-----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, FlFFCmA2wmdDuCIEYoyVQ0xiJ06QRo0Fi7gel9ymm4HmH/FyIjeELhxlpigUjs03 ttPeLitbytGi1fNprRSYhQ== 0000891618-97-003125.txt : 19970804 0000891618-97-003125.hdr.sgml : 19970804 ACCESSION NUMBER: 0000891618-97-003125 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19970801 SROS: NASD GROUP MEMBERS: CORAL PARTNERS II, A LIMITED PARTNERSHIP GROUP MEMBERS: CROWN ASSOCIATES III, LIMITED PARTNERSHIP GROUP MEMBERS: CROWN GLYNN ASSOCIATES, LIMITED PARTNERSHIP GROUP MEMBERS: GLYNN BUCKLEY INVESTMENTS GROUP MEMBERS: GLYNN EMERGING OPPORTUNITY FUND GROUP MEMBERS: GLYNN INVESTMENT L.P. GROUP MEMBERS: GLYNN VENTURES III GROUP MEMBERS: HENREY DONALDSON GROUP MEMBERS: KENNETH CHENG GROUP MEMBERS: KLEINER PERKINS CAUFIELD & BYERS VI LP GROUP MEMBERS: KLEINER PERKINS CAUFIELD & BYERS VI, L.P. GROUP MEMBERS: MAYFIELD ASSOCIATES FUND II, CALIFORNIA GROUP MEMBERS: MAYFIELD VII, A CALIFORNIA LIMITED PARTNERSHIP GROUP MEMBERS: MCMORGAN FUND II GROUP MEMBERS: SIERRA VENTURES IV INTERNATIONAL, DELAWARE GROUP MEMBERS: SIERRA VENTURES IV, CALIFORNIA GROUP MEMBERS: THE CROWN TRUST GROUP MEMBERS: THOMAS P. SHANAHAN GROUP MEMBERS: VENTURE FUND I, 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: 1934 Act SEC FILE NUMBER: 005-49603 FILM NUMBER: 97650326 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: KLEINER PERKINS CAUFIELD & BYERS VI LP CENTRAL INDEX KEY: 0000936312 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 943517816 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 2750 SAND HILL ROAD CITY: MENLO PARK STATE: CA ZIP: 94025 BUSINESS PHONE: 4152332750 MAIL ADDRESS: STREET 1: 2750 SAND HILL ROAD CITY: MENLO PARK STATE: CA ZIP: 94025 SC 13D 1 SCHEDULE 13D FOR DIGITAL GENERATION SYSTEMS 1 OMB APPROVAL OMB Number 3235-0145 Expires: October 31, 1997 Estimated average burden hours per form. . . . . . .14.90 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO.____)(1) DIGITAL GENERATION SYSTEMS, INC. - -------------------------------------------------------------------------------- (Name Of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 25392 10 0 - -------------------------------------------------------------------------------- (CUSIP Number) Thomas P. Shanahan DIGITAL GENERATION SYSTEMS, INC. 875 Battery Street, 2nd Floor San Francisco, CA 94111 (415) 276-6600 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) July 23, 1997 - -------------------------------------------------------------------------------- (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(b)(3) or (4), check the following box [ ]. Check the following box if a fee is being paid with the statement [ ]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1: and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. (1) 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). 2 SCHEDULE 13D CUSIP No. 253921 10 0 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON SIERRA VENTURES IV, A CALIFORNIA LIMITED PARTNERSHIP - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION CALIFORNIA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 1,939,792 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 5,805,406 (7,745,198-1,939,792) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 1,939,792 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 3 SCHEDULE 13D CUSIP No. 253921 10 0 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON SIERRA VENTURES IV, A DELAWARE LIMITED PARTNERSHIP - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 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 77,672 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 7,667,526 (7,745,198-77,672) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 77,672 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 4 SCHEDULE 13D CUSIP No. 253921 10 0 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON CORAL PARNTERS II, A LIMITED PARTNERSHIP - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 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 1,259,633 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 6,485,565 (7,745,198-1,259,633) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 1,259,633 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 5 SCHEDULE 13D CUSIP No. 253921 10 0 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON KLEINER PERKINS CAUFIELD & BYERS VI, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION CALIFORNIA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 1,167,592 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 6,577,606 (7,745,198-1,167,592) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 1,167,592 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 6 SCHEDULE 13D CUSIP No. 253921 10 0 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON MAYFIELD VII, A CALIFORNIA LIMITED PARTNERSHIP - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION CALIFORNIA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 973,301 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 6,771,897 (7,745,198-973,301) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 973,301 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 7 SCHEDULE 13D CUSIP No. 253921 10 0 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON MAYFIELD ASSOCIATES FUND II, A CALIFORNIA PARTNERSHIP - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION CALIFORNIA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 32,475 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 7,712,723 (7,745,198-32,475) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 32,475 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 8 SCHEDULE 13D CUSIP No. 253921 10 0 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON VENTURE FUND I, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 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 894,342 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 6,850,856 (7,745,198-894,342) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 894,342 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 9 SCHEDULE 13D CUSIP No. 253921 10 0 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON THE CROWN TRUST - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION CALIFORNIA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 256,825 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 7,488,373 (7,745,198-256,825) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 256,825 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 10 SCHEDULE 13D CUSIP No. 253921 10 0 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON CROWN ASSOCIATES III, LIMITED PARTNERSHIP - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION CALIFORNIA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 207,770 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 7,537,428 (7,745,198-207,770) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 207,770 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 11 SCHEDULE 13D CUSIP No. 253921 10 0 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GLYNN VENTURES III - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION CALIFORNIA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 89,166 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 7,656,032 (7,745,198-89,166) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 89,166 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 12 SCHEDULE 13D CUSIP No. 253921 10 0 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GLYNN EMERGING OPPORTUNITY FUND - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION CALIFORNIA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 77,500 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 7,667,698 (7,745,198-77,500) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 77,500 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 13 SCHEDULE 13D CUSIP No. 253921 10 0 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON CROWN-GLYNN ASSOCIATES, LIMITED PARTNERSHIP - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION CALIFORNIA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 100,605 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 7,644,593 (7,745,198-100,605) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 100,605 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 14 SCHEDULE 13D CUSIP No. 253921 10 0 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON MCMORGAN FUND II - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION CALIFORNIA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 51,400 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 7,693,798 (7,745,198-51,400) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 51,400 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 15 SCHEDULE 13D CUSIP No. 253921 10 0 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GLYNN BUCKLEY INVESTMENTS - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION CALIFORNIA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 27,700 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 7,717,498 (7,745,198-27,700) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 27,700 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 16 SCHEDULE 13D CUSIP No. 253921 10 0 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GLYNN INVESTMENT L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION CALIFORNIA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 24,000 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 7,721,198 (7,745,198-24,000) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 24,000 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 17 PAGE 17 OF 88 PAGES - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON HENRY DONALDSON - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION CALIFORNIA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 495,825 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 7,249,373 (7,745,198-495,825) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 495,825 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 18 PAGE 18 OF 88 PAGES - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON KENNETH CHENG - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION CALIFORNIA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 48,600 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 7,696,598 (7,745,198-48,600 OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 48,600 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 19 SCHEDULE 13D CUSIP No. 253921 10 0 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON THOMAS P. SHANAHAN - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* NOT APPLICABLE - VOTING AGREEMENT - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION CALIFORNIA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 21,000 NUMBER OF ---------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY 7,724,198 (7,745,198-21,000) OWNED BY ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 21,000 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,745,198 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 64.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 20 ITEM 1. SECURITY AND ISSUER. Equity Security: Common Stock (the "Equity Securities") Issuer of Security: Digital Generation Systems, Inc. A California Corporation (the "Issuer") Principal Executive Officers of Issuer: Henry W. Donaldson President and Chief Executive Officer c/o Digital Generation Systems, Inc. 875 Battery Street San Francisco, CA 94111 Kenneth K. Cheng Senior Vice President and Chief Operating Officer c/o Digital Generation Systems, Inc. 875 Battery Street San Francisco, CA 94111 Thomas P. Shanahan Vice President, Finance and Chief Financial Officer c/o Digital Generation Systems, Inc. 875 Battery Street San Francisco, CA 94111 Jon E. Reese Vice President, Sales c/o Digital Generation Systems, Inc. 875 Battery Street San Francisco, CA 94111 Gregory G. Schott Vice President, Operations c/o Digital Generation Systems, Inc. 875 Battery Street San Francisco, CA 94111 21 ITEM 2. IDENTITY AND BACKGROUND. The following is a schedule of each reporting person jointly filing this Schedule 13D pursuant to authority granted under Rule 13d-1(f) of the regulations promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended (collectively, the "Reporting Group"): (1) Name: Sierra Ventures IV a California Limited Partnership Address: 3000 Sand Hill Road, Building 4, Suite 210 Menlo Park, CA 94025 State of Organization: California Principal Business: Investment Activities Convictions: During the last five years, neither Sierra Ventures IV nor any general partner thereof has been convicted in a criminal proceeding. Civil Proceedings: During the last five years, neither Sierra Ventures IV nor any general partner thereof has been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. (2) Name: Sierra Ventures IV International a Delaware Limited Partnership Address: 3000 Sand Hill Road Building 4, Suite 210 Menlo Park, CA 94025 State of Organization: Delaware Principal Business: Investment Activities Convictions: During the last five years, neither Sierra Ventures IV International nor any general partner thereof has been convicted in a criminal proceeding. Civil Proceedings: During the last five years, neither Sierra Ventures IV International nor any general partner thereof has been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. 22 (3) Name: Coral Partners II a limited partnership Address: 60 South Sixth Street Suite 3510 Minneapolis, MN 55402 State of Organization: Delaware Principal Business: Investment Activities Convictions: During the last five years, neither Coral Partners II nor any general partner thereof has been convicted in a criminal proceeding. Civil Proceedings: During the last five years, neither Coral Partners II nor any general partner thereof has been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. (4) Name: Kleiner Perkins Caufield & Byers VI, L.P. Address: 2750 Sand Hill Road Menlo Park, CA 94025 State of Organization: California Principal Business: Investment Activities Convictions: During the last five years, neither Kleiner Perkins Caufield & Byers VI, L.P. nor any general partner thereof has been convicted in a criminal proceeding. Civil Proceedings: During the last five years, neither Kleiner Perkins Caufield & Byers VI, L.P. nor any general partner thereof has been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. (5) Name: Mayfield VII a California Limited Partnership Address: 2800 Sand Hill Road Menlo Park, CA 94025 State of Organization: California 23 Principal Business: Investment Activities Convictions: During the last five years, neither Mayfield VII nor any general partner thereof has been convicted in a criminal proceeding. Civil Proceedings: During the last five years, neither Mayfield VII nor any general partner thereof has been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. (6) Name: Mayfield Associates Fund II a California Limited Partnership Address: 2800 Sand Hill Road Menlo Park, CA 94025 State of Organization: California Principal Business: Investment Activities Convictions: During the last five years, neither Mayfield Associates Fund II nor any general partner thereof has been convicted in a criminal proceeding. Civil Proceedings: During the last five years, neither Mayfield Associates Fund II nor any general partner thereof has been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. (7) Name: Venture Fund I, L.P. Address: 3000 Sand Hill Road Building 4, Suite 235 Menlo Park, CA 94025 State of Organization: Delaware Principal Business: Investment Activities Convictions: During the last five years, neither Venture Fund I, L.P. nor any general partner thereof has been convicted in a criminal proceeding. Civil Proceedings: During the last five years, neither Venture Fund I, L.P. nor any general partner thereof has been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a 24 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. (8) Name: The Crown Trust Address: 3000 Sand Hill Road Building 4, Suite 235 Menlo Park, CA 94025 State of Organization: California Principal Business: Investment Activities Convictions: During the last five years, The Crown Trust has not been convicted in a criminal proceeding. Civil Proceedings: During the last five years, The Crown Trust has not been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. (9) Name: Crown Associates III, Limited Partnership Address: 3000 Sand Hill Road Building 4, Suite 235 Menlo Park, CA 94025 State of Organization: California Principal Business: Investment Activities Convictions: During the last five years, neither Crown Associates III, Limited Partnership nor any general partner thereof has been convicted in a criminal proceeding. Civil Proceedings: During the last five years, neither Crown Associates III, Limited Partnership nor any general partner thereof has been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. (10) Name: Glynn Ventures III Address: 3000 Sand Hill Road Building 4, Suite 235 25 Menlo Park, CA 94025 State of Organization: California Principal Business: Investment Activities Convictions: During the last five years, neither Glynn Ventures III nor any general partner thereof has been convicted in a criminal proceeding. Civil Proceedings: During the last five years, neither Glynn Ventures III nor any general partner thereof has been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. (11) Name: Glynn Emerging Opportunity Fund Address: 3000 Sand Hill Road Building 4, Suite 235 Menlo Park, CA 94025 State of Organization: California Principal Business: Investment Activities Convictions: During the last five years, neither Glynn Emerging Opportunity Fund nor any general partner thereof has been convicted in a criminal proceeding. Civil Proceedings: During the last five years, neither Glynn Emerging Opportunity Fund nor any general partner thereof has been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. (12) Name: Crown-Glynn Associates, Limited Partnership Address: 3000 Sand Hill Road Building 4, Suite 235 Menlo Park, CA 94025 State of Organization: California Principal Business: Investment Activities Convictions: During the last five years, neither Crown-Glynn Associates, Limited Partnership nor any general partner thereof has been convicted in a criminal proceeding. 26 Civil Proceedings: During the last five years, neither Crown-Glynn Associates, Limited Partnership nor any general partner thereof has been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. (13) Name: McMorgan Fund II Address: 3000 Sand Hill Road Building 4, Suite 235 Menlo Park, CA 94025 State of Organization: California Principal Business: Investment Activities Convictions: During the last five years, neither McMorgan Fund II nor any general partner thereof has been convicted in a criminal proceeding. Civil Proceedings: During the last five years, neither McMorgan Fund II nor any general partner thereof has been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. (14) Name: Glynn Buckley Investments Address: 3000 Sand Hill Road Building 4, Suite 235 Menlo Park, CA 94025 State of Organization: California Principal Business: Investment Activities Convictions: During the last five years, neither Glynn Buckley Investments nor any general partner thereof has been convicted in a criminal proceeding. Civil Proceedings: During the last five years, neither Glynn Buckley Investments nor any general partner thereof has been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. (15) Name: Glynn Investment L.P. 27 Address: 3000 Sand Hill Road Building 4, Suite 235 Menlo Park, CA 94025 State of Organization: California Principal Business: Investment Activities Convictions: During the last five years, neither Glynn Investment L.P. nor any general partner thereof has been convicted in a criminal proceeding. Civil Proceedings: During the last five years, neither Glynn Investment L.P. nor any general partner thereof has been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. (16) Name: Henry W. Donaldson Business Address: c/o Digital Generation Systems, Inc. 875 Battery Street San Francisco, CA 94111 Principal Occupation: President and Chief Executive Officer Digital Generation Systems, Inc. 875 Battery Street San Francisco, CA 94111 Convictions: During the last five years, Mr. Donaldson has not been convicted in a criminal proceeding. Civil Proceedings: During the last five years, Mr. Donaldson has not been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. (17) Name: Kenneth Cheng Business Address: c/o Digital Generation Systems, Inc. 875 Battery Street San Francisco, CA 94111 Principal Occupation: Executive Vice President, Operations Digital Generation Systems, Inc. 875 Battery Street 28 San Francisco, CA 94111 Convictions: During the last five years, Mr. Cheng has not been convicted in a criminal proceeding. Civil Proceedings: During the last five years, Mr. Cheng has not been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. (18) Name: Thomas P. Shanahan Business Address: c/o Digital Generation Systems, Inc. 875 Battery Street San Francisco, CA 94111 Principal Occupation: Vice President and Chief Financial Officer Digital Generation Systems, Inc. 875 Battery Street San Francisco, CA 94111 Convictions: During the last five years, Mr. Shanahan has not been convicted in a criminal proceeding. Civil Proceedings: During the last five years, Mr. Shanahan has not been a party to any civil proceedings of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is 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. 29 ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The members of the Reporting Group have not utilized any funds or other consideration in making the "acquisition" of the Equity Securities of the Issuer to which this Schedule 13D relates. Such reporting persons have filed this Schedule 13D to report the execution and delivery of the Voting Agreement (as defined in Item 6 hereof) by and among the members of the Reporting Group. Accordingly, this Item 3 is not applicable to the events reported in this Schedule 13D. 30 ITEM 4. PURPOSE OF TRANSACTION. The members of the Reporting Group entered into the Voting Agreement (as defined in Item 6 hereof) as an inducement to encourage certain new investors to enter into an amendment (the "Amendment") to a Preferred Stock Purchase Agreement, dated as of July 14, 1997 (the "Purchase Agreement"), by and among the Issuer and such new investors. Pursuant to the Amendment, such new investors agreed to purchase additional shares of Series A Convertible Preferred Stock of the Issuer, at a second closing under the Purchase Agreement, provided that the Issuer obtained the consent of its shareholders to issue the additional shares of Series A Convertible Preferred Stock at such second closing. The members of Reporting Group entered into the Voting Agreement to provide such new investors with comfort that the Issuer would successfully obtain the consent of its shareholders to issue the additional shares of Series A Convertible Preferred Stock at such second closing. 31 ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) The following table sets forth the name of each member of the Reporting Group, the aggregate number of Equity Securities of the Issuer beneficially owned by such members of the Reporting Group, respectively, and the percentage of the Equity Securities of the Issuer beneficially owned by each such member of the Reporting Group, respectively:
EQUITY PERCENTAGE OF SECURITIES EQUITY-SECURITIES BENEFICIALLY BENEFICIALLY NAME OWNED (#) OWNED (%) ---- --------- ----------------- Sierra Ventures IV 1,939,792 16.1 Sierra Ventures IV International 77,672 0.6 Coral Partners II 1,259,633 10.4 Kleiner Perkins Caufield & Byers VI, L.P. 1,167,592 9.7 Mayfield VII 973,301 8.1 Mayfield Associates Fund II 32,475 0.3 Venture Fund I, L.P. 894,342 7.4 The Crown Trust 256,825 2.1 Crown Associates III 207,770 1.7 Glynn Ventures III 89,166 0.7 Glynn Emerging Opportunity Fund 77,500 0.6 Crown - Glynn Associates 100,605 0.8 McMorgan Fund II 51,400 0.4 Glynn Buckley Investments 27,700 0.2 Glynn Investment L.P. 24,000 0.2 Henry W. Donaldson 495,825 4.1 Kenneth K. Cheng 48,600 0.4 Thomas P. Shanahan 21,000 0.2 Reporting Group 7,745,198 64.2
(b) See the responses to Items 7-11 and 13, inclusive, set forth on the cover pages hereto, for information with respect to each member of the Reporting Group regarding the number of Equity Securities of the Issuer to which this Schedule 13D relates as to which there is sole power to vote or to direct the vote, shared power to vote or to direct the vote, sole power to dispose or to direct the disposition, or shared power to dispose or to direct the disposition. With respect to the responses to Item 8 set forth on the cover pages hereto, the members of the Reporting Group have assumed that each member has sole power to vote the Equity Securities of the Issuer directly owned by such member, but shared power to vote the Equity Securities beneficially owned by each of the other members of the Reporting Group as a result of the terms of the Voting Agreement (as defined in Section 6 hereof). (c) None. (d) None. (e) Not applicable. 32 ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. The reporting persons set forth in Item 2 hereof have filed this Schedule 13D to report the execution and delivery of a Voting Agreement, dated as of July 23, 1997 (the "Voting Agreement"), by and among the members of the Reporting Group. Pursuant to the Voting Agreement, the members of the Reporting Group have agreed, among other things, to vote the securities of the Issuer held by them in favor of the issuance of additional shares of Series A Convertible Preferred Stock by the Issuer in accordance with the terms and upon the conditions set forth therein. As result of their agreement to act together for the purpose of voting the securities of the Issuer in accordance with the terms of the Voting Agreement, each of the members of the Reporting Group is deemed to have acquired beneficial ownership, for purposes of Sections 13(d) and 13(g) of the Securities Act of 1933, as amended, as of the date of the Voting Agreement, of all equity securities of the Issuer beneficially owned by each other member of the Reporting Group. Accordingly, each of the members of the Reporting Group has filed this Schedule 13D to report the "acquisition" of beneficial ownership of more than five percent of the Equity Securities of the Issuer to which this Schedule 13D relates. 33 ITEM 7. EXHIBITS. (1) Joint Filing Agreement, dated as of July 31, 1997, by and among the parties listed on Exhibit A thereto. (2) Voting Agreement, dated as of July 23, 1997, by and among the parties listed on Exhibit A thereto. 34 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 SIERRA VENTURES IV, a California Limited Partnership By: /s/ Jeffrey Drazen --------------------------- Name: Jeffrey Drazen Title: Authorized Signatory 35 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 SIERRA VENTURES IV INTERNATIONAL, a Delaware Limited Partnership By: /s/ Jeffrey Drazen --------------------------- Name: Jeffrey Drazen Title: Authorized Signatory 36 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 CORAL PARTNERS II, a limited partnership By: /s/ Yuval Almog ---------------------------- Name: Yuval Almog Title: General Partner 37 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 KLEINER PERKINS CAUFIELD & BYERS VI, L.P. By: /s/ Kevin R. Compton ---------------------------------- Name: Kevin R. Compton Title: General Partner 38 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 MAYFIELD VII, a California Limited Partnership By: Mayfield VII Management Partners, A California Limited Partnership Its General Partner By: /s/ George A. Pavlov ---------------------------------- Name: George A. Pavlov Title: Authorized Signatory 39 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 MAYFIELD ASSOCIATES FUND II, a California Limited Partnership By: /s/ George A. Pavlov --------------------------------- Name: George A. Pavlov Title: Authorized Signatory 40 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 VENTURE FUND I, L.P. By: /s/ Neil Douglas --------------------------- Name: Neil Douglas Title: General Partner 41 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 THE CROWN TRUST By: /s/ John W. Glynn, Jr. --------------------------- Name: John W. Glynn, Jr. Title: Authorized Signatory 42 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 CROWN ASSOCIATES III, Limited Partnership By: /s/ John W. Glynn, Jr. ---------------------------- Name: John W. Glynn, Jr. Title: Authorized Signatory 43 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 GLYNN VENTURES III By: /s/ John W. Glynn, Jr. ----------------------------- Name: John W. Glynn, Jr. Title: Authorized Signatory 44 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 GLYNN EMERGING OPPORTUNITY FUND By: /s/ John W. Glynn, Jr. ----------------------------- Name: John W. Glynn, Jr. Title: Authorized Signatory 45 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 CROWN-GLYNN ASSOCIATES, Limited Partnership By: /s/ John W. Glynn, Jr. ------------------------------ Name: John W. Glynn, Jr. Title: Authorized Signatory 46 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 MCMORGAN FUND II By: /s/ John W. Glynn, Jr. ------------------------------ Name: John W. Glynn, Jr. Title: Authorized Signatory 47 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 GLYNN BUCKLEY INVESTMENTS By: /s/ John W. Glynn, Jr. --------------------------- Name: John W. Glynn, Jr. Title: Authorized Signatory 48 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 GLYNN INVESTMENT L.P. By: /s/ John W. Glynn, Jr. --------------------------- Name: John W. Glynn, Jr. Title: Authorized Signatory 49 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 By: /s/ Henry W. Donaldson ------------------------- Name: Henry W. Donaldson 50 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 By: /s/ Kenneth K. Cheng ----------------------------- Name: Kenneth K. Cheng 51 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 31, 1997 By: /s/ Thomas P. Shanahan ---------------------------- Name: Thomas P. Shanahan 52 JOINT FILING AGREEMENT This Joint Filing Agreement (this "Agreement") is entered into as of July 31, 1997, by and among the parties set forth in Exhibit A hereto (the "Filing Parties"). WITNESSETH WHEREAS, the Filing Parties have entered into that certain Voting Agreement, dated as of July 23, 1997 (the "Voting Agreement") pursuant to which the Filing Parties have agreed to vote their shares of capital stock of Digital Generation Systems, Inc., a California Corporation (the "Company") in favor of the issuance of the Company of additional shares of its Series A Convertible Preferred Stock at a second closing under that certain Preferred Stock Purchase Agreement, dated as of July 14, 1997, as amended by that certain Amendment, dated as of July 23, 1997; WHEREAS, pursuant to Section 13(d) of the Securities Act of 1933, as amended (the "Securities Act"), the Filing Parties are required to file a Schedule 13D with the Securities and Exchange Commission (the "Commission") in connection with the execution and delivery of the Voting Agreement to report the "acquisition" of more than five percent of the equity securities of the Company; and WHEREAS, pursuant to the requirements of Rule 13d-1(f) promulgated under the Securities Act, the Filing Parties desire to enter into this Agreement to evidence their agreement to jointly file a Schedule 13D with the Commission to fulfill their obligations under Section 13(d) of the Securities Act with respect to their execution and delivery of the Voting Agreement. AGREEMENT NOW, THEREFORE, in consideration of the foregoing premises, the mutual agreements hereinafter set forth, the mutual benefits to be gained by such agreements, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, the parties hereto hereby agree as follows: 1. The Filing Parties hereby agree to cooperate in the preparation and filing with the Commission of a Schedule 13D to jointly report the "acquisition" of more than five percent of the "equity securities" (as defined in Rule 13d-1(d) promulgated under the Securities Act) of the Company as evidenced by the execution and delivery of the Voting Agreement. 2. The Filing Parties hereby agree to permit the attachment of this Agreement as an exhibit to the Schedule 13D referred to in Section 1 hereof to evidence the agreement of such Filing Parties that such Schedule 13D is being filed on behalf of all of the Filing Parties. 53 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. July 31, 1997 SIERRA VENTURES IV, a California Limited Partnership By: /s/ Jeffrey Drazen --------------------------------- Name: Jeffrey Drazen Title: Authorized Signatory July 31, 1997 SIERRA VENTURES IV INTERNATIONAL, a Delaware Limited Partnership By: /s/ Jeffrey Drazen --------------------------------- Name: Jeffrey Drazen Title: Authorized Signatory July 31, 1997 CORAL PARTNERS II, a limited partnership By: /s/ Yuval Almog --------------------------------- Name: Yuval Almog Title: General July 31, 1997 KLEINER PERKINS CAUFIELD & BYERS VI, L.P. By: /s/ Kevin R. Compton ----------------------------------- Name: Kevin R. Compton Title: General Partner 54 July 31, 1997 MAYFIELD VII, a California Limited Partnership By: Mayfield VII Management Partners, A California Limited Partnership Its General Partner By: /s/ George A. Pavlov ----------------------------------- Name: George A. Pavlov Title: Authorized Signatory July 31, 1997 MAYFIELD ASSOCIATES FUND II, a California Limited Partnership By: /s/ George A. Pavlov --------------------------------- Name: George A. Pavlov Title: Authorized Signatory July 31, 1997 VENTURE FUND I, L.P. By: /s/ Neil Douglas ----------------------------------- Name: Neil Douglas Title: General Partner July 31, 1997 THE CROWN TRUST By: /s/ John W. Glynn, Jr. ----------------------------------- Name: John W. Glynn, Jr. Title: Authorized Signatory 55 July 31, 1997 CROWN ASSOCIATES III, Limited Partnership By: /s/ John W. Glynn, Jr. ---------------------------------- Name: John W. Glynn, Jr. Title: Authorized Signatory July 31, 1997 GLYNN VENTURES III By: /s/ John W. Glynn, Jr. --------------------------------- Name: John W. Glynn, Jr. Title: Authorized Signatory July 31, 1997 GLYNN EMERGING OPPORTUNITY FUND By: /s/ John W. Glynn, Jr. --------------------------------- Name: John W. Glynn, Jr. Title: Authorized Signatory July 31, 1997 CROWN-GLYNN ASSOCIATES, Limited Partnership By: /s/ John W. Glynn, Jr. ---------------------------------- Name: John W. Glynn, Jr. Title: Authorized Signatory July 31, 1997 MCMORGAN FUND II By: /s/ John W. Glynn, Jr. ---------------------------------- Name: John W. Glynn, Jr. Title: Authorized Signatory 56 July 31, 1997 GLYNN BUCKLEY INVESTMENTS By: /s/ John W. Glynn, Jr. --------------------------------- Name: John W. Glynn, Jr. Title: Authorized Signatory July 31, 1997 GLYNN INVESTMENT L.P. By: /s/ John W. Glynn, Jr. --------------------------------- Name: John W. Glynn, Jr. Title: Authorized Signatory July31, 1997 By: /s/ Henry W. Donaldson -------------------------------- Name: Henry W. Donaldson July 31, 1997 By: /s/ Kenneth K. Cheng -------------------------------- Name: Kenneth K. Cheng July 31, 1997 By: /s/ Thomas P. Shanahan --------------------------------- Name: Thomas P. Shanahan 57 VOTING AGREEMENT THIS VOTING AGREEMENT (the "Agreement"), dated as of July 23, 1997, among the parties listed on Exhibit A hereto (collectively referred to as the "Controlling Stockholders"), Pequot Private Equity Fund, L.P. ("PPEF"), Pequot Partners Fund, L.P. ("PPF"), Pequot Offshore Private Equity Fund, Inc. ("POPEF"), Pequot International Fund, Inc. ("PIF") and GE Capital Information Technology Solutions ("GE") (each of PPEF, PPF, POPEF, PIF and GE collectively referred to as the "New Investors"). W I T N E S S E T H : WHEREAS, as an inducement to the New Investors to enter into an amendment to the Purchase Agreement, dated July 14, 1997, by and among Digital Generation Systems, Inc. and the parties listed on Exhibit A thereto, the Controlling Stockholders are willing to vote their shares of common stock, no par value, of the Company (the "Common Stock") and Common Stock equivalents (Common Stock and Common Stock equivalents hereinafter referred to as "Shares") to approve the issuance of shares by the Company in connection with the Purchase Agreement (the "Purchase") or the agreement to purchase Mediatech, Inc. (the "Acquisition", together with the Purchase, the "Transactions"); and WHEREAS, the Controlling Stockholders own in the aggregate, of record and/or beneficially, the shares set forth on Exhibit A ("Control Shares"). WHEREAS, the Company may be required by the NASDAQ Stock Market to obtain shareholder approval for the total amount of the shares to be issued in connection with the Transactions (the "Vote"). NOW, THEREFORE, in order to induce the New Investors to enter into the Purchase Agreement and in consideration of the foregoing and the mutual covenants and agreements herein contained and other good and valuable consideration, it is agreed as follows: 1. Voting of Shares. The Controlling Stockholders hereby agree that, from the date of this Agreement up to one week after the Vote (the "Expiration Date"), at any meeting of stockholders of the Company, however called, and in any action by written consent of stockholders of the Company, they shall (a) vote the Control Shares in favor of the Transactions and the issuance of Shares in connection thereto; (b) vote the Control Shares against any action or agreement which would result in a breach in any material respect of any covenant, representation or warranty or any other obligation of the Company under the Purchase Agreement; and (c) vote the Control Shares against any action or agreement which would impede, interfere with or attempt to discourage the 58 issuance of Shares in connection with the Transactions, including, but not limited to: (i) any extraordinary corporate transaction, such as a merger, reorganization or liquidation involving the Company or any of its subsidiaries; (ii) a sale or transfer of material amount of assets of the Company or any of its subsidiaries; (iii) any material change in the present capitalization or dividend policy of the Company; or (iv) any other material change in the corporate structure or business, excluding any election of directors of the Company. 2. Covenants of Controlling Stockholders. (a) During the period from the date of this Agreement until the Expiration Date, except in accordance with the provisions of this Agreement, the Controlling Stockholders agree that they will not, directly or indirectly: (i) sell, transfer, pledge, hypothecate, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, pledge, hypothecation, assignment or other disposition of, any Control Shares owned by them; (ii) deposit any Control Shares into a voting trust, or, except as provided in this Agreement, grant any proxies or enter into a voting agreement with respect to any Control Shares; or (iii) encourage, solicit, initiate or participate in any way in any discussions or negotiations with, or provide any information to, or afford any access to the properties, books or records of the Company or any of its subsidiaries to, or otherwise assist or facilitate, any corporation, partnership, person or other entity or group (other than the New Investors) concerning any merger, consolidation, business combination, liquidation, reorganization, sale of substantial assets, sale of Common Stock, of capital stock or similar transactions involving the Company or any material subsidiary or division of the Company. (b) Any Common Stock or securities convertible into Common Stock acquired by Controlling Stockholders subsequent to the date of this Agreement, including any shares issued upon conversion of the Series A Preferred Stock or any part thereof, will become subject to this Agreement and shall, for all purposes of this Agreement, be considered Control Shares. (c) Controlling Stockholders agree not to engage in any action or omit to take any action, prior to the Expiration Date, which might have the effect of preventing or disabling the Controlling Stockholders from performing their obligations under this Agreement. -2- 59 (d) The Controlling Stockholders agree not to exercise, prior to the Expiration Date, any dissenters' rights which the Controlling Stockholders may have under the California General Corporation Law in respect of the Transactions or other business combination transaction involving the Company or any of its affiliates. 3. Representations and Warranties of the Controlling Stockholders. Each of the Controlling Stockholders, jointly and severally, represents and warrants to the New Investors as follows: (a) Each of the Controlling Stockholders is the record and beneficial owners of their Control Shares and the Controlling Stockholders beneficially own the number of shares set forth on Exhibit A opposite their respective names; (b) Each of the Controlling Stockholders has the right, power, capacity and authority to execute and deliver this Agreement and to perform its obligations hereunder; the execution, delivery and performance of this Agreement by the Controlling Stockholders will not require the consent of any other person and will not constitute a violation of, conflict with or result in a default under (i) any contract, understanding or arrangement to which any of the Controlling Stockholders are a party or by which any of the Controlling Stockholders are bound, (ii) any judgment, decree or order applicable to any of the Controlling Stockholders, or (iii) any law, rule or regulation of any governmental body applicable to any of the Controlling Stockholders; and this Agreement constitutes a valid and binding agreement on the part of each of the Controlling Stockholders; (c) the Control Shares owned by the Controlling Stockholders have been validly issued and are fully paid and nonassessable; and (d) the Control Shares are now, and at all times during the term of this Agreement will be, held by the Controlling Stockholders, free and clear of all adverse claims, liens, encumbrances and security interests, and none of the Control Shares is subject to any voting trust or other agreement or arrangement (except as created by this Agreement) with respect to the voting or disposition of such Control Shares; and there are no outstanding options, warrants or rights to purchase or acquire, or agreements relating to, the Control Shares. 4. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to the conflicts of law principles thereof. 5. Filing and Consents; Further Assurances. The Controlling Stockholders will use their best efforts to cause the Transactions to be consummated and to prepare and to make all filings with, and to obtain consents of, all third parties and -3- 60 governmental authorities necessary to the consummation of the transactions contemplated by this Agreement. Each party hereto shall perform such further acts and execute such further documents as may reasonably be required to carry out the provisions of this Agreement, including instruments necessary or desirable to complete the transfer, sale and assignment of the Control Shares. 6. Assignment. This Agreement may not be assigned by any party hereto, except that the New Investors shall have the right to assign to any of their respective affiliates, any and all rights and obligations of the New Investors under this Agreement, provided that no such assignment shall relieve the New Investors of their obligations hereunder. 7. Survival. All of the representations, warranties and covenants contained herein shall survive until two years after the Expiration Date. 8. Specific Performance. Money damages are an inadequate remedy for breach of this Agreement because of the difficulty of ascertaining the amount of damages that will be suffered by the New Investors in the event that this Agreement is breached. Therefore, the Controlling Stockholders agree that the New Investors may obtain specific performance of this Agreement. 9. Notices. All notices or other communications required or permitted hereunder shall be in writing (except as otherwise provided herein) and shall be deemed duly given if delivered in person, by facsimile or telegram or by registered or certified mail, postage prepaid addressed as follows: To the New Investors, see Exhibit B hereto With copies to: Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 Attention: Robert C. Schwenkel, Esq. Fax: (212) 859-8587 To Controlling Stockholders, see Exhibit A hereto. 10. Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other -4- 61 jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable. 11. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement. 12. Binding Effect; Benefits. This Agreement shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, legal representatives, successors and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to or shall confer on any person (other than the parties hereto, affiliates of the New Investors and the respective heirs, legal representatives and successors and permitted assigns of the parties hereto) any rights, remedies, obligations or liabilities under or by reason of this Agreement. 13. Entire Agreement; Amendments. This Agreement sets forth the entire agreement of the parties with respect to the subject matter hereof and supersedes all previous understandings, written or oral, in respect thereof. This Agreement may not be modified or amended except by an instrument or instruments signed by the party against whom enforcement of any such modification or amendment is sought. -5- 62 IN WITNESS WHEREOF, the Controlling Stockholders, and each of the New Investors, each having been represented by legal counsel in connection herewith, have entered into this Agreement as of the date first written above. NEW INVESTORS: PEQUOT PRIVATE EQUITY FUND, L.P. By:____________________________________ Name: Title: PEQUOT PARTNERS FUND, L.P. By:____________________________________ Name: Title: PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC. By:____________________________________ Name: Title: PEQUOT INTERNATIONAL FUND, INC. By:____________________________________ Name: Title: GE CAPITAL INFORMATION TECHNOLOGY SOLUTIONS By:____________________________________ Name: Title: -6- 63 CONTROLLING STOCKHOLDERS: SIERRA VENTURES IV By:____________________________________ Name: Title: SIERRA VENTURES IV INTERNATIONAL By:____________________________________ Name: Title: CORAL PARTNERS II By:____________________________________ Name: Title: KLEINER PERKINS CAUFIELD & BYERS VI By:____________________________________ Name: Title: KPCB VI FOUNDERS FUND By:____________________________________ Name: Title: MAYFIELD VII By:____________________________________ Name: Title: -7- 64 MAYFIELD ASSOCIATES FUND II By:____________________________________ Name: Title: VENTURE FUND I, LP By:____________________________________ Name: Title: CROWN ASSOCIATES III, LIMITED PARTNERSHIP By:____________________________________ Name: Title: CROWN ASSOCIATES III, LIMITED PARTNERSHIP - PREFERRED STOCK (D) By:____________________________________ Name: Title: CROWN-GLYNN ASSOCIATES, LIMITED PARTNERSHIP By:____________________________________ Name: Title: -8- 65 CROWN-GLYNN ASSOCIATES, LIMITED PARTNERSHIP - PREFERRED STOCK - SERIES D By:____________________________________ Name: Title: THE CROWN TRUST - PREFERRED STOCK (D) By:____________________________________ Name: Title: THE CROWN TRUST By:____________________________________ Name: Title: GLYNN EMERGING OPPORTUNITY FUND By:____________________________________ Name: Title: GLYNN INVESTMENT L.P. By:____________________________________ Name: Title: GLYNN BUCKLEY INVESTMENTS By:____________________________________ Name: Title: -9- 66 GLYNN VENTURES III By:____________________________________ Name: Title: GLYNN VENTURES III - PREFERRED STOCK SERIES C (66,666) AND SERIES D (12,500) By:____________________________________ Name: Title: McMORGAN FUND II By:____________________________________ Name: Title: HENRY DONALDSON By:____________________________________ Name: Title: KEN CHENG By:____________________________________ Name: Title: THOMAS SHANAHAN By:____________________________________ Name: Title: -10- 67 GE Capital Information Technology Solutions 700 Canal Street Stamford, Connecticut 06902 Attention: Jerry Poch Phone: (203) 357-1464 Fax: (203) 357-1531 B-2 -----END PRIVACY-ENHANCED MESSAGE-----