. Shares shall vest in equal monthly installments upon Mr. Ginsburg's completion of each of the twenty-four (24) months of continuous service measured from and after the date of issuance of the Second Warrant. The Second Warrant shall be exercisable for up to 50% of the vested shares, in whole or in part with respect to such vested 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 for at least twenty (20) of the preceding thirty (30) consecutive trading days and ending on 5:00 p.m. on December 9, 2003. The remaining vested shares shall become exercisable, 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 for at least twenty (20) of the preceding thirty (30) consecutive trading days and ending on 5:00 p.m. on December 9, 2003. The foregoing summary of such agreements is qualified in its entirety by such references to Exhibit 4, Exhibit 5 and Exhibit 6, each of which is hereby incorporated by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 1 Common Stock Subscription Agreement dated August 12, 1998 by and between Digital Generation Systems, Inc. and Scott K. Ginsburg. Exhibit 2 Common Stock Subscription Agreement dated September 25, 1998 by and between Digital Generations Systems, Inc. and Scott K. Ginsburg. Exhibit 3 Letter Agreement dated December 9, 1998 by and between Digital Generation Systems, Inc. and Scott K. Ginsburg for Moon Doggie Family Partnership. Exhibit 4 Warrant Purchase Agreement dated as of December 9, 1998 by and among Digital Generation Systems, Inc. and Moon Doggie Family Partnership. Exhibit 5 Warrant No. 1 to Purchase Common Stock of Digital Generations Systems, Inc. Exhibit 6 Warrant No. 2 to Purchase Common Stock of Digital Generations Systems, Inc. Exhibit 7 Joint Filing Agreement dated as of December 11, 1998 by and between Scott K. Ginsburg and Moon Doggie Family Investments. Exhibit 8 Individual Account Agreement, Customer's Options Agreement, and Trading Authorization with Goldman, Sachs & Co. dated as of July 10, 1998. CUSIP No. 253921100 Page 9 of 10 Pages --------- SIGNATURE After reasonable inquiry and to the best of the undersigned's knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. Scott K. Ginsburg /s/ Scott K. Ginsburg _______________________ Dated: December 21, 1998 CUSIP No. 253921100 Page 10 of 10 Pages --------- SIGNATURE After reasonable inquiry and to the best of the undersigned's knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. Moon Doggie Family Partnership, L.P. By: /s/ Scott K. Ginsburg ____________________________________ Name: Scott K. Ginsburg Title: General Partner Dated: December 21, 1998 EX-99.1 2 EXHIBIT 1 EXHIBIT 1 DIGITAL GENERATION SYSTEMS, INC. COMMON STOCK SUBSCRIPTION AGREEMENT The undersigned ("Subscriber") hereby offers to purchase 714,285 shares of ------- the Common Stock (the "Shares") of Digital Generation Systems, Inc., a California corporation (the "Company") at a price of $2.80 per share, and is herewith delivering payment for such Shares by check or wire transfer payable to the Company. 1. Subscriber, by offering to purchase the Shares, (a) hereby represents and warrants to the Company that all information provided by Subscriber herewith is true and correct and (b) hereby represents and warrants to the Company as follows: a. Investment. Subscriber is acquiring the Shares for investment for Subscriber's own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof in violation of applicable securities laws. Subscriber understands that such Shares have not been, and will not be, registered under the Securities Act of 1933, as amended, (the "Securities Act") by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of such Subscriber's representations as expressed herein. b. Rule 144. Subscriber acknowledges that the Shares must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available. Subscriber is aware of the provisions of Rule 144 promulgated under the Securities Act which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, except as otherwise permitted under Rule 144(k), if applicable, (i) the availability of certain current public information about the Company, (ii) the resale occurring not less than one year after a party has purchased and fully paid for the shares to be sold, (iii) the sale being effected through a "broker's transaction" or in transactions directly with a "market maker" (as provided by Rule 144(f)) and (iv) the number of shares being sold during any three-month period not exceeding specified limitations. c. Legends. Subscriber agrees that each certificate or other document evidencing any of the Shares shall be endorsed with the legend set forth below. Subscriber agrees not to transfer the Shares represented by any such certificate without complying with the restrictions on transfer described in the legend endorsed on such certificate. 1 THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, OR ASSIGNED IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION, WITHOUT AN OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL FOR THE COMPANY, STATING THAT SUCH SALE, TRANSFER, OR ASSIGNMENT IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SAID ACT. THIS CERTIFICATE MUST BE SURRENDERED TO THE CORPORATION OR ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE TRANSFER OF ANY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE. d. Access to Data. Subscriber has requested and received from the Company all the information Subscriber considers necessary or appropriate for deciding whether to purchase the Shares. Subscriber has had an opportunity to ask questions of and receive answers from management of the Company concerning the Company, the Company's business and financial affairs and the Subscriber's purchase of Shares hereunder. Subscriber has had such questions answered to Subscriber's satisfaction. Subscriber understands that any information contained in any written documentation or made by management during discussions with the Company were intended to describe the aspects of the Company's business and prospects which the Company believes to be material, but such information does not necessarily provide a thorough exhaustive description. Subscriber acknowledges that any estimates or projections as to events that may occur in the future were based upon the best judgment of the Company's management at the time such estimates or projections were made and that whether or not such estimates or projections will depend upon the Company's achieving its overall business objectives, including the availability of funds resulting from the sale of the Shares. Subscriber acknowledges there is no assurance that any projections will be attained. e. Preexisting Personal or Business Relationship. Subscriber either has a preexisting personal or business relationship with the Company or any of its officers, directors or controlling persons or, by reason of Subscriber's business or financial experience, could be reasonably assumed to have the capacity to protect Subscriber's own interests in connection with the purchase of the Shares. f. Authorization. This agreement, upon acceptance by the Company, will constitute a valid and legally binding obligation of Subscriber, enforceable in accordance with its terms. 2 g. Brokers or Finders. There are no arrangements or claims for brokerage or finders' fees or agents' commissions or any similar charges in connection with this agreement or any transaction contemplated hereby based on any arrangement or agreement known to Subscriber. h. No Reliance on Third Parties. In purchasing the Shares, Subscriber is not relying upon any representation or assurance from any person. i. Risk of Investment. Subscriber understands the risks inherent in new ventures and the risks associated with unproven technologies such as those of the Company, and Subscriber has experience in investing in such ventures. Subscriber can bear the entire loss of his investment in the Company. j. No Legal Tax or Investment Advice. Subscriber understands that nothing in this Agreement or any other materials presented to Subscriber or information provided by the Company's management in connection with the purchase and sale of the Shares constitutes legal, tax, or investment advice. Subscriber has consulted such legal, tax, and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares. 2. Address. Subscriber's address listed below is true and correct. 3. Subscriber understands that the final number of Shares which may be purchased by Subscriber will be determined by the Company and that this offer to purchase Shares is subject to acceptance, in whole or in part, by the Company. Funds not accepted for the purchase of Shares will be refunded. 4. Subject to acceptance by the Company of Subscriber's offer to purchase Shares hereunder and upon receipt of Subscriber's payments, the Company will cause a stock certificate representing the Shares purchased by Subscriber to be prepared, and the Company will cause such stock certificate to be transmitted to the Subscriber at the address shown below. 5. By accepting below, the Company undertakes, within 60 days of the closing of the round in which the Shares are purchased, to use its diligent efforts to prepare and file a registration statement with the Securities and Exchange Commission on Form S-3 registering the shares under the Securities Act of 1933, as amended, and hereby represents, warrants, covenants and agrees as to the matters set forth on Annex I attached hereto. 3 IN WITNESS WHEREOF, Subscriber hereby executes this Agreement as of August 12, 1998. /s/ Scott K. Ginsburg - ------------------------------- Signature Scott K. Ginsburg - ------------------------------- Print Name Address: 17340 Club Hill Drive ----------------------- Dallas, Texas 75248 ----------------------- (Do not write below this line.) Accepted as to 714,285 Shares as of August 12, 1998. Digital Generation Systems, Inc. By: /s/ Henry Donaldson -------------------------- Henry Donaldson, President 4 ANNEX I TO SUBSCRIPTION AGREEMENT By executing the attached Subscription Agreement (the "Agreement"), the Company hereby represents and warrants to Subscriber that: (a) the Shares have been duly authorized and, when issued, will be duly and validly issued, fully paid and non-assessable; (b) the Company has registered its Common Stock pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Common Stock is listed and traded on the NASDAQ National Market and the Company has timely filed all material required to be filed pursuant to all reporting obligations under either Section 13(a) or 15(d) of the Exchange Act for a period of at least twelve (12) months immediately preceding the offer or sale of the Shares; (c) the Company has legally available sufficient authorized and unissued Common Stock as may be reasonably necessary to effect the sale and issuance of the Shares; (d) the Agreement has been duly and validly authorized by the Company and, when executed and delivered by the Company, will be the valid and binding agreement of the Company enforceable in accordance with its terms; (e) the execution and delivery of the Agreement by the Company, the issuance of the Shares, and the consummation by the Company of the other transactions contemplated by the Agreement, do not and will not conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under, the articles of incorporation or by-laws of the Company, or any material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound, or any material existing applicable law, rule, or regulation or any applicable decree, judgment, or order of any court or other governmental body having jurisdiction over the Company or any of its properties or assets, except such conflict, breach or default which would not have a material adverse effect on the transactions contemplated herein; and (f) no authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market or the stockholders of the Company is required to be obtained by the Company for the issuance and sale of the Shares to Subscriber as contemplated by the Agreement, except such authorizations, approvals and consents that have been obtained. By accepting Subscriber's offer to purchase the Shares, the Company hereby agrees to enter into a separate registration rights agreement with Subscriber (and any other purchasers of common stock of the Company in the same round in which the Shares are purchased) granting Subscriber the demand registration rights contained in Section 1.3 of the Amendment and Restatement No. 5 to Rights Agreement entered into as of July 14, 1997 by and among the Company and certain of its securityholders, which rights shall apply to the registration statement on Form S-3 referred to in Section 5 of the Agreement. The demand registration rights so granted will be exercisable no earlier than sixty (60) days following the closing of the round in which the Shares are purchased. Nothing in this Section 2 is intended to limit the Company's obligations under section 5 of the 5 Agreement to file the Form S-3. Notwithstanding anything herein to the contrary, the Form S-3 shall be maintained effective by the Company until the earlier of (i) the date as to which Subscriber may sell all of the Shares without registration in a single transaction pursuant to Rule 144(k) or (ii) the date on which Subscriber has sold all of the Shares to the public. 6 EX-99.2 3 EXHIBIT 2 EXHIBIT 2 DIGITAL GENERATION SYSTEMS, INC. Common Stock Subscription Agreement Subject to the terms and conditions of this Agreement, the undersigned ("Subscriber") hereby offers and agrees to purchase shares of Common Stock (the "Shares") of Digital Generation Systems, Inc., a California corporation (the "Company"), and the Company agrees to sell the Shares to Subscriber. 1. The closing of the purchase and sale of the Shares under this Agreement (the "Closing") shall be held on such date and at such time as the Company shall select in writing (the "Notice of Closing"), which date shall in no event (i) be more than sixty (60) days following the date of this Agreement, (ii) be less than two (2) business days after receipt by the Subscriber of the Notice of Closing. 2. The price per share shall be equal to the average closing price of the Company's common stock during the fifteen (15) trading days immediately prior to the Notice of Closing (the "Purchase Price") and the number of Shares to be sold by the Company and purchased by Subscriber. The aggregate Purchase Price for the Shares shall not exceed $8 million nor be less than $6 million. 3. Subscriber, by offering and agreeing to purchase the Shares, (a) hereby represents and warrants to the Company that all information provided by Subscriber herewith is true and correct and (b) hereby represents and warrants to the Company as follows: a. Investment. Subscriber is acquiring the Shares for investment for Subscriber's own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof in violation of applicable securities laws. Subscriber understands that such Shares have not been, and will not be, registered under the Securities Act of 1933, as amended, (the "Securities Act") by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of such Subscriber's representations as expressed herein. b. Rule 144. Subscriber acknowledges that the Shares must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available. Subscriber is aware of the provisions of Rule 144 promulgated under the Securities Act which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, except as otherwise permitted under Rule 144(k), if applicable, (i) the availability of certain current public information about the Company, (ii) the resale occurring not less that one year after a party has purchased and fully paid for the shares to be sold, (iii) the sale being effected through a "broker transaction" or in transactions directly with a "market maker" (as provided by Rule 144(f) and (iv) the number of share being sold during any three-month period not exceeding specified limitations. c. Legends. Subscriber agrees that each certificate or other document evidencing any of the Shares shall be endorsed with the legend set forth below. Subscriber agrees not to transfer the Shares represented by any such certificate without complying with the restrictions on transfer described in the legend endorsed on such certificate. THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS, THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, OR ASSIGNED IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION, WITHOUT AN OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL FOR THE COMPANY, STATING THAT SUCH SALE, TRANSFER, OR ASSIGNMENT IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SAID ACT. THIS CERTIFICATE MUST BE SURRENDERED TO THE CORPORATION OR ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE TRANSFER OF ANY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE. d. Access to Data. Subscriber has requested and received from the Company all the information Subscriber considers necessary or appropriate fro deciding whether to purchase the Shares. Subscriber has received and reviewed copies of the Company's filings with the Securities and Exchange Commission. Subscriber has had an opportunity to ask questions of and receiver answers from management of the Company concerning the Company, the Company's business and financial affairs and the Subscriber's purchase of Shares hereunder. Subscriber has had such questions answered to Subscriber's satisfaction. Subscriber understands that any information contained in any written documentation or made by management during discussions with the Company were intended to describe the aspects of the Company's business and prospects which the Company believes to be material, but such information does not necessarily provide a thorough exhaustive description. Subscriber acknowledges that any estimates or projections as to events that may occur in the future were based upon the best judgment of the Company's management at the time such estimates or projections were made and that whether or not such estimates or projections will depend upon the Company's achieving its overall business objectives, including availability of funds resulting from the sale of the Shares. Subscriber acknowledges there is no assurance that any projections will be attained. e. Pre-existing Personal or Business Relationship. Subscriber either has a pre-existing personal or business relationship with the Company or any of its officers, directors or controlling persons or, by reason of Subscriber's business or financial experience, could be reasonably assumed to have the capacity to protect Subscriber's own interests in connection with the purchase of the Shares. f. Authorisation. This agreement, upon acceptance by the Company, will constitute a valid and legally binding obligation of Subscriber, enforceable in accordance with its terms. 2 g. Brokers or Finders. There are no arrangements or claims for brokerage or finders' fees or agents' commissions or any similar charges in connection with this agreement or any transaction contemplated hereby based on any arrangement or agreement known to Subscriber. h. No Reliance on Third Parties. In purchasing the Shares, Subscriber is not relying upon any representation or assurance from any person. i. Risk of Investment. Subscriber understands the risks inherent in new ventures and the risks associated with unproven technologies such as those of the company, and Subscriber has experience in investing in such ventures. Subscriber can bear the entire loss of his investment in the Company. j. No Legal Tax or Investment Advice. Subscriber understands that nothing in this Agreement or any other materials presented to Subscriber or information provided by the Company's management in connection with the purchase and sale of the Shares constitutes legal, tax, or investment advice. Subscriber has consulted such legal, tax, and investment advisors as it, in it sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares. 4. Address. Subscriber's address listed below is true and correct. 5. Subscriber understands that the final number of Shares which may be purchased by Subscriber will be determined by the Company and that this offer to purchase Shares is subject to acceptance, in whole or in part, by the Company. Funds not accepted for the purchase of Shares will be refunded. 6. At the Closing, and upon receipt of Subscriber's payment by check or wire transfer payable to the Company of the Purchase Price, the Company will cause a stock certificate representing the Shares purchased by Subscriber to be prepared, and the Company will cause such stock certificate to be transmitted to the Subscriber at the address shown below. 7. By accepting below, the Company undertakes, within 60 days of the closing of the rounds in which the Shares are purchased, to use its diligent efforts to prepare and file a registration statement with the Securities and Exchange Commission on Form S-3 registering the Shares under the Securities Act of 1933, as amended and hereby represents, warrants, covenants and agrees as to the matters set forth on Annex I attached hereto. 3 IN WITNESS WHEREOF, Subscriber and the Company hereby execute this Agreement as of September 25, 1998. SUBSCRIBER /s/ Scott K. Ginsburg - ----------------------------- Signature Scott K. Ginsburg - ----------------------------- Print Name Address:17340 Club Hill Drive --------------------- Dallas, Texas 75248 --------------------- COMPANY By: /s/ Henry Donaldson -------------------------- Henry Donaldson, President 4 ANNEX I TO SUBSCRIPTION AGREEMENT 1. By executing the attached Subscription Agreement (the "Agreement"), the Company hereby represents and warrants to Subscriber that: (a) the Shares have been duly authorized and, when issued, will be duly and validly issued, fully paid and non-assessable; (b) the Company has registered its Common Stock pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Common Stock is listed and traded on the NASDAQ National Market and the Company has timely filed all material required to be filed pursuant to all reporting obligations under either Section 13(a) or 15(d) of the Exchange Act for a period of at least twelve (12) months immediately proceeding the offer or sale of the Shares; (c) the Company has legally available sufficient authorized and unissued Common Stock as may be reasonably necessary to effect the sale and issuance of the Shares; (d) the Agreement has been duly and validly authorized by the Company and, when executed and delivered by the Company, will be the valid and binding agreement of the Company enforceable in accordance with its terms; (e) the execution and delivery of the Agreement by the Company, the issuance of the Shares, and the consummation by the Company of the other transactions contemplated by the Agreement, do not and will not conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under, the articles of incorporation or by-laws of the Company, or any material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound, or any material existing applicable law, rule or regulation or any applicable decree, judgment, or order of any court or other governmental body having jurisdiction over the Company or any of its properties or assets, except such conflict, breach or default which would not have a material adverse effect on the transactions contemplated herein, and (f) no authorization, approval or consent of any court, governmental body, regulatory body, regulatory agency, self-regulatory organization, or stock exchange or market or the stockholders of the Company is required to be obtained by the Company for the issuance and sale of the Shares to Subscriber as contemplated by the Agreement, except such authorizations, approvals and consents that have been obtained. 2. By accepting Subscriber's offer to purchase the Shares, the company hereby agrees to enter into a separate registration rights agreement with Subscriber (and any other purchaser of common stock of the company in the same round in which the Shares are purchased granting Subscriber the demand registration rights contained in Section 1.3 of the Amendment and Restatement No.5 of Rights Agreement entered into as July 14, 1997 by and among the Company and certain of its securityholders, which rights shall apply to the registration statement on Form S-3 referred to in Section 5 of the Agreement. The demand registration rights so granted will be exercisable no earlier than sixty (60) days following the closing of the round in which the Shares are purchased. 5 Nothing in this Section is intended to limit the Company's obligations under Section 5 of the Agreement to file the Form S-3. Notwithstanding anything herein to the contrary, the Form S-3 shall be maintained effective by the Company until the earlier of (i) the date as to which Subscriber may sell all of the Shares without registration in a single transaction pursuant to Rule 144 (k) or (ii) the date on which Subscriber has sold all of the Shares to the public. 6 EX-99.3 4 EXHIBIT 3 EXHIBIT 3 December 9, 1997 Scott K. Ginsburg 17340 Club Hill Drive Dallas, Texas 75248 RE: SUBSCRIPTION TO PURCHASE SHARES OF COMMON STOCK OF DIGITAL GENERATION SYSTEMS, INC. (THE "COMPANY) Mr. Ginsburg: In connection with the purchase and sale of 2,920,134 shares of the Common Stock of the Company (the "Common Shares") pursuant to that certain Subscription Agreement dated September 29, 1998, by and among the Company and you (the "Subscription Agreement"), the Company and you hereby expressly agree to waive, and hereby do waive, the provision in Section 1 of the Subscription Agreement requiring the Closing (as defined in the Subscription Agreement) of the purchase and sale of the Common Shares to be held no later than sixty (60) days following the date of the Subscription Agreement. Furthermore, the Company and you hereby expressly agree to amend, and hereby do amend, Section 1 of the Subscription Agreement to allow for the Closing to be held no later than December 10, 1998, unless otherwise mutually agreed upon by the Company and you. Very truly yours, DIGITAL GENERATION SYSTEMS, INC. By: /s/ Henry W. Donaldson ------------------------------------- Henry W. Donaldson President and Chief Executive Officer ACKNOWLEDGED AND AGREED: By: /s/ Scott K. Ginsburg ---------------------------------- Scott K. Ginsburg For Moon Doggie Family Partnership EX-99.4 5 EXHIBIT 4 EXHIBIT 4 WARRANT PURCHASE AGREEMENT December 9, 1998 TABLE OF CONTENTS ----------------- Page ---- 1. PURCHASE AND SALE OF THE WARRANT.........................................1 1.1. Sale and Issuance of the Warrant...................................1 1.2. Closing............................................................1 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................1 2.1. Authorization......................................................1 2.2. Valid Issuance of the Warrant......................................2 2.3. Offering...........................................................2 2.4. Non-Contravention..................................................2 2.5. Capitalization.....................................................3 2.6. Legal Proceedings..................................................3 2.7. No Violations......................................................3 2.8. Governmental Permits, Etc..........................................3 2.9. Financial Statements...............................................4 2.10. No Material Adverse Charge.........................................4 2.11. Additional Information.............................................4 2.12. Intellectual Property..............................................4 2.13. Listing............................................................4 3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR...........................5 3.1. Authorization......................................................5 3.2. Purchase Entirely for Own Account..................................5 3.3. Investment Experience..............................................5 3.4. Accredited Investor................................................5 3.5. Restricted Securities..............................................5 3.6. Further Limitations on Disposition.................................5 3.7. Legends............................................................6 4. CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING..........................6 4.1. Representations and Warranties.....................................7 4.2. Performance........................................................7 4.3. Qualifications.....................................................7 4.4. Proceedings and Documents..........................................7 4.5. Registration Rights Agreement......................................7 5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.......................7 5.1. Representations and Warranties.....................................7 i 5.2. Payment of Purchase Price..........................................7 5.3. Qualifications.....................................................7 6. MISCELLANEOUS............................................................7 6.1. Survival of Warranties.............................................7 6.2. Successors and Assigns.............................................8 6.3. Governing Law......................................................8 6.4. Counterparts.......................................................8 6.5. Titles and Subtitles...............................................8 6.6 Notices............................................................8 6.7. Finder's Fee.......................................................8 6.8. Expenses...........................................................8 6.9. Amendments and Waivers.............................................9 6.10. Severability.......................................................9 6.11. Corporate Securities Law...........................................9 6.12. Entire Agreement...................................................9 SCHEDULE A Schedule of Investors EXHIBIT A Form of Warrant EXHIBIT B Registration Rights Agreement ii DIGITAL GENERATION SYSTEMS, INC. WARRANT PURCHASE AGREEMENT THIS WARRANT PURCHASE AGREEMENT is made as of the 9th day of December, 1998, by and among Digital Generation Systems, Inc., a California corporation (the "Company"), and Moon Doggie Family Partnership (the "Investor"). WHEREAS, the Company desires to sell, and the Investor desires to purchase for an aggregate purchase price of nine thousand four hundred ninety dollars and forty-four cents ($9,490.44), a warrant, in the form attached hereto as Exhibit A (the "Warrant"), to purchase one million four hundred sixty and --------- sixty-seven (1,460,067) shares of the Company's Common Stock (the "Warrant Shares") and with an exercise price equal three dollars and twenty-five cents ($3.25) (the "Purchase Price"). NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS: 1. PURCHASE AND SALE OF THE WARRANT. -------------------------------- 1.1. SALE AND ISSUANCE OF THE WARRANT. -------------------------------- (a) On or prior to the Closing, the Company shall have authorized (i) the sale and issuance to the Investor of the Warrant and (iii) the issuance of the Warrant Shares to be issued upon exercise of the Warrant. (b) Subject to the terms and conditions of this Agreement, the Investor agrees to purchase at the Closing, and the Company agrees to sell and issue to Investor at the Closing, a Warrant to purchase the Warrant Shares, for the purchase price set forth such Investor's name on Schedule A hereto. ---------- 1.2. CLOSING. ------- The purchase and sale of the Warrant shall take place at the offices of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, 155 Constitution Drive, Menlo Park, California, at 10:00 A.M., on December 9, 1998, or at such other time and place as the Company and the Investor mutually agree upon orally or in writing (which time and place are designated as the "Closing"). At the Closing the Company shall deliver to the Investor a Warrant to purchase the Warrant Shares, against payment of the purchase price therefor by check or wire transfer. 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby --------------------------------------------- represents and warrants to the Investor that: 2.1. AUTHORIZATION. ------------- All corporate action on the part of the Company, 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 Warrant being sold hereunder and the Warrant Shares issuable upon conversion of the Warrant 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 THE WARRANT. ----------------------------- The Warrant that is being purchased by the Investor 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 Warrant 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. The Company agrees that, prior to the expiration of the Warrant, the Company will at all time have authorized and reserved, and will keep available, solely for issuance or delivery upon the exercise of the Warrant, the number of shares of Common Stock as from time to time shall be issuable upon the exercise of the Warrant. 2.3. OFFERING. -------- Subject in part to the truth and accuracy of the 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. NON-CONTRAVENTION. ----------------- To the best of the Company's knowledge, the execution and delivery of this Agreement and the Warrant, the issuance of the Warrant Shares to be issued by the Company upon conversion of the Warrant, and the consummation of the transactions contemplated hereby will not conflict with or constitute a violation of, or default (with the passage of time or otherwise) under, any material agreement or instrument to which the Company is a party or by which it is bound or the Articles of Incorporation (the "Charter") or the Bylaws of the Company nor result in the creation or imposition of any lien, encumbrance, claim, security interest or restriction whatsoever upon any of the material properties or assets of the Company or an acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any material bond, debenture, note or any other evidence of indebtedness or any material indenture, mortgage, deed of trust or any either agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the property or assets 2 of the Company is subject, nor conflict with, or result in a violation of, any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to the Company. No consent, approval, authorization or other order of, or registration, qualification or filing with, any regulatory body, administrative agency, or other governmental body in the United States, other than with respect to "blue sky" laws, is required for the valid issuance and sale of the Warrant and the Warrant Shares to be issued pursuant to this Agreement (other than such as have been made or obtained). 2.5. CAPITALIZATION. -------------- 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") accurately reflected the capitalization of the Company as of their respective filing or effective dates, as the case may be. The Warrant Shares and the shares of Common Stock of the Company issuable upon conversion of that certain Warrant No. 2 to Purchase Common Stock of even date herewith issued to the Investor (together, the "Combined Shares") represent greater than fifty percent (50%) of the sum of (a) the Combined Shares and (b) the number of shares of Common Stock of the Company issuable upon exercise of those warrants issued pursuant to that certain Common Stock and Warrant Purchase Agreement of even date herewith, by and among the Company and certain investors. 2.6. LEGAL PROCEEDINGS. ----------------- Except as disclosed in the SEC Filings, there is no material legal or governmental proceeding pending or, to the knowledge of the Company, threatened or contemplated to which the Company is or may be a party or of which the business or property of the Company is or may be subject. 2.7. NO VIOLATIONS. ------------- Except as disclosed in the SEC Filings, the Company is not in violation of its Charter or Bylaws, in violation of any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to the Company, which violation, individually or in the aggregate, would have a material adverse effect on the business or financial condition of the Company, or in default in any material respect in the performance of any obligation, agreement or condition contained in any bond, debenture, note or any other evidence of indebtedness in any indenture, mortgage, deed of trust or any other agreement or instrument to which the Company is a party or by which the Company is bound or by which the properties of the Company are bound or affected, which default, individually or in the aggregate, would have a material adverse effect on the business or financial condition of the Company or which would otherwise have a material adverse effect on the Investor, and there exists no condition which, with the passage of time or the giving of notice or both, would constitute a material default under any such document or instrument or result in the imposition of any material penalty or the acceleration of any indebtedness. 2.8 GOVERNMENTAL PERMITS, ETC. ------------------------- Except as disclosed in the SEC Filings, the Company has all necessary franchises, licenses, certificates and other authorizations from any foreign, federal, state or local government or governmental agency, department, or body that are currently necessary for the operation of the business of the Company as currently conducted, the absence of which would have a material adverse effect on the business or operations of the Company. 3 2.9. FINANCIAL STATEMENTS. -------------------- Except as disclosed in the SEC Filings, the financial statements of the Company and the related notes contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, present fairly the financial position of the Company as of the dates indicated therein and its results of operations and cash flows for the periods therein specified. Such financial statements (including the related notes) have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods therein specified. 2.10. NO MATERIAL ADVERSE CHARGE. -------------------------- Except as disclosed in the SEC Filings, since September 30, 1998, there has not been any material adverse change in its business, financial condition or results of operations. 2.11. ADDITIONAL INFORMATION. ---------------------- The Company has filed in a timely manner all SEC Filings. The SEC Filings complied in all material respects with the requirements of the Exchange Act or the Securities Act of 1933, as amended (the "Securities 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. 2.12. INTELLECTUAL PROPERTY. --------------------- Except to the extent that the failure to comply with any of the following statements would not have a material adverse effect on the business or operations of the Company, the Company hereby represents and warrants that as of the date hereof: (a) the Company has the right to use all intellectual property (the "Intellectual Property") now used by it in its business; (b) the Company owns all right, title and interest in and to, all of the intellectual property it owns, free and clear of any liens or encumbrances; (c) in any case in which the Company does not own Intellectual Property, it has good and valid licenses for the same which are in full force and effect; and (d) no claims have been asserted with respect to the use of any such Intellectual Property or challenging or questioning the validity or effectiveness of any such license or agreement. 2.13. LISTING. ------- The Company shall use its best efforts to comply with all requirements of the National Association of Securities Dealers, Inc. with respect to the issuance of the Warrant Shares and the listing of the Warrant Shares on the Nasdaq National Market. 4 3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor hereby ---------------------------------------------- represents and warrants that: 3.1. AUTHORIZATION. ------------- Such Investor has full power and authority to 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 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 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. INVESTMENT EXPERIENCE. --------------------- Such Investor is an investor in 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 Warrant. If other than an individual, Investor also represents it has not been organized for the purpose of acquiring the Warrant. 3.4. ACCREDITED INVESTOR. ------------------- Such Investor is an "accredited investor" within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation D, as presently in effect. 3.5. RESTRICTED SECURITIES. --------------------- Such Investor understands that the Securities it is purchasing 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. 3.6. FURTHER LIMITATIONS ON DISPOSITION. ---------------------------------- Without in any way limiting 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 5 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 Securities Act of 1933, as amended, 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. 3.7 LEGENDS. ------- It is understood that the certificates evidencing the 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. 4. CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING. The obligations of the ----------------------------------------------- Investor under Section 1 of this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions: 6 4.1. REPRESENTATIONS AND WARRANTIES. ------------------------------ The representations and 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 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 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 in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to Investor's 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 the Investor shall have entered into the Registration Rights Agreement. 5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of the -------------------------------------------------- Company to the 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 warranties of the Investor 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 purchase price specified in Section 1.1. 5.3. QUALIFICATIONS. -------------- All authorizations, approvals, or permits, if 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. 6. MISCELLANEOUS. ------------- 6.1. SURVIVAL OF WARRANTIES. ---------------------- The warranties, representations and covenants of the Company and the Investor 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 Investor or the Company. 7 6.2. SUCCESSORS AND ASSIGNS. ---------------------- Except as otherwise provided herein, the 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. 6.3. GOVERNING LAW. ------------- This Agreement shall be governed by and construed under the laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California. 6.4. COUNTERPARTS. ------------ This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 6.5. TITLES AND SUBTITLES. -------------------- The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 6.6. NOTICES. ------- Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified, 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 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. 6.7. FINDER'S FEE. ------------ Each party represents that it neither is nor will be obligated for any finders' fee or commission in connection with this transaction. The 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 the 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. 6.8. EXPENSES. -------- Irrespective of whether the Closing is effected, each 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 Warrant 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. 8 6.9. AMENDMENTS AND WAIVERS. ---------------------- Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of (a) the Company and (b) the Investor. 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. 6.10. SEVERABILITY. ------------ If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 6.11. CORPORATE SECURITIES LAW. ------------------------ THE SALE OF THE SECURITIES THAT 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. 6.12. ENTIRE AGREEMENT. ---------------- This Agreement and the documents referred 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. 9 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. DIGITAL GENERATION SYSTEMS, INC. By: /s/ Henry W. Donaldson ------------------------------------- Henry W. Donaldson, President and Chief Executive Officer Address: 875 Battery Street San Francisco, CA 94111 INVESTOR: /s/ Scott K. Ginsburg for Moon Doggie ------------------------------------- Family Partnership ------------------ Scott K. Ginsburg Address: 17340 Club Hill Drive Dallas, Texas 75248 10 SCHEDULE A ---------- SCHEDULE OF INVESTORS --------------------- NAME AND ADDRESS PURCHASE PRICE - ---------------- -------------- OF WARRANT ---------- Moon Doggie Family Partnership $9,490.44 EXHIBIT A --------- Form of Warrant EXHIBIT B --------- Registration Rights Agreement EX-99.5 6 EXHIBIT 5 EXHIBIT 5 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 NO. 1 TO PURCHASE COMMON STOCK OF DIGITAL GENERATION SYSTEMS, INC. VOID AFTER DECEMBER 9, 2001 This Warrant is issued to Moon Doggie Family Partnership, 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 Warrant Purchase Agreement dated as of the date hereof (the "Purchase Agreement"). 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 million four hundred sixty thousand sixty- seven (1,460,067) 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 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 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 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 Election 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 of 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 subscription notice. 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. 4 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. 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/ Henry W. Donaldson ------------------------------------ Henry W. Donaldson, President and Chief Executive Officer SIGNATURE PAGE TO WARRANT NO. 1 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 for resale or with a view to distribution of such shares or any part thereof. WARRANTHOLDER: By: ------------------------------- Moon Doggie Family Partnership Address: ----------------------------------- ----------------------------------- Date: -------------- Name in which shares should be registered: - ------------------------------------------ EX-99.6 7 EXHIBIT 6 EXHIBIT 6 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 NO. 2 TO PURCHASE COMMON STOCK OF DIGITAL GENERATION SYSTEMS, INC. VOID AFTER DECEMBER 9, 2003 This Warrant is issued to Moon Doggie Family Partnership, or its registered assigns ("Holder") by Digital Generation Systems, Inc., a California corporation (the "Company"), on December 9, 1998 (the "Warrant Issue Date"). 1. Purchase Shares. Subject to the terms and conditions hereinafter --------------- set forth, 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 million five hundred forty-eight thousand four hundred sixty (1,548,460) 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 10 hereof. 2. Exercise Price. The purchase price for the Shares shall be $3.25, -------------- as adjusted from time to time pursuant to Section 10 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 only with respect to that portion of Shares that have vested (the "Vested Shares"), subject to the other restrictions in this Section 3. The Shares shall vest in equal monthly installments upon Scott K. Ginsburg's completion of each of the twenty-four (24) months of continuous Service measured from and after the Warrant Issue Date. (b) In the event that the Company is subject to a Change in Control on or after June 9, 1999, all of the Shares that have not yet vested shall immediately vest and become Vested Shares. (c) This Warrant shall be exercisable for up to seven hundred seventy-four thousand two hundred thirty (774,230) of the Vested Shares, in whole or in part with respect to such Vested 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 for at least twenty (20) of the preceding thirty (30) consecutive trading days and ending on 5:00 p.m. on December 9, 2003. This Warrant shall not be exercisable, at any time, with respect to any of the Shares that are not Vested Shares. (d) This Warrant shall become exercisable with respect to all of the Vested 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 for at least twenty (20) of the preceding thirty (30) consecutive trading days and ending on 5:00 p.m. on December 9, 2003. This Warrant shall not be exercisable, at any time, with respect to any of the Shares that are not Vested Shares. (e) Notwithstanding paragraphs (a), (b), (c) and (d) of this Section 3, in the event that Mr. Ginsburg has provided continuous Service to the Company from the Warrant Issue Date through November 8, 2003 (the "End Vesting Date"), this Warrant shall become exercisable with respect to all of the Shares as of the End Vesting Date. 4. Representations and Warranties of the Company. The Company hereby --------------------------------------------- represents and warrants to the Holder that: (a) Authorization. All corporate action on the part of the ------------- Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Warrant and that certain Registration Rights Agreement of even date herewith, by and between the Company and certain investors (the "Registration Rights Agreement"), the performance of all obligations of the Company hereunder and thereunder, and the authorization, issuance (or reservation for issuance), and delivery of this Warrant and the Shares issuable upon conversion of this Warrant has been taken or will be taken prior to the date hereof, and this Warrant and the Registration Rights Agreement constitute valid and legally binding obligations of the Company, 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. (b) Valid Issuance. This Warrant, when issued, sold and -------------- delivered in accordance with the terms set forth herein and in consideration for the Service provided by the Holder, will be duly and validly issued, fully paid, and nonassessable, and will be free of 2 restrictions on transfer other than restrictions on transfer under this Warrant and the Registration Rights Agreement and under applicable state and federal securities laws. The Shares issuable upon conversion of this Warrant 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 Warrant and the Registration Rights Agreement and under applicable state and federal securities laws. The Company agrees that, prior to the expiration of this Warrant, the Company will at all time have authorized and reserved, and will keep available, solely for issuance or delivery upon the exercise of this Warrant, the number of shares of Common Stock as from time to time shall be issuable upon the exercise of this Warrant. (c) Offering. Subject in part to the truth and accuracy of the -------- Holder's representations set forth in Section 5 of this Warrant, the offer, sale and issuance of this Warrant is 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. (d) Non-Contravention. To the best of the Company's knowledge, ----------------- the execution and delivery of this Warrant, the issuance of the Shares to be issued by the Company upon conversion of this Warrant, and the consummation of the transactions contemplated hereby will not conflict with or constitute a violation of, or default (with the passage of time or otherwise) under, any material agreement or instrument to which the Company is a party or by which it is bound or the Articles of Incorporation (the "Charter") or the Bylaws of the Company nor result in the creation or imposition of any lien, encumbrance, claim, security interest or restriction whatsoever upon any of the material properties or assets of the Company or an acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any material bond, debenture, note or any other evidence of indebtedness or any material indenture, mortgage, deed of trust or any either agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the property or assets of the Company is subject, nor conflict with, or result in a violation of, any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to the Company. No consent, approval, authorization or other order of, or registration, qualification or filing with, any regulatory body, administrative agency, or other governmental body in the United States, other than with respect to "blue sky" laws, is required for the valid issuance of this Warrant or the Shares to be issued upon conversion of this Warrant (other than such as have been made or obtained). (e) Capitalization. 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 Warrant (the "SEC Filings") accurately reflected the capitalization of the Company as of their respective filing or effective dates, as the case may be. The Shares and the shares of Common Stock issuable upon conversion of that certain Warrant No. 1 to Purchase Common Stock of even date herewith issued to the Holder (together, 3 the "Combined Shares") represent greater than fifty percent (50%) of the sum of (a) the Combined Shares and (b) the number of shares of Common Stock of the Company issuable upon exercise of those warrants issued pursuant to that certain Common Stock and Warrant Purchase Agreement of even date herewith, by and among the Company and certain investors. (f) Legal Proceedings. Except as disclosed in the SEC Filings, ----------------- there is no material legal or governmental proceeding pending or, to the knowledge of the Company, threatened or contemplated to which the Company is or may be a party or of which the business or property of the Company is or may be subject. (g) No Violations. Except as disclosed in the SEC Filings, the ------------- Company is not in violation of its Charter or Bylaws, in violation of any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to the Company, which violation, individually or in the aggregate, would have a material adverse effect on the business or financial condition of the Company, or in default in any material respect in the performance of any obligation, agreement or condition contained in any bond, debenture, note or any other evidence of indebtedness in any indenture, mortgage, deed of trust or any other agreement or instrument to which the Company is a party or by which the Company is bound or by which the properties of the Company are bound or affected, which default, individually or in the aggregate, would have a material adverse effect on the business or financial condition of the Company or which would have otherwise have a material adverse effect on the Holder, and there exists no condition which, with the passage of time or the giving of notice or both, would constitute a material default under any such document or instrument or result in the imposition of any material penalty or the acceleration of any indebtedness. (h) Governmental Permits, Etc. Except as disclosed in the SEC ------------------------- Filings, the Company has all necessary franchises, licenses, certificates and other authorizations from any foreign, federal, state or local government or governmental agency, department, or body that are currently necessary for the operation of the business of the Company as currently conducted, the absence of which would have a material adverse effect on the business or operations of the Company. (i) Financial Statements. Except as disclosed in the SEC -------------------- Filings, the financial statements of the Company and the related notes contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, present fairly the financial position of the Company as of the dates indicated therein and its results of operations and cash flows for the periods therein specified. Such financial statements (including the related notes) have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods therein specified. (j) No Material Adverse Charge. Except as disclosed in the SEC -------------------------- Filings, since September 30, 1998, there has not been any material adverse change in its business, financial condition or results of operations. 4 (k) Additional Information. The Company has filed in a timely ---------------------- manner all SEC Filings. The SEC Filings complied in all material respects with the requirements of the Exchange Act or the Securities Act of 1933, as amended (the "Securities 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. (l) Intellectual Property. Except to the extent that the failure --------------------- to comply with any of the following statements would not have a material adverse effect on the business or operations of the Company, the Company hereby represents and warrants that as of the date hereof: (1) the Company has the right to use all intellectual property (the "Intellectual Property") now used by it in its business; (2) the Company owns all right, title and interest in and to, all of the intellectual property it owns, free and clear of any liens or encumbrances; (3) in any case in which the Company does not own Intellectual Property, it has good and valid licenses for the same which are in full force and effect; and (4) no claims have been asserted with respect to the use of any such Intellectual Property or challenging or questioning the validity or effectiveness of any such license or agreement. (m) Listing. The Company shall use its best efforts to comply ------- with all requirements of the National Association of Securities Dealers, Inc. with respect to the issuance of the Shares and the listing of the Shares on the Nasdaq National Market. 5. Representations and Warranties of the Holder. The Holder hereby -------------------------------------------- represents and warrants that: (a) Authorization. Such Holder has full power and authority to ------------- acknowledge and enter into this Warrant and the Registration Rights Agreement, and this Warrant and the Registration Rights Agreement constitute 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. 5 (b) Purchase Entirely for Own Account. This Warrant is issued --------------------------------- to such Holder in reliance upon such Holder's representation to the Company, which by such Holder's acknowledgement of this Warrant such Holder hereby confirms, that this Warrant and the Shares issuable upon exercise of this Warrant to be received by such Holder (collectively, the "Securities") will be acquired for investment for such Holder'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 Holder has no present intention of selling, granting any participation in, or otherwise distributing the same. By acknowledging this Warrant, such Holder further represents that such Holder 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. (c) Investment Experience. Such Holder is an investor in --------------------- 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 this Warrant. If other than an individual, Holder also represents it has not been organized for the purpose of acquiring this Warrant. (d) Accredited Investor. Such Holder is an "accredited investor" ------------------- within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation D, as presently in effect. (e) Restricted Securities. Such Holder understands that the --------------------- Securities it is being issued 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 Holder represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act. (f) Further Limitations on Disposition. Without in any way ---------------------------------- limiting the representations set forth above, such Holder 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 5 and the Registration Rights Agreement provided and to the extent this Section 5 and such agreement are then applicable, and: (1) There is then in effect a Registration Statement under the Securities Act of 1933, as amended, covering such proposed disposition and such disposition is made in accordance with such Registration Statement; or (2) (i) Such Holder 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 Holder 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 6 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. (3) Notwithstanding the provisions of Paragraphs (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by the Holder 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 Holder hereunder. (g) Legends. It is understood that the certificates evidencing ------- the Securities may bear one or all of the following legends: (1) "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." (2) 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. (3) Any legend required by applicable blue sky law. 6. 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 Election 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. 7. 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, 7 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 7; 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 of 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. 8. 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 subscription notice. 9. 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. 10. 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 10(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 10(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 8 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. 11. Withholding Taxes. In the event that the Company determines that ----------------- it is required to withhold any tax as a result of the exercise of this Warrant, the Holder, as a condition to the exercise of this Warrant, shall make arrangements satisfactory to the Company to enable it to satisfy all withholding requirements. The Holder and/or Mr. Ginsburg shall also make arrangements satisfactory to the Company to enable it to satisfy any withholding requirements that may arise in connection with the vesting or disposition of Shares purchased by exercising this Warrant. 12. 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 shares the Company shall make a cash payment therefor on the basis of the Exercise Price then in effect. 13. 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 13 shall limit the right of the Holder to be provided the Notices required under this Warrant. 14. 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. 9 15. Successors and Assigns. The terms and provisions of this Warrant ---------------------- shall inure to the benefit of, and be binding upon, the Company and the Holders hereof and their respective successors and assigns. 16. 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. 17. 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). 18. 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. 19. 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. 20. 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. 21. Definitions. ----------- (a) "Board of Directors" shall mean the Board of Directors of the Company, as constituted from time to time or, if a Committee has been appointed, such Committee. (b) "Change in Control" shall mean: (1) The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if persons who were not shareholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or 10 more of the voting power of the outstanding securities of each of (A) the continuing or surviving entity and (B) any direct or indirect parent corporation of such continuing or surviving entity; or (2) The sale, transfer or other disposition of all or substantially all of the Company's assets. A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company's incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company's securities immediately before such transaction. (c) "Code" shall mean the Internal Revenue Code of 1986, as amended. (d) "Company" shall mean Digital Generation Systems, Inc., a California corporation. (e) "Consultant" shall mean an individual who performs bona fide services for the Company, a Parent or a Subsidiary as a consultant or advisor, excluding Employees and Outside Directors. (f) "Employee" shall mean any individual who is a common-law employee of the Company, a Parent or a Subsidiary. (g) "Fair Market Value" shall mean the fair market value of a Share, as determined by the Board of Directors in good faith. Such determination shall be conclusive and binding on all persons. (h) "Outside Director" shall mean a member of the Board of Directors who is not an Employee. (i) "Outside Director" shall mean a member of the Board of Directors who is not an Employee. (j) "Parent" shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. (k) "Securities Act" shall mean the Securities Act of 1933, as amended. (l) "Service" shall mean service as an Employee, Outside Director or Consultant. 11 (m) "Subsidiary" shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. (n) "Warrant" shall mean this Warrant. 12 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/ Henry W. Donaldson ------------------------------------- Henry W. Donaldson, President and Chief Executive Officer ACKNOWLEDGED AND AGREED: By:/s/ Scott K. Ginsburg for ------------------------- Moon Doggie Family Partnership ------------------------------ Scott K. Ginsburg 13 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 for resale or with a view to distribution of such shares or any part thereof. WARRANTHOLDER: By: ------------------------------ Moon Doggie Family Partnership Address: --------------------------------- --------------------------------- Date: -------------- Name in which shares should be registered: - ------------------------------------------ 14 EX-99.7 8 EXHIBIT 7 Exhibit 7 JOINT FILING AGREEMENT ---------------------- In accordance with Rule 13d-1(f) promulgated under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree to the joint filing with all other Reporting Persons (as such term is defined in the Schedule 13D referred to below) on behalf of each of them of a statement on Schedule 13D (including amendments thereto) with respect to the Common Stock of beneficial interest, no par value per share, of Digital Generation Systems, a California corporation, and that this Agreement may be included as an Exhibit to such joint filing. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the undersigned hereby execute this Agreement as of the 21st day of December 1998. Scott K. Ginsburg By: /s/ Scott K. Ginsburg ----------------------------------- Moon Doggie Family Partnership, L.P. By: /s/ Scott K. Ginsburg ----------------------------------- Name: Scott K. Ginsburg Title: General Partner EX-99.8 9 EXHIBIT 8 Exhibit 8 Goldman, Sachs & Co. [GOLDMAN SACHS LOGO] 85 Broad Street INDIVIDUAL ACCOUNT New York, NY 10004-2456 AGREEMENT 212-902-1000 - -------------------------------------------------------------------------------- Title of Account Account Number Scott K. Ginsburg 012-07137-9 - -------------------------------------------------------------------------------- TO: GOLDMAN SACHS & CO. This agreement sets forth our respective rights and obligations in connection with your accepting a cash or margin account or accounts for the undersigned ("Client"). This agreement is in addition to (and in no way limits or restricts) any of the provisions of or the rights which you or any of your affiliates may have under any other agreements between you or any of your affiliates and Client. You and Client hereby agree to the following with respect to any of Client's accounts with you and all transactions with you: 1. EXCHANGE OR MARKET. All transactions under this agreement shall be in - ---------------------- accordance with the rules and customs of the exchange or market and its clearing house. If any, where the transactions are executed and in conformity with applicable law and regulations of governmental authorities and future amendments or supplements thereto. 2. GENERAL LIEN: DELIVERY OF COLLATERAL. Client agrees that all securities and - ---------------------------------------- other property and the proceeds thereof, and any other obligations, whether or not due, which you or any of your affiliates may hold for Client or which are, or may become, due to Client (either individually or jointly with others or in which Client has any interest) and all rights Client may have against your or any of your affiliates shall be subject to a general lien, security interest and right of set-off for the discharge of all Client's obligations to you or any of your affiliates. Client further agrees that you may, in your discretion at any time and from time to time, require Client to deliver collateral to margin and secure Client's performance of obligations to you and your affiliates with respect to margin and secure Client's performance of obligations to you and your affiliates with respect to spot, forward, option, swap and other transactions involving or relating to foreign exchange. Such collateral shall be delivered, within one business day of your request, in such amount and form and to such account or recipient as you shall specify. You may, in your discretion and without notice to Client, deduct any amounts from Client's account and apply or transfer any of Client's securities and other property interchangeably between any of Client's accounts, each of which unreservedly guarantees all obligations of Client. Client acknowledges that you and each of your affiliates act as agents for each other in respect of the rights subject to lien as described above. 3. PAYMENT AND SETTLEMENT. Client agrees that all cash account transactions will - -------------------------- be handled on a cash basis and Client shall pay for any security purchased for Client's account, and deliver any securities sold for Client's account on or before the settlement date. Client agrees to pay on demand all balances owing with respect to Client's account. Client warrants that no sale of securities is contemplated before the securities are paid for as provided above and that each item sold will be owned by Client at the time of sale. 4. DEFAULT. In the event of default by Client of any obligation under any - ----------- transaction or agreement with your or any of your affiliates, if Client shall become bankrupt, insolvent or subject to any bankruptcy, reorganization, insolvency or similar proceeding, or if for any reason you or any of your affiliates deem it advisable for your or their protection, you or any of your affiliates may, without notice or demand to Client, and at such times and places as you may determine, cancel., terminate, accelerate, liquidate and/or close-out any or any transactions and agreements between Client and you or any of your affiliates, pledge or sell any securities or other property which you or any of your affiliates may hold for Client or which is due to Client (either individually or jointly with others) and apply the proceeds to the discharge of the obligation, set-off, net and recoup any obligations to Client against any obligations to you or any of your affiliates, exercise all rights of a secured creditor in respect of all collateral in which you or your affiliates have a security interest or right of set-off, cover any open positions of Client (by buying in or borrowing securities or otherwise) and take such other actions as you or any of your affiliates deem appropriate provided that if applicable law would stay or otherwise impair the ability of your or any of your affiliates to take any such action upon any such bankruptcy, reorganization, insolvency or similar proceeding, you and the applicable affiliate(s) will be deemed to have taken such action with respect to the cancellation, termination, acceleration, liquidation and/or close-out of transactions, and the application of appropriate set-offs and if and to the extent you deem it appropriate, the sale or disposition of securities or other assets of Client, the exercise of rights of a secured creditor, and the application of proceeds immediately prior to such bankruptcy, reorganization, insolvency or similar proceeding. Client shall remain liable for any deficiency and shall promptly reimburse you and your affiliates for any loss or expense incurred thereby, including losses sustained by reason of an inability to borrow any securities or other property sold for Client's account. 5. INTEREST, FEES. Client agrees to pay interest charges which may be imposed by - ------------------ you in accordance with your usual custom, with respect to late payments in conjunction with any transaction, including for securities purchased, in Client's account and prepayments in Client's account (i.e., the crediting of the proceeds of sale prior to settlement date or prior to receipt by you of the item sold in good deliverable form). Client acknowledges receipt of the enclosed document entitled "Interest Charges to Clients" and agrees to be bound thereby. Client agrees to pay promptly any amount which may become due in order to meet requests for additional deposits or marks to market with respect to any transactions including unissued securities purchased or sold by Client. Client agrees to pay promptly any custody or other fees which may be imposed by you with respect to the account. 6. SALES ORDERS. Except as provided in the last sentence of this Section 6, the - ---------------- giving of each sell order by Client shall constitute a designation of the sale as "long" and a certification that the securities to be sold are owned by Client and, if such securities are not in your possession, the placing of such order shall constitute a warranty by Client that Client shall deliver such securities to you on or before settlement date. If Client maintains a margin account, Client agrees to designate all sell orders as either "long" or "short". 7. REPORTS, STATEMENTS. Reports or confirmations of the execution of orders and - ----------------------- statements of Client's account shall be conclusive if not objected to in writing within ten (10)) days after forwarding by you to Client by mail or otherwise. Communications mailed, electronically transmitted or otherwise sent to Client at the address specified in your records shall, until three (3) business days after you have received notice in writing of a different address, be deemed to have been forwarded by you when sent and the Client waives all claims resulting from failure to receive such communications. 8. CUSTODIAL ARRANGEMENTS. If you act as custodian for the securities and other - -------------------------- property in Client's account, you are authorized to register such securities in your name or the name of your nominee, or cause such securities to be registered in the name of, or in the name of the nominee of, a recognized depository or clearing organization. Client understands that when you hold on Client's behalf bonds or preferred stocks which are callable in part by the issuer, such securities will be subject to your impartial lottery allocation system in which the probability of Client's securities being selected as called is proportional to the holdings of all clients of such securities held in bulk by or for your. Client further understands that you will withdraw such securities from any depository prior to the first date on which such securities may be called unless such depository had adopted an impartial lottery system which is applicable to all participants. Client may withdraw uncalled securities prior to a partial call subject to compliance with applicable margin requirements and the terms of any agreements between you and Client. You are authorized to withdraw securities sold or otherwise disposed of, and to credit Client's account with the proceeds thereof or make such other disposition thereof as Client may direct. Your are further authorized to collect all income and other payments which my become due on Client's securities, to surrender for payment maturing obligations and those called for redemption and to exchange certificates in temporary form for like certificates in definitive form, or, if the par value of any shares is changed, to effect the exchange for new certificates. It is understood and agreed by Client that although you will use reasonable efforts to effect the authorization set forth in the preceding sentence, you will incur no liability for your failure to effect the same. 9. TERMINATION. Client and you agree that the accounts maintained hereunder may - ---------------- be terminated by you or Client at any time effective upon the giving of notice of such termination to Client or to you, as the case may be. All applicable provisions will survive the termination of the account and this agreement. Without limiting the foregoing, upon any such termination, the provisions of this agreement shall remain in effect with respect to all securities and other property then held in such account or accounts and all transactions and agreements then outstanding between Client and you or any of your affiliates. 10. ORDERS, RECOMMENDATIONS, BUNCHING. Client acknowledges that, on occasion, - --------------------------------------- you may not be in a position to make a recommendation or render an opinion with respect to any security. Client agree that: i) you may, in your sole discretion and without prior notice to Client, refuse to accept or execute any other from Client and, in such case, you shall endeavor to give Client notice of such refusal as soon as practical; ii) you may submit Client's orders jointly with orders for other clients and you need not designate any of Client's eligible orders as "individual" when submitting orders via the DOT system and; iii) the average price for executions resulting from bunched orders will be assigned to Client's account. 11. GOVERNING LAW, SUCCESSOR AND ASSIGNS, WAIVER. THIS AGREEMENT AND ITS - -------------------------------------------------- ENFORCEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND ITS PROVISIONS SHALL COVER INDIVIDUALLY AND COLLECTIVELY ALL ACCOUNTS WHICH CLIENT MAY MAINTAIN WITH YOU. This agreement is binding upon and inures to the benefit of you, your affiliates, Client, and our respective legal representatives, successors and assigns. Neither you nor Client may assign its rights or delegate its obligations under this agreement, in whole or in part, without the prior written consent of the other party, except for an assignment and delegation by you of all of your rights and obligations hereunder to a successor entity that assumes substantially all of your assets and businesses (including all of the obligations under this agreement) by contract, operation of law or otherwise and that is a registered broker-dealer under relevant Securities and Exchange Commission rules. Under any such delegation and assumption of obligations by such successor entity, you shall be relieved of and fully discharged from all your obligations hereunder, whether such obligations arose before or after the date of such delegation and assumption. No waiver of any provision of this agreement shall be deemed a waiver of any other provision, nor a continuing waiver of the provision or provisions so waived. All waivers and modifications must be in writing. 12. ARBITRATION - ---------------- (A) ARBITRATION IS FINAL AND BINDING ON THE PARTIES. (b) THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHTS TO A JURY TRIAL. (c) PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT FROM COURT PROCEEDINGS (d) THE ARBITRATORS' AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING AND ANY. PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF RULINGS BY THE ARBITRATORS IS STRICTLY LIMITED. (e) THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY. ANY CONTROVERSY BETWEEN YOU (TOGETHER WITH ANY OF YOUR AFFILIATES ALSO INVOLVED IN SUCH CONTROVERSY) OR ANY OF YOUR OR THEIR MANAGING DIRECTORS, OFFICERS, DIRECTORS OR EMPLOYEES ON THE ONE HAND, AND CLIENT OR CLIENT'S AGENTS ON THE OTHER HAND, ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, OR THE ACCOUNTS ESTABLISHED HEREUNDER, SHALL BE SETTLED BY ARBITRATION, IN ACCORDANCE WITH THE RULES THEN OBTAINING OF ANY ONE OF THE AMERICAN ARBITRATION ASSOCIATION OR THE NEW YORK STOCK EXCHANGE, INC., OR ANY OTHER EXCHANGE OF WHICH YOU ARE A MEMBER, OR THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. OR THE MUNICIPAL SECURITIES RULEMAKING BOARD, AS CLIENT MAY ELECT. IF CLIENT DOES NOT MAKE SUCH ELECTION BY REGISTERED MAIL ADDRESSED TO YOU AT YOUR MAIN OFFICE WITHIN TEN (10) DAYS AFTER RECEIPT OF NOTIFICATION FROM YOU REQUESTING SUCH ELECTION, THEN CLIENT AUTHORIZES YOU TO MAKE SUCH ELECTION ON BEHALF OF CLIENT. THE AWARD OF THE ARBITRATOR SHALL BE FINAL, AND JUDGMENT UPON THE AWARD RENDERED MAY BE ENTERED IN ANY COURT, STATE OR FEDERAL, HAVING JURISDICTION. NO PERSON SHALL BRING A PUTATIVE OR CERTIFIED CLASS ACTION TO ARBITRATION, NOR SEEK TO ENFORCE NAY PRE-DISPUTE ARBITRATION AGREEMENT AGAINST ANY PERSON WHO HAS INITIATED IN COURT A PUTATIVE CLASS ACTION OR WHO IS A MEMBER OF A PUTATIVE CLASS WHO HAS NOT OPTED OUT OF THE CLASS WITH RESPECT TO ANY CLAIMS ENCOMPASSED BY THE PUTATIVE CLASS ACTION UNTIL: (I) THE CLASS CERTIFICATION IS DENIED; (II) THE CLASS IS DECERTIFIED; OR (II) THE CLIENT IS EXCLUDED FROM THE CLASS BY THE COURT. SUCH FORBEARANCE TO ENFORCE AN AGREEMENT TO ARBITRATE SHALL NOT CONSTITUTE A WAIVER OF ANY RIGHTS UNDER THIS AGREEMENT EXCEPT TO THE EXTENT STATED HEREIN. 13. CLIENT REPRESENTATION. Client represents that he or she is of legal age. - --------------------------- Client further represents that no one except the Client has an interest in Client's account unless such interest is revealed in the title of such account and in any such case, Client has the interest indicated in such title. Client warrants that he or she will keep you informed of nay changes in the information supplied to you herein or otherwise in connection with your establishing and maintaining an account or accounts for Client. - -------------------------------------------------------------------------------- GSIAA 8/97 PLEASE SEE REVERSE SIDE - ------------------------------------------------------------------------------- MARGIN - ------------------------------------------------------------------------------- NO MARGIN ACCOUNT WILL BE ESTABLISHED FOR THE CLIENT UNLESS AND UNTIL THE ACCOUNT IS APPROVED FOR MARGIN TRANSACTIONS BY GOLDMAN, SACHS & CO. Please complete Section 14 ONLY IF CLIENT WISHES TO APPLY FOR A MARGIN ACCOUNT. 14. Margin. SECTION 14 APPLIES TO TRANSACTIONS EFFECTED IN A SECURITIES MARGIN - ------------ ACCOUNT WHICH HAS BEEN ESTABLISHED BY YOU. THE PROVISIONS OF SECTION 14 ARE IN ADDITION TO THE OTHER PROVISIONS CONTAINED IN THIS AGREEMENT. a) Client represents and warrants to you that Client has had an opportunity to discuss with you the risks associated with the use of margin and that the use of margin is consistent with Client's investment objectives as supplied to you, including, if applicable, the designation of safety of principal as Client's primary investment objective. b) Client agrees to maintain margins for Client's account as you may require from time to time. Client agrees to pay interest charges which are imposed, in accordance with your usual custom, with respect to Client's account and to pay on demand any debit balance owing with respect to Client's account. c) Client agrees that securities and other property in Client's account may be carried in your general loans and may be pledged or hypothecated separately or in common with other securities and any other property for the sum due to you thereon or for a greater sum and without retaining in your possession and control for delivery a like amount of similar securities or other property and that certain rights of ownership, including the right to vote such securities, may be transferred to you or by you to others. BY SIGNING HERE, CLIENT INDICATES A DESIRE TO APPLY FOR A SECURITIES MARGIN ACCOUNT, AGREES TO ABIDE BY ALL PROVISIONS IN SECTION 14, AND ACKNOWLEDGES THAT CLIENT'S SECURITIES MAY BE LOANED TO GOLDMAN, SACHS & CO. OR TO OTHERS. - ------------------------------------------------------------------------------- Signature: /S/ Scott K. Ginsburg Date: 7/10/98 - ------------------------------------------------------------------------------- SECTION 15-20 MUST BE COMPLETED BY THE CLIENT: - ------------------------------------------------------------------------------- 15. OCCUPATION OF CLIENT AND OTHERS. Check all applicable boxes and provide an explanation below if Client is associated with any of the entities listed below, or if an immediate family member of Client (spouse, brother, sister, parents, children, mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in- law, daughter-in-law), or other person, who supports Client to a material extent, is associated with any of the following entities; an exchange; [ ] a member or member organization of any exchange or the NASD or any broker- dealer; [ ] a bank, savings and loan institution, trust company, insurance company; or; [ ] an investment company, an investment advisory firm or other institutional investment entity. Explanation: ------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 16. INVESTMENT OBJECTIVES. While individual transactions may vary, Client's investment objectives with respect to securities transactions are set forth below. Such information does not apply to other transactions with your or with any of your affiliates. PLEASE RANK ALL APPLICABLE OBJECTIVES IN ORDER OF PREFERENCE ("1" INDICATES THE HIGHEST PREFERENCE, "5" INDICATES THE LOWEST PREFERENCE) 3 GROWTH: Client is more interested in having the market value of the portfolio - --- grow over the long term than in current income from portfolio; Client is prepared to accept additional risk to principal to achieve this growth. 4 INCOME: Client is more interested in obtaining a steady stream of current - --- income from the portfolio than in growth of the portfolio. 5 SAFETY OF PRINCIPAL: Client is interested primarily in preserving the value - --- of the account assets, and is willing to forego more growth or higher income. 1 TRADING PROFITS: Client wants to take advantage of short-term trading - --- opportunities, which may involve establishing and then liquidating positions quickly. 2 SPECULATION: Client is interested in taking above-average risks to principal - --- in an attempt to achieve above-average returns. The above information regarding my investment objectives represents my current preference and supersedes any indications of such preferences that I may have previously provided to you with respect to securities transactions other than information specifically supplied with respect to options transactions. 17. FINANCIAL INFORMATION - -------------------------
$250,000 $ 500,000 Below to to Over $250,000 $500,000 $1,000,000 $1,000,000 -------- -------- ---------- ---------- Total Net Worth (excluding residence) [ ] [ ] [ ] [X] Annual Income [ ] [ ] [ ] [X] Total Net Liquid Assets [ ] [ ] [ ] [X]
18. PAYMENT AGREEMENT. You are authorized to rely on the payment instructions - ---------------------- set forth below until written notice believed by you in good faith to be genuine of any changes regarding such instructions is received by you. I addition, when so instructed you may, but you are not required to, follow payment instructions which differ from the instructions se forth below with respect to specified transactions; proved, however, that only Client or a person with trading authorization over Client's account may authorize the transfer of funds to an account which is not in Client's name only. PAYMENT INSTRUCTIONS Name of Bank or Other Recipient: - ------------------------------------------------------------------------------ Address: - ------------------------------------------------------------------------------ Name of Account: - ------------------------------------------------------------------------------ Account Number: - ------------------------------------------------------------------------------ Contact Name and Telephone Number (if applicable): - ------------------------------------------------------------------------------ The following persons are among those authorized to transfer funds: 19. ORDERS PLACED BY OTHERS. If you are authorizing someone to place orders on - ----------------------------- your behalf, please indicate the person"s name below AND COMPLETE THE ENCLOSED TRADING AUTHORIZATION. 20. DISCLOSURE TO ISSUERS. Client understands that you may be required to - --------------------------- disclose to securities issuers the name, address and securities positions with respect to securities held in Client's account in your or your nominee's name unless you are notified that Client objects, Client hereby notifies you that Client wishes such disclosure to be made. [ ] CLIENT SHOULD CHECK THIS BOX IF CLIENT DOES NOT CONSENT TO SUCH DISCLOSURE. BY SIGNING BELOW, CLIENT ACKNOWLEDGES RECEIPT OF A COPY OF THIS INDIVIDUAL ACCOUNT AGREEMENT. A PREDISPUTE ARBITRATION CLAUSE IS CONTAINED IN SECTION 12 HEREOF. - ------------------------------------------------------------------------------- Signature: /S/ Scott K. Ginsburg Date: 7/10/98 - ------------------------------------------------------------------------------- Please Print Name: Scott K. Ginsburg - ------------------------------------------------------------------------------- For Goldman, Sachs & Co. use only - ------------------------------------------------------------------------------- Account Representative Receiving Account Manager Reviewing Account /S/ - ------------------------------------------------------------------------------- Date 7/15/98 Date - ------------------------------------------------------------------------------- ACCT/CL/PNC/101 Goldman, Sachs & Co. [GOLDMAN 85 Broad Street SACHS CUSTOMER'S OPTIONS New York, NY 10004-2456 LOGO] AGREEMENT 212-902-10000 - -------------------------------------------------------------------------- Title of Account Account Number Scott K. Ginsburg 012-07137-9 - -------------------------------------------------------------------------- TO: GOLDMAN, SACHS & CO. IN CONSIDERATION OF YOUR ACTING FOR THE UNDERSIGNED ("CUSTOMER") IN CONNECTION WITH THE PURCHASE AND SALE OF OPTIONS WHICH ARE LISTED ON ANY OPTIONS OR SECURITIES EXCHANGE, CUSTOMER AGREES WITH YOU AS FOLLOWS: 1. All transactions under this agreement shall be in accordance with the rules and customs of the exchange or market, and its clearing house. If any, where the transactions are executed and in conformity with applicable law and regulations of governmental authorities and future amendments or supplements thereto. 2. Customer has been informed that the rules of the various exchanges and other regulatory organizations require that you obtain the information set forth below. Customer agrees to keep you informed of any changes in the information supplied A) INVESTMENT OBJECTIVES FOR OPTIONS TRANSACTIONS (Number those applicable in order of priority) Growth (3) Income (4) Safety of Principal (5) Trading Profits (1) Speculation (2) Other ( ) --------------------- B) EMPLOYMENT STATUS Not employed [ ] Self employed [ ] Retired [ ] Name of Employer ------- C) AGE 45 MARITAL STATUS Single NUMBER OF DEPENDENTS ------ ------- ------ D) ESTIMATED TOTAL ANNUAL INCOME Less than $50,000 [ ] $50,000-$100,000 [ ] $100,000-$250,000 [ ] $250,000+ [X] E) ESTIMATED NET WORTH (Excluding Principal Family Residence) Less than $100,000 [ ] $100,000-$250,000 [ ] $250,000-$500,000 [ ] $500,000-$1,000,000+ [ ] $1,000,000+ [X] F) ESTIMATED LIQUID NET WORTH (Cash, Securities, Other) Less than $100,000 [ ] $100,000-$250,000 [ ] $250,000-$500,000 [ ] $500,000-$1,000,000+ [ ] $1,000,000+ [X] G) INVESTMENT EXPERIENCE OF ACCOUNT PRINCIPAL(S)
Number Average No. Average of Years of Trades Dollar Amount Type of Account Type(s) of Trading Per Month Per Trade (One or ___) Previous Trading ------------------------------------------------------------------------------------------ Equities 10 5 200,000 [ ] Cash [X] Margin [X] Long [ ] Short ------------------------------------------------------------------------------------------ Bonds 6 mo. [X] Cash [ ] Margin [X] Long [ ] Short ------------------------------------------------------------------------------------------ Options [ ] Covered Writing [ ] Uncovered Writing 0 [ ] Cash [ ] Margin [ ] Spreading [ ] Buying [ ] Hedging ------------------------------------------------------------------------------------------ Commodities [ ] Long [ ] Short 0 [ ] Cash [ ] Margin [ ] Spreading [ ] Hedging ------------------------------------------------------------------------------------------ Other (Specify) 0 [ ] Cash [ ] Margin [ ] Long [ ] Short ------------------------------------------------------------------------------------------
H) INVESTMENT EXPERIENCE OF AGENT (if applicable)
Number Average No. of Years of Trades Type(s) of Trading Per Month Previous Trading --------------------------------------------------- Equities [ ] Long [ ] Short ---------------------------------------------------------- Bonds [ ] Long [ ] Short ---------------------------------------------------------- Options [ ] Covered Writing [ ] Uncovered Writing [ ] Spreading [ ] Buying [ ] Hedging ---------------------------------------------------------- Commodities [ ] Long [ ] Short Spreading Hedging ---------------------------------------------------------- Other (Specify) [ ] Long [ ] Short ----------------------------------------------------------
Name of Authorized Party: --------------------------------------------------- Relationship of Principal(s) ------------------------------------------------ CUSTOMER , OR WITH REFERENCE TO 2.H, HIS AGENT, HAS ACCURATELY PROVIDED THE INFORMATION FURNISHED ABOVE. ANY INFORMATION NOT FURNISHED ABOVE IS EITHER UNKNOWN OR THE CUSTOMER REFUSES TO FURNISH THE SAME. 3. Customer, acting alone or in concert with others agrees not to violate directly or indirectly (through you as broker or otherwise), or contribute to the violation of the position or exercise limits of the exchanges which are summarized in the attached appendix. 4. This agreement is in addition to and does not replace, cancel or modify any other agreement which Customer may have with you. 5. Customer hereby certifies that the current OCC options disclosure document(s) have been received, read and are understood, including the material on the risks of buying and selling listed options. 6. WE AGREE TO THE PROVISIONS CONCERNING ARBITRATION SET FORTH BELOW. (a) ARBITRATION IS FINAL AND BINDING ON THE PARTIES. (b) THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO A JURY TRIAL. (c) PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT FROM THE COURT PROCEEDINGS. (d) THE ARBITRATOR'S AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF RULINGS BY THE ARBITRATORS IS STRICTLY LIMITED. (e) THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO WERE OR TO AFFILIATED WITH THE SECURITIES INDUSTRY. Any controversy between you (together with any of your affiliates also involved in such controversy) or any of your or their partners, officers, directors, or employee s on the one hand, and Customer or Customers agents on the other hand, arising out of or relating to the agreement, the transactions contemplated hereby, or the accounts established hereunder, shall be settled by arbitration, in accordance with the rules then obtaining of any one of the American Arbitration Association or The New York Stock Exchange, Inc., or any other exchange of which you are a member, or the National Association of Securities Dealers, Inc., or The Municipal Securities Rulemaking Board, as Customer may elect. If Customer does not make such election by registered mail addressed to you at your main office within ten (10) days after receipt of notification from you requesting such election, then Customer authorizes you to make such election on behalf of Customer. The award of the arbitrator shall be final, and judgment upon the award rendered may be entered in any court, state or federal, having jurisdiction. NO PERSONS SHALL BRING A PUTATIVE OR CERTIFIED CLASS ACTION TO ARBITRATION, NOR SEEK TO ENFORCE ANY PRE-DISPUTE ARBITRATION AGREEMENT ASSIGN ANY PERSON WHO HAS INITIATED IN COURT A PUTATIVE CLASS ACTION OR WHO IS A MEMBER OF A PUTATIVE CLASS WHO HAS NOT OPTED OUT OF THE CLASS WITH RESPECT TO ANY CLAIMS ENCOMPASSED BY THE PUTATIVE CLASS ACTION UNTIL: (I) THE CLASS CERTIFICATION IS DENIED; (II) THE CLASS IS DECERTIFIED; OR (III) THE CUSTOMER IS EXCLUDED FROM THE CLASS BY THE COURT. Such forbearance to endorse an agreement to arbitrate shall not constitute a waiver of any rights under this agreement except to the extent stated herein. 7. Customer understands that exercise assignment notices for option contracts are allocated among customer short positions pursuant to an automated procedure which randomly selects from among all customer short option positions, including positions established on the day of assignment, those contracts which are subject to exercise. Customer further understands that all short positions in American-style options are liable for assignment at any time. A more detailed description of this random allocation procedure is available upon request. BY SIGNING BELOW, CUSTOMER ACKNOWLEDGES RECEIPT OF A COPY OF THIS CUSTOMER'S OPTIONS AGREEMENT. PREDISPUTE ARBITRATION CLAUSE IS CONTAINED IN PARAGRAPH 6 HEREOF. - ------------------------------------------------------------------------------------------------------------------------------------ Signature: /S/ Scott K. Ginsburg ADDITIONAL SIGNATURE (IF NECESSARY): - ------------------------------------------------------------------------------------------------------------------------------------ Please Print Name Scott K. Ginsburg Please Print Name - ------------------------------------------------------------------------------------------------------------------------------------ Date: 7/10/98 Date: - ------------------------------------------------------------------------------------------------------------------------------------ FOR GOLDMAN, SACHS & CO. USE ONLY - ------------------------------------------------------------------------------------------------------------------------------------ Registered Representative Receiving Account: /S/ Registered Options Principal Approved: - ------------------------------------------------------------------------------------------------------------------------------------ Date: 7/15/98 Date: - ------------------------------------------------------------------------------------------------------------------------------------
TRADING AUTHORIZATION Goldman, Sachs & Co. [GOLDMAN SACHS LOGO] [FOR GOLDMAN SACHS REPRESENTATIVES] 85 Broad Street New York, NY 10004-2456 212-902-1000 - ----------------------------------------------------------------------------------------------------------------------------------- Title of Account Account Number Scott K. Ginsburg 012-07137-9 - -----------------------------------------------------------------------------------------------------------------------------------
To: Goldman, Sachs & Co. The undersigned hereby authorizes (print names of at least two Goldman Sachs representatives): 1. Tim Weber - --------------------------------------------------------------------------- 2. Kirk Rimer - --------------------------------------------------------------------------- 3. Charlie McKinney - --------------------------------------------------------------------------- 4. - --------------------------------------------------------------------------- and such other persons who are now or who may hereafter become members of the same client team as the above-named persons, or their or their Goldman Sachs designees, as his or her agent and attorney-in-fact, individually or collectively, to buy, sell, trade, tender, exchange and otherwise deal in stocks, bonds and any other forms of securities or instruments (including short sales and other margin transactions if a margin account has been applied for on behalf of the undersigned and approved, and puts, calls and other options, if option approval has been applied for on behalf of the undersigned and approved), if option approval has been applied for on behalf other undersigned and approved), in accordance with Goldman Sachs' policies governing discretionary accounts, for the undersigned's accounts (the "Account"). While individual transactions may vary, my general investment objectives, in order of preference, are as follows (please indicate the objectives applicable to your Account, using "1" to indicate your highest preference through "5" to indicate your lowest): 3 GROWTH (I am more interested in having the market value of my portfolio grow over the long term than I am in current income for my portfolio; I am prepared to accept additional risk to principal to achieve this growth.) 4 INCOME (I am more interested in obtaining steady stream of current income from my portfolio than I am in growth of my portfolio.) 5 SAFETY OF PRINCIPAL (I am interested primarily in preserving the value of my assets, and I am willing to forego more growth or higher income). 1 TRADING PROFITS (I want to take advantage of short-term trading opportunities, which may involve establishing and then liquidating positions quickly). 2 SPECULATION (I am interested in taking above-average risks to principal in an attempt to achieve above-average returns). The above information regarding my investment objectives represents my current preference and supersedes any indications of such preferences that I may previously have provided to Goldman Sachs other than information specifically supplied with respect to options transactions. If margin transactions are contemplated, I acknowledge that I have had an opportunity to discuss with you the risks associated with the use of margin and that the use of margins is consistent with my investment objectives, including, if applicable, the designation of safety of principal as my primary investment objective. If the above information regarding my investment objectives changes, at the time of such change I will orally advise the Goldman Sachs representatives referred to above and, at the same time, I will provide written notice of the change in investment objectives. You are entitled to rely on the foregoing information and other information which I have provided to you until your receipt of a written notice of the change in such information. I understand that, in accordance with Goldman Sachs' policies, the following transactions will not be executed by you on a discretionary basis: (i) the purchase of securities where Goldman Sachs is a participant in any registered public offering; (ii) the purchase of debt securities which are unrated or which are rated by either Moody's or S&P as below investment grade (Baa-1/BBB) unless a) the debt securities have been pre-refunded with U.S. Government or U.S. Government agency securities; b) the debt securities appear in the High Yield Recommended List published in the Private Client Focus (including any additional issues of the same entity which have equivalent or higher published ratings); or c) the debt securities are convertible, without the payment of cash or other consideration, into equity securities which are rated as "market performers" or better by the Research Department. (iii) private placements including products of the Special Investment Group and other OTC, customized derivative financial transactions; (iv) warrants and listed options as follows: a) warrants other than the purchase or sale of equity warrants with an original purchase price $20 or more; b) listed options other than selling listed calls against securities the client owns, selling listed puts against cash or cash equivalents sufficient to pay for securities that may be put to the client, buying listed puts against securities the client owns. (v) Index options, swaps, OTC options, forwards, futures, stripped securities (other than government securities), collaterized mortgage obligations, fixed income derivative securities (e.g., I/O's, P/O's or inverse floaters) or commodities trading; (vi) transactions involving control or restricted securities; (vii) foreign currency transactions other than those necessary to settle a foreign securities transaction; and (viii) the purchase of funds administered or advised by Goldman Sachs Asset Management, other than certain money market funds managed by Goldman Sachs Asset Management/ILA/ITA that have a constant $1.00 per unit net asset value. I further understand that you may modify the foregoing discretionary trading policies, without my consent, or notice to me. I also understand that Goldman Sachs will rely upon recently published ratings of securities in complying with the above-described or any other restrictions or policies. I further understand that the Firm has other policies and procedures applicable to discretionary and nondiscretionary transactions generally (e.g., to ensure compliance with insider trading prohibitions or other provisions of the federal securities laws) and that you will not execute transactions prohibited thereby. I further understand that you may modify, without my consent or notice to me, such Firm policies and procedures. The undersigned hereby agrees that Goldman Sachs may submit orders jointly on behalf of the Account and the accounts of other of Goldman Sachs' customers and you need not designate any of the Account's eligible orders via the DOT system. The undersigned also agrees that the average price of executions resulting from such orders will be assigned to the Account. The undersigned hereby further agrees that Goldman Sachs may execute orders for other customer accounts or proprietary accounts along with orders on the same side of the market for the Account, and that, in such situation, the Account will be assigned a portion of such executions reflective of the customer's share of the outstanding orders in accordance with Goldman Sachs policies. The undersigned hereby further agrees that Goldman Sachs may act as principal or as agent, and may cross orders on behalf of the Account with orders for the accounts of other Goldman Sachs' customers or proprietary accounts. The undersigned further understand that Goldman Sachs may receive additional compensation as a result of the Investment on cash balances in certain money market funds managed or advised by Goldman Sachs that the Account may make. This authorization: (a) is a continuing one, and shall not be affected by the subsequent incompetence or disability of the undersigned and shall remain in full force and effect until 24 hours after the receipt at Goldman Sachs of written notice of the undersigned's revocation thereof or written notice of the undersigned's death, and such revocation or notice shall cancel all outstanding unexecuted orders which can be cancelled, but such revocation shall not affect any liability in any way resulting from transactions initiated prior to such revocation, and all transactions initiated prior to Goldman Sachs' receipt of said notice of the undersigned's death shall be binding on the undersigned's estate, (b) shall inure to the benefit of Goldman Sachs and any successor firm or firms; (c) shall be binding upon the undersigned's executors, administrators and legal representatives to the extent specifically provided herein; and (d) is in addition to (and in no way limits or restricts) any of the provisions of, or the rights which Goldman Sachs may have under, any other agreement or agreements between Goldman Sachs and the undersigned relating to the Account, including, without limitation, those provisions relating to the arbitration of disputes. THE ACCOUNT AND TRANSACTIONS THEREFOR AND ALL DOCUMENTS PERTAINING THERETO, INCLUDING WITHOUT LIMITATION THIS TRADING AUTHORIZATION, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO CHOICE OF LAW RULES. - ------------------------------------------------------------------------------ SIGNATURE: /S/ SCOTT K. GINSBURG DATE 7/10/98 - ------------------------------------------------------------------------------ PLEASE PRINT NAME SCOTT K. GINSBURG - ------------------------------------------------------------------------------ SIGNATURE: /S/ DATE - ------------------------------------------------------------------------------ PLEASE PRINT NAME - ------------------------------------------------------------------------------ REQUEST FOR APPROVAL OF Goldman, Sach & Co. [GOLDMAN DISCRETIONARY ACCOUNT 85 Broad Street SACHS (ATTACH COPY OF TRADING New York, NY 10004-2456 LOGO] AUTHORIZATION) 212-902-1000 - ----------------------------------------------------------------------------- Title of Account Account Number Scott K. Ginsburg 012-07137-9 - ----------------------------------------------------------------------------- BACKGROUND OF ACCOUNT: (please provide relevant information, in addition to that requested below, as appropriate) 1. Age 44; Marital Status D 5. Estimated total annual income: ___ --- $3MM Number of Dependents: 2 ---------------------------------------------------- --- 2. Current or former occupation of customer: 6. Estimated liquid net worth (cash, securities, etc.): Media exec. $350MM ---------------------------------------- ---------------------------------------------------- 3. Education Background: BS 7. Estimated value of assets to be managed: ---- $25MM ---------------------------------------------------- 4. How long has the account been at the Firm? 8. GS Managed Assets as Percentage of Account's NEW Total Net Worth: (less than) 10% ---------------------------------------- ----------------------------------------------------
9. Describe customer's investment experience at Goldman Sachs and elsewhere, and the types of investments he or she currently has. Scott Ginsburg was the Founder of Evergreen Media which merged with Chancellor Media in 1995. Scott become the CEO of Chancellor until he recently retired with approximately $350 million. Scott has 10 years equity trading experience and a little bond trading experience. - ----------------------------------------------------------------------------- SALESPERSON ACKNOWLEDGMENT - ----------------------------------------------------------------------------- (To be signed by all members of sales team who have been approved for discretionary trading) We acknowledge the policies, procedures and restrictions applicable to discretionary accounts contained in the Manual entitled Compliance Policies and Procedures for Discretionary Accounts in Private Client Services and agree to abide thereby should this request be approved. - ------------------------------------------------------------------------------- Salesperson /S/ Date 7/15/98 - ------------------------------------------------------------------------------- Please Print Name Salesperson /S/ Date 7/15/98 - ------------------------------------------------------------------------------- Please Print Name Salesperson /S/ Date 7/15/98 Please Print Name: - ------------------------------------------------------------------------------- EQDAA 5/96 Please See Reverse Side -----END PRIVACY-ENHANCED MESSAGE-----