<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
December 24, 1996
Date of Report
(Date of earliest event
reported)
DIGITAL SYSTEMS INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Washington 0-18511 91-1273645
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(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
6464 185th Avenue N.E.
Redmond, Washington 98052
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(Address of principal executive offices, including zip code)
(206) 881-7544
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(Registrant's telephone number, including area code)
Exhibit Index appears on page 6
<PAGE> 2
ITEM 2. ACQUISITION OF ASSETS
ACQUISITION OF VIEWSTAR CORPORATION
On December 24, 1996, Digital Systems International, Inc. ("Digital")
acquired all of the outstanding stock of ViewStar Corporation, a California
Corporation ("ViewStar"), pursuant to an Agreement and Plan of Merger, dated as
of October 14, 1996 (the "Merger Agreement"), by and among Digital, ViewStar,
and Vision Merger Corporation, a Washington corporation and a wholly owned
subsidiary of Digital ("Merger Sub"). In accordance with the terms of the
Merger Agreement, Merger Sub merged into ViewStar, with ViewStar as the
surviving corporation (the "Merger"). Digital anticipates that the Merger will
be accounted for as a pooling-of-interests and will qualify as a tax-free
reorganization.
At the time of effectiveness of the Merger on December 24, 1996 (the
"Effective Time"), each issued and outstanding share of common stock, par value
$.001 per share, of ViewStar (the "ViewStar Common Stock") converted into the
right to receive .693 shares (the "Exchange Ratio") of common stock, par value
$.01 per share, of Digital (the "Digital Common Shares"), and each issued and
outstanding share of preferred stock, par value $.001 per share, of ViewStar
(the "ViewStar Preferred Stock" and, together with the ViewStar Common Stock,
the "ViewStar Stock") converted into a number of Digital Common Shares equal to
the Exchange Ratio times the number of shares of ViewStar Common Stock into
which such ViewStar Preferred Stock is convertible (based upon a conversion
ratio of one share of ViewStar Common Stock for 3.5 shares of ViewStar
Preferred Stock) immediately prior to the Effective Time. In addition, each
option to purchase shares of ViewStar Stock that was outstanding at the
Effective Time converted into an option to purchase a number of
Digital Common Shares equal to the product of the Exchange Ratio and the number
of shares of ViewStar Common Stock subject to such option. As a result of the
Merger, the shareholders of ViewStar immediately prior to the Effective Time
(the "ViewStar Shareholders") own approximately 28.6% of the outstanding
Digital Common Shares (including the Holdback Shares described below and
excluding Digital Common Shares owned by ViewStar Shareholders prior to the
Merger) (the "Share Consideration").
Pursuant to the Merger Agreement, for up to six months following the
closing of the Merger, and subject to certain other limitations, the Share
Consideration may be reduced by a number of Digital Common Shares equal in value
to any losses in excess of $350,000 that may be suffered by Digital due to
certain breaches by ViewStar of its representations and warranties or failure by
ViewStar to perform its obligations under the Merger Agreement. Digital Common
Shares representing 10% of the Share Consideration (the "Holdback Shares") have
been retained by Digital in order to effect any necessary reduction in the Share
Consideration.
Digital's shareholders approved the issuance of Digital Common Shares
in connection with the Merger at a special meeting held on December 20, 1996.
ViewStar Shareholders approved the Merger Agreement by written consent on
November 27, 1996.
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Pursuant to the Merger Agreement, Kamran Kheirolomoom, President and
Chief Executive Officer of ViewStar, and Umang Gupta, a director of ViewStar,
have been appointed to Digital's Board of Directors. Digital also has entered
into employment agreements with certain of ViewStar's executive officers.
REGISTRATION RIGHTS AGREEMENT
Also on December 24, 1996, Digital executed a Registration Rights
Agreement (the "Registration Rights Agreement") in connection with an agreement
dated October 14, 1996, by and among Digital, ViewStar and certain shareholders
of Digital and ViewStar (the "Shareholders Agreement") pursuant to which, among
other things, such ViewStar Shareholders agreed to approve the Merger. To
induce the ViewStar Shareholders which are venture capital funds (the "ViewStar
Affiliates") to sign the Shareholders Agreement, Digital agreed to enter into
the Registration Rights Agreement with the ViewStar Affiliates. The
Registration Rights Agreement requires Digital to effect one shelf registration
on a Form S-3 registration statement of the Digital Common Shares issued to
such ViewStar Affiliates in connection with the Merger on demand by the
ViewStar Affiliates, under specified conditions. The Registration Rights
Agreement terminates on December 24, 1997.
ITEM 5 OTHER EVENTS
Effective January 1, 1997, Digital changed its name to Mosaix, Inc.
Henceforth, Digital will conduct all of its operations, and will make all
filings with the Securities and Exchange Commission, under the name Mosaix,
Inc. In connection with its name change, Digital's Nasdaq stock symbol has
changed from "DGTL" to "MOSX," and its web page address has changed from
www.dgtl.com to www.mosaix.com.
The Merger Agreement, Registration Rights Agreement, a joint press
release issued by the parties to announce the Digital shareholders' approval of
the Merger and a press release issued by Digital to announce its change of name
to Mosaix, Inc. are filed as exhibits to this report and are incorporated herein
by reference. The descriptions of the Merger Agreement and Registration Rights
Agreement herein do not purport to be complete and are qualified in their
entirety by the provisions of the Merger Agreement and Registration Rights
Agreement.
The Digital Common Shares are quoted on the Nasdaq National Market
under the trading symbol "MOSX."
3
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements
Incorporated by reference to pages F-9 through F-31 of Digital's
Registration Statement on Form S-4 (File No. 333-14887) filed October 25, 1996,
as amended.
(b) Pro Forma Financial Information
Incorporated by reference to pages 19 through 23 of Digital's
Registration Statement on Form S-4 (File No. 333-14887) filed October 25, 1996.
(c) Exhibits
<TABLE>
<CAPTION>
Exhibit Number Description
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<S> <C>
2.1* Agreement and Plan of Merger among Digital Systems International,
Inc., ViewStar Corporation and Vision Merger Corporation, dated
as of October 14, 1996.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of KPMG Peat Marwick LLP.
99.1 Registration Rights Agreement among Digital Systems
International, Inc. and certain shareholders of ViewStar
Corporation, dated as of December 24, 1996.
99.2 Press Release issued December 23, 1996.
99.3 Press Release issued November 26, 1996.
</TABLE>
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* Incorporated by reference to Digital's Registration Statement on Form
S-4 (File No. 333-14887) filed October 25, 1996, as amended.
4
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SIGNATURE Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
DIGITAL SYSTEMS INTERNATIONAL, INC.
Dated December 30, 1996 By /s/ John J. Flavio
---------------------------------
John J. Flavio, Senior Vice President
and Chief Financial Officer
5
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description Page
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<S> <C> <C>
2.1* Agreement and Plan of Merger among Digital Systems International,
Inc., ViewStar Corporation and Vision Merger Corporation, dated
as of October 14, 1996.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of KPMG Peat Marwick LLP.
99.1 Registration Rights Agreement among Digital Systems
International, Inc. and certain shareholders of ViewStar
Corporation, dated as of December 24, 1996.
99.2 Press Release issued December 23, 1996.
99.3 Press Release issued November 26, 1996.
</TABLE>
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* Incorporated by reference to Digital's Registration Statement on Form
S-4 (File No. 333-14887) filed October 25, 1996, as amended.
6
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CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
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The Board of Directors
ViewStar Corporation:
We consent to incorporation by reference in the registration statements (Nos.
333-18577,33-93948,33-88544,33-51620,33-41199, 33-41197 and 33-36617) on Form
S-8 and in the registration statement (No. 333-16053) on Form S-3 of Digital
Systems International, Inc. of our report dated July 3, 1996, except for note
7, which is as of August 15, 1996, relating to the consolidated balance sheets
of ViewStar Corporation and subsidiaries as of December 31, 1995 and 1994, and
the related consolidated statements of operations, stockholders' equity
(deficit), and cash flows for each of the years in the three-year period ended
December 31, 1995, which report is incorporated by reference in the Form 8-K of
Digital Systems International, Inc. dated December 30, 1996.
KPMG Peat Marwick LLP
San Jose, California
December 30, 1996
<PAGE> 1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
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The Board of Directors
Digital Systems International, Inc.:
We consent to incorporation by reference in the registration statements (Nos.
333-18577, 33-93948, 33-88544, 33-51620, 33-41199, 33-41197 and 33-36617) on
Form S-8 and in the registration statement (No. 333-16053) on Form S-3 of
Digital Systems International, Inc. of our report dated February 2, 1996,
relating to the consolidated balance sheets of Digital Systems International,
Inc. and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1995, which report
is incorporated by reference in the Form 8-K of Digital Systems International,
Inc. dated December 30, 1996.
KPMG Peat Marwick LLP
Seattle, Washington
December 30, 1996
<PAGE> 1
EXHIBIT 99.1
DIGITAL SYSTEMS INTERNATIONAL, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is entered into as
of December 24, 1996 by and among Digital Systems International, Inc., a
Washington corporation (the "Company"), and the parties listed on Schedule A
hereto as at any time amended (the "Shareholders").
RECITALS
A. Pursuant to an Agreement and Plan of Merger (the "Merger Agreement"),
dated October 14, 1996, by and among the Company, ViewStar Corporation, a
California corporation ("ViewStar"), and Vision Merger Corporation, a
Washington corporation, the Company will issue, and the Shareholders will
receive, in exchange for securities of ViewStar held by such Shareholders,
shares of Common Stock, par value $.01 per share, of the Company (the "Digital
Common Shares").
B. The Shareholders, the Company and certain holders of Digital Common
Shares entered into a Shareholders Agreement (the "Shareholders Agreement")
simultaneously with the execution and delivery of the Merger Agreement.
C. As an inducement to the Shareholders to sign the Shareholders
Agreement, the Company issued to the Shareholders a letter, dated October 11,
1996, in which the Company agreed to enter into a registration rights agreement
providing for a shelf registration on Form S-3 of the Digital Common Shares to
be issued to the Shareholders pursuant to the Merger Agreement.
D. The parties are entering into this Registration Rights Agreement to set
forth the specific terms and conditions relating to registration of the Digital
Common Shares to be issued to the Shareholders pursuant to the Merger
Agreement.
<PAGE> 2
AGREEMENT
In consideration of the foregoing, and for good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. DEFINITIONS
For purposes of this Agreement:
(a) "Commission" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act of 1933, as
amended (the "Securities Act").
(b) "Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement on Form S-3 in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement.
(c) "Registrable Securities" means (i) Digital Common Shares issuable to
any of the Shareholders pursuant to the Merger Agreement and (ii) any Digital
Common Shares issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, Digital
Common Shares issued pursuant to the Merger Agreement, excluding in all cases,
however, any Registrable Securities sold by a person in a transaction pursuant
to Rule 145(d) or any other transaction in which its rights under this
Agreement are not assigned.
(d) The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of Digital Common Shares outstanding which
are, and the number of Digital Common Shares issuable pursuant to then
exercisable or convertible securities which are, Registrable Securities.
(e) "Registration Expenses" means all expenses, except as otherwise
stated below, incurred by the Company in complying with paragraph 2 hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding the
compensation of regular employees of the Company which shall be paid in any
event by the Company).
(f) "Selling Expenses" means all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the
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Holders and all fees and disbursements of counsel representing the Holders or
any Holder.
(g) The term "Holder" means any person owning or having the right to
acquire Registrable Securities who is a party to this Agreement as of the date
hereof or who may be added as a party hereto pursuant to the terms of this
Agreement, and any assignee thereof in accordance with paragraph 9 hereof.
(h) "Initiating Holders" means any Holder that is unable to sell all of
the Registrable Securities held by such Holder pursuant to Rule 145(d) during
any three-month period in 1997.
(i) "Form S-3" means such form under the Securities Act as in effect on
the date hereof or any registration form under the Securities Act subsequently
adopted by the Commission that similarly permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the Commission.
(j) "Rule 144" and "Rule 145" mean Rule 144 and Rule 145 promulgated
under the Securities Act as in effect on the date hereof or as subsequently
amended.
2. REQUESTED REGISTRATION ON FORM S-3.
Commencing on the date of publication of results covering at least 30 days
of combined operations of Digital and ViewStar referred to in Section 2(b)(2)
of the Shareholders Agreement, and subject to all the terms and conditions of
this Agreement, a Shareholder or other Holder who qualifies as an Initiating
Holder shall have the right to require the Company to file a "shelf"
registration statement on Form S-3 and in compliance with Rule 415 of the
Securities Act for a delayed or continuous public offering of all the
Registrable Securities held by such Holder by submitting a written request to
the Company to file such a registration statement. If the Company receives
such a written request and the Company is a registrant entitled to use Form S-3
to register the Registrable Securities for such an offering, the Company shall:
(a) promptly give written notice of the proposed registration to all
other Holders and include in such registration statement all the Registrable
Securities of any other Holder who qualifies as an Initiating Holder as a
result of its inability to sell all its Registrable Securities during the same
three-month period, or is likely to qualify as an Initiating Holder with
respect to any subsequent three-month period in
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1997, and who requests such registration in a written notice to the Company
given within 15 days of the mailing of such notice by the Company; and
(b) as soon as practicable, use its best efforts to effect the
registration under the Securities Act of all Registrable Securities of the
Initiating Holder and of such other Holders (including, without limitation,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act and any other governmental requirements or regulations) on such
form and to cause such Registrable Securities to be qualified in such
jurisdictions as the Holder or Holders may reasonably request; provided,
however, that the Company shall not be obligated to take any action to effect
any such registration pursuant to this paragraph 2:
(i) In any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting such
registration unless the Company already is subject to service in such
jurisdiction and except as may be required by the Securities Act;
(ii) After the Company has effected one such registration and such
registration has been declared or ordered effective;
(iii) After December 31, 1997; or
(iv) If the Company shall furnish to such Holders a certificate
signed by the Chief Executive Officer of the Company stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its shareholders for a registration statement to be filed at
such time, in which case the Company's obligation to use its best efforts to
register under this paragraph 2 shall be deferred for a period not to exceed 90
days from the date of receipt of written request from the Initiating Holders.
3. MANNER OF OFFERING
(a) The Registrable Securities so registered may be sold from time to time
to purchasers directly in one or more transactions or in transactions involving
broker-dealers who may place the shares in bulk trades or otherwise, but not in
underwritten transactions on either a firm commitment basis or a best efforts
basis pursuant to a written agreement with an underwriter without the consent
of the Company. The Initiating Holder may request that the offering of the
Registrable Securities be effected through an underwriting and, provided that
all other Holders registering Registrable Securities in the offering concur,
the Company may, in its sole discretion, consent to such an offering.
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(b) In the event that the Company consents to effect a registration
pursuant to paragraph 2 as a registered public offering involving an
underwriting, the Company shall so advise the Holders. In such event, the
right of any Holder to registration pursuant to paragraph 2 shall be
conditioned upon such Holder's participation in the underwriting arrangements
required by this paragraph 3. All Holders proposing to distribute their
securities through such underwriting shall enter into an underwriting agreement
in customary form with a managing underwriter selected for such underwriting by
the Company. The Company, on its own behalf or on behalf of its shareholders,
shall have the right to include any of the Company's securities in such
registration; provided, that if, in the case of a firm commitment underwriting,
the total amount of securities, including Registrable Securities, requested to
be included in such offering exceeds the amount of securities that the managing
underwriters reasonably believe compatible with the success of the offering,
then the Company shall exclude all or such specified portion of such securities
to be registered on behalf of the Company or its shareholders from such
underwritten offering and will select, in its sole discretion, the securities
to be so excluded from such offering, and there shall be included in the
offering only that number of Registrable Securities which the managing
underwriter believes will not jeopardize the success of the offering. If the
managing underwriter advises the Company in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
Company shall so advise all holders of Registrable Securities and the number of
shares of Registrable Securities that may be included in the registration and
underwriting shall be allocated among all Holders thereof in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities held
by such Holders at the time of filing the registration statement. No
Registrable Securities excluded from the underwriting by reason of the managing
underwriter's marketing limitation shall be included in such registration. To
facilitate the allocation of shares in accordance with the above provisions,
the Company or the managing underwriter may round the number of shares
allocated to any Holder to the nearest 100 shares. If any Holder of
Registrable Securities disapproves of the terms of the underwriting, such
person may elect to withdraw therefrom by written notice to the Company, the
managing underwriter and the Initiating Holder. The Registrable Securities
and/or other securities so withdrawn also shall be withdrawn from registration,
and such Registrable Securities shall not be transferred in a public
distribution prior to 90 days after the effective date of such registration, or
such other shorter period of time as the Company or the underwriters may
require.
4. EXPENSES OF REGISTRATION
All Registration Expenses incurred in connection with a registration
pursuant to paragraph 2 shall be borne by the Company. All Selling Expenses
relating
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to securities registered on behalf of the Holders and all other expenses of
registration shall be borne by the Holders of such securities pro rata on the
basis of the number of shares so registered.
5. REGISTRATION PROCEDURES
In the case of any registration effected by the Company pursuant to this
Agreement, the Company will keep each Holder advised in writing as to the
initiation of such registration and as to the completion thereof. At its
expense, the Company will:
(a) Prepare and file with the Commission a registration statement on
Form S-3 with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective until the earlier of
December 31, 1997 or completion of the distribution described in the
registration statement;
(b) Prepare and file with the Commission such amendments and supplements
to such registration statement on Form S-3 and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in
order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
such jurisdictions as shall be reasonably requested by the Holders, provided
that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
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(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) In the case of an underwritten public offering pursuant to paragraph
3(b), furnish, at the request of any Holder registering Registrable Securities
thereunder, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with the registration, (i) an opinion,
dated such date, of the counsel representing the Company for the purposes of
such registration, in form and substance customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities and (ii) a letter
dated such date, from the independent accountants of the Company, in form and
substance customarily given by independent accountants to underwriters in an
underwritten public offering, addressed to the underwriters, if any, and to the
Holders registering such Registrable Securities.
6. INDEMNIFICATION
(a) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration
has been effected pursuant to this Agreement, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section 15 of
the Securities Act, against all expenses, claims, losses, damages or
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus or other document, or
any amendment or supplement thereto, incident to any such registration or based
on any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, or any violation by
the Company of any federal, state or common law rule or regulation applicable
to the Company in connection with any such registration, and the Company will
reimburse each such Holder, each of its officers and directors, and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage,
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liability or action, provided that the Company will not be liable in any such
case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder, controlling person or underwriter and stated to be specifically for use
therein.
(b) Each Holder will, if Registrable Securities held by such Holder are
included in the securities as to which such registration is being effected,
indemnify the Company, each of its directors and officers, each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, and each other such Holder, each of its
officers and directors and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus or other document, or
any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company, such Holders, such directors, officers,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent that such
untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus or other document
in reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein.
(c) Each party entitled to indemnification under this paragraph 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure
to give such notice is materially prejudicial to an Indemnifying Party's
ability to defend such action and provided further, that the Indemnifying Party
shall not assume the defense
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for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) If the indemnification provided for in paragraphs (a) through (c) of
this paragraph 6 is held by a court of competent jurisdiction to be unavailable
or is otherwise insufficient to hold harmless an Indemnified Party under such
paragraphs in respect of any losses, claims, damages or liabilities or actions
in respect thereof referred to therein, then each Indemnifying Party shall, in
lieu of indemnifying such Indemnified Party, contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages,
liabilities or actions in such proportion as appropriate to reflect the
relative fault of the Company, the underwriters and the Holder of such
Registrable Securities in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or actions as well as any
other relevant equitable considerations, including the failure to give any
notice under paragraph (c). The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the Company, the underwriters or the Holders of such
Registrable Securities and to the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Company and each of the Holders agrees that it would not be just
and equitable if contributions pursuant to this paragraph were determined by
pro rata allocation (even if all of the Holders of such Registrable Securities
were treated as one entity for such purpose) or by any other method of
allocation which did not take account of the equitable considerations referred
to above in this paragraph. The amount paid or payable by an Indemnified Party
as a result of the losses, claims, damages, liabilities or action in respect
thereof, referred to above in this paragraph, shall be deemed to include any
legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentations (within the meaning of Section 11(f) of
the Securities Act), shall be entitled to contribution from any person who is
not guilty of such fraudulent misrepresentation.
(e) For purposes of this paragraph 6, the term "underwriter" shall
mean a person deemed to be an underwriter under Section 2(11) of the
Securities Act.
-9-
<PAGE> 10
7. FURNISH INFORMATION
It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Agreement with respect to any selling Holder
that such selling Holder shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of such securities as shall be reasonably required to effect the
registration of its Registrable Securities and to execute such documents in
connection with such registration as the Company may reasonably request.
8. RULE 144 REPORTING
With a view to making available the benefits of Rule 145(d) and any other
rules and regulations of the Commission that may at any time permit the sale of
the Registrable Securities to the public without registration, the Company
agrees to use its best efforts to:
(a) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act");
(b) So long as a Holder owns any Registrable Securities, to furnish to
the Holder promptly upon request a written statement by the Company as to its
compliance with the informational requirements of Rule 144 and the reporting
requirements of the Securities Act and the Exchange Act, a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as a Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing such
Holder to sell any such securities without registration.
9. TRANSFER OF REGISTRATION RIGHTS
The rights to cause the Company to register securities granted to
Shareholders under paragraph 2 hereof may be assigned to a transferee or
assignee reasonably acceptable to the Company in connection with any transfer
or assignment of Registrable Securities by a Shareholder provided that: (i)
such transfer may otherwise be effected in accordance with applicable
securities laws, and (ii) such assignee or transferee acquires at least 20,000
Digital Common Shares. Notwithstanding the foregoing, the rights to cause the
Company to register securities may be assigned to any constituent partner of a
Shareholder, without compliance with item (ii) above, provided written notice
thereof is promptly given to the Company.
-10-
<PAGE> 11
10. 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, upon confirmation of facsimile
transmission to such party at the facsimile number set forth on Schedule A
hereto, or the third business day after deposit with the United States Post
Office, postage prepaid, registered or certified with return receipt requested
and addressed to the party to be notified at the address indicated for such
party on Schedule A hereto, or at such other address or facsimile number as
such party may designate by ten days' advance written notice to the other
parties given in the foregoing manner.
11. AMENDMENTS AND WAIVERS
Any term of this Agreement may be amended, and the observance of any term
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Holders of a majority of the Registrable Securities then outstanding.
Additional Holders may be added to this Agreement with such consent by amending
Schedule A hereto and adding a signature page executed by such additional
Holder.
12. 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 this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
13. GOVERNING LAW
This Agreement shall be governed by and construed under the laws of the
State of Washington as applied to agreements among Washington residents entered
into and to be performed entirely within the State of Washington.
14. 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.
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<PAGE> 12
15. ENTIRE AGREEMENT
This Agreement constitutes the full and entire understanding and agreement
between the parties with respect to the subject matter hereof and supersedes
all prior agreements with respect to the subject matter hereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
-12-
<PAGE> 13
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
DIGITAL SYSTEMS INTERNATIONAL,
INC.
By: /s/ Patrick S. Howard
-------------------------------
Its President
----------------------------
INMAN & BOWMAN
By: /s/ G.M. Inman
-------------------------------
Grant M. Inman, General Partner
of Inman & Bowman
Management, the General
Partner of Inman & Bowman
INMAN & BOWMAN ENTREPRENEURS
By: /s/ G.M. Inman
-------------------------------
Grant M. Inman, General Partner
of Inman & Bowman
Management, the General
Partner of Inman & Bowman
INSTITUTIONAL VENTURE
MANAGEMENT IV
By: /s/ Geoffrey Y. Yang
-------------------------------
Its Geoffrey Y. Yang
General Partner
INSTITUTIONAL VENTURE PARTNERS
IV
By Its General Partner
Institutional Venture
Management IV
By: /s/ Geoffrey Y. Yang
-------------------------------
Its Geoffrey Y. Yang
General Partner
-13-
<PAGE> 14
J.P. MORGAN INVESTMENT
CORPORATION
By: [illegible]
-------------------------------
Its Managing Director
----------------------------
SIXTY WALL STREET SBIC FUND, L.P.
By: [illegible]
-------------------------------
Its Manager
----------------------------
MAYFIELD ASSOCIATES
By: [illegible]
-------------------------------
Its Authorized Signatory
----------------------------
MAYFIELD ASSOCIATES FUND II
By: [illegible]
-------------------------------
Its Authorized Signatory
----------------------------
MAYFIELD VI
By: [illegible]
-------------------------------
Its Authorized Signatory
----------------------------
MAYFIELD VII
By: [illegible]
-------------------------------
Its Authorized Signatory
----------------------------
-14-
<PAGE> 15
TECHNOLOGY PARTNERS WEST
FUND II
By: [illegible]
-------------------------------
Its Managing Partner
----------------------------
TECHNOLOGY PARTNERS WEST
FUND III
By: [illegible]
-------------------------------
Its Managing Partner
----------------------------
TECHNOLOGY PARTNERS WEST
FUND IV, L.P.
By: [illegible]
-------------------------------
Its Managing Partner
----------------------------
TPW VENTURE PARTNERS IX
By: [illegible]
-------------------------------
Its General Partner
----------------------------
WONGFRATIS COMPANY
By: [illegible]
-------------------------------
Its Partner
----------------------------
-15-
<PAGE> 16
SCHEDULE A
Shareholders
Inman & Bowman
Inman & Bowman Entrepreneurs
ATTN: Grant Inman
4 Orinda Way
Building D, Suite 150
Orinda, CA 94563
Fax:
Institutional Venture Management IV
Institutional Venture Partners IV
ATTN: Geoffrey Yang
3000 Sand Hill Road
Building 2, Suite 290
Menlo Park, CA 94108
Fax:
JP Morgan Investment Corporation
Sixty Wall Street SBIC Fund
ATTN: Donald Patrick
60 Wall Street
New York, NY 10260
Fax:
Mayfield Associates
Mayfield Associates Fund II
Mayfield VI
Mayfield VII
ATTN: F. Gibson Myers
2800 Sand Hill Road, Suite 250
Menlo Park, CA 94025
Fax:
A-1
<PAGE> 17
Technology Partners West Fund II
Technology Partners West Fund III
Technology Partners West Fund IV
TPW Venture Partners IX
ATTN: William Hart
1550 Tiburon Blvd., Suite A
Belvedere, CA 94920
Fax:
Wongfratis Company
ATTN: Hon Wong
51 Jordan Place
Palo Alto, CA 94303
Fax:
A-2
<PAGE> 1
EXHIBIT 99.2
[DIGITAL SYSTEMS INTERNATIONAL logo]
FOR IMMEDIATE RELEASE CONTACT:
JOHN J. FLAVIO
SR. VICE PRESIDENT & CFO
(206) 556-8088
[email protected]
DIGITAL SYSTEMS INTERNATIONAL SHAREHOLDERS APPROVE MERGER WITH
VIEWSTAR CORPORATION
REDMOND, Wash. December 23, 1996. Digital Systems International, Inc.
("Digital") (NASDAQ:DGTL) a global leader in call center solutions, announced
that at a special meeting held Friday, December 20th, the shareholders of the
Corporation approved the issuance of shares of Digital common stock to
shareholders of ViewStar Corporation ("ViewStar"), a market leader in enterprise
business process applications. A majority of ViewStar shareholders had
previously approved the merger by written consent. The Digital shareholder
approval will permit Digital to complete its merger with ViewStar, which it
anticipates doing on or about December 24, 1996.
The company had previously announced plans to sell up to 300,000 additional
shares of Digital common stock, if necessary, in order to complete the merger.
The company announced today, however, that it will not be necessary to sell the
additional shares and the registration statement for the shares will be
withdrawn.
# # #
Digital Systems International, Inc. - 6464 185th Avenue N.E. -
Redmond, WA 98052-5032 - (206) 881-7544
<PAGE> 1
EXHIBIT 99.3
[DIGITAL SYSTEMS INTERNATIONAL Letterhead]
FOR IMMEDIATE RELEASE CONTACT:
MATT NICHOLS
MANAGER, CORPORATE COMMUNICATIONS
DSI, (206) 869-4500
[email protected]
DIGITAL SYSTEMS INTERNATIONAL TO OPERATE UNDER NEW NAME,
MOSAIX, INC.
NEW IDENTITY REFLECTS FOCUS, COMMITMENT, AND DELIVERY OF A BROADER AND DEEPER
VALUE PROPOSITION IN ENTERPRISE CUSTOMER MANAGEMENT MARKET
REDMOND, Wash. November 26, 1996. Digital Systems International, Inc. (DSI)
(NASDAQ:DGTL) announced today that effective January 1, 1997, the company will
change its name to Mosaix, Inc., a name that more accurately represents the
company's broader customer management value proposition and more diverse product
and services offerings. The new corporate identity will encompass all DSI
operations, including DSI's United Kingdom subsidiary, Voicelink Systems Ltd.,
and ViewStar Corporation which, upon shareholder approval, will merge with DSI
in late December.
"Mosaix is a unique name and an accurate reflection of who we are and where
we're going in the enterprise customer management market," stated DSI President
and CEO, Pat Howard. "Mosaic refers to individual elements that integrate
seamlessly into a rational and intelligent pattern and present a clear picture
to the observer. The new Mosaix name reflects the myriad of interlocking
strategies that we can call upon to create intelligent solutions for companies
focused on providing total customer care as a key differentiator for their
businesses. Our call center systems and applications, our computer telephony
integration (CTI) expertise, and our workflow and business process automation
software and experience are all components that enable us to offer a higher and
broader value proposition to our customers than perhaps any other company in the
marketplace."
"Mosaix also establishes a clear identity for our partnering and channel
strategies. We believe that total customer care solutions will require the
products of more than one vendor to create a smart solution and that customers
will expect to buy both products and services from the most appropriate channel
to them, whether that is directly from Mosaix or from our system integrator and
value added reseller (VAR) partners or others who may use our software," added
Howard.
Digital Systems International, Inc. - 6464 185th Avenue N.E. -
Redmond, WA 98052-5032 - (206) 881-7544
<PAGE> 2
-more-
page 2
"And, finally, Mosaix also suggests the diversity of our employees--diversity in
skills, talents, and backgrounds that can be applied to delivering the most
profitable enterprise customer management applications in the industry. Our
customers have a fundamental need to feel confident about moving forward with
the right products, company, and people, and we believe this new identity will
convey that confidence."
DSI's NASDAQ stock symbol and web page address will change in January 1997. The
new trading symbol will be MOSX and the web page address will change from
www.dgtl.com, to www.mosaix.com.
DSI is a global leader in systems, software, and services that enable the
management of the electronic space between an organization and its customers.
The company has more than 1000 installations worldwide, supporting customer
management strategies in major financial institutions, utilities,
telecommunications companies, educational and government centers, healthcare,
and non-profit organizations. DSI has offices in the United States and United
Kingdom and value added resellers in North America, Australia, Latin America,
and Japan.
# # #
Digital Systems International, Inc. - 6464 185th Avenue N.E. -
Redmond, WA 98052-5032 - (206) 881-7544
