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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
Date of Report (Date of earliest event reported) November 8, 1996
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Digital Generation Systems, Inc.
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(Exact name of registrant as specified in charter)
California 0-27644 94-3140772
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
875 Battery Street, San Francisco, California 94111
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 276-6600
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Not applicable.
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
The registrant, PDR Productions, Inc, a New York corporation ("PDR"),
and Pat DeRosa, an officer and director and the sole stockholder of PDR, are
parties to a Stock Purchase Agreement dated as of October 15, 1996 (the
"Purchase Agreement"). On November 8, 1996, the registrant acquired all of the
outstanding stock of PDR from Mr. DeRosa pursuant to the Purchase Agreement.
The negotiated value of the PDR shares acquired was approximately $9.0 million,
subject to adjustment in accordance with the Purchase Agreement based on the
results of a post-closing audit of PDR. The registrant paid for the PDR shares
acquired by delivering $6.5 million in cash from its working capital and
issuing to Mr. DeRosa a promissory note bearing interest at 8.0% per annum
payable at maturity and maturing one year from the closing date.
Prior to this transaction, no material relationship existed between
PDR and the registrant or any of its affiliates, any officer or director of the
registrant, or any associate of any such director or officer.
PDR is engaged in the business of media duplication and distribution,
and the registrant intends to continue this business.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
It is currently impracticable for the registrant to provide the
financial statements required by Item 7(a). The registrant intends to file all
required financial statements on or before January 21, 1997.
(b) Pro Forma Financial Information.
It is currently impracticable for the registrant to provide the pro
forma financial information required by Item 7(b). The registrant intends to
file all required pro forma financial information on or before January 21,
1997.
(c) Exhibits.
2.1* Stock Purchase Agreement dated as of October 15,
1996, among Digital Generation Systems, Inc., PDR
Productions, Inc. and Pat DeRosa.
2.2** Amendment to Stock Purchase Agreement dated November
8, 1996, among Digital Generation Systems, Inc., PDR
Productions, Inc. and Pat DeRosa.
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* Incorporated by reference to Exhibit 10.25 to the registrant's
Quarterly Report on Form 10-Q filed November 13, 1996.
** Filed herewith.
SIGNATURES
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 GENERATION SYSTEMS, INC.
(Registrant)
Date: November 22, 1996 By: /s/ Thomas P. Shanahan
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Thomas P. Shanahan,
Chief Financial Officer
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EXHIBIT 2.2
AMENDMENT TO
STOCK PURCHASE AGREEMENT
This Amendment to Stock Purchase Agreement is dated this 8th day of
November, 1996 by and among Digital Generation Systems, Inc. ("DG Systems"),
PDR Productions, Inc. ("PDR"), Pat DeRosa (the "Stockholder").
WITNESSETH
WHEREAS, on October 15, 1996, DG Systems, PDR and the Stockholder
entered into a Stock Purchase Agreement (the "Stock Purchase Agreement")
whereby DG Systems agreed to purchase from the Stockholder 100% of the issued
and outstanding shares of PDR; and
WHEREAS, DG Systems' due diligence review also reveals that (despite
representations in the Stock Purchase Agreement that there was no litigation
pending) there is currently pending copyright infringement litigation
instituted by Kenneth Youngblood, et. al. against PDR in the United States
District Court, Southern District of New York (the "Copyright Infringement
Litigation"); and
WHEREAS, as a prerequisite to completing the transaction under the
Stock Purchase Agreement, DG Systems is requiring that this amendment be
executed and delivered whereby DG Systems is fully indemnified against
liability resulting from or relating to the Copyright Infringement Litigation;
and
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WHEREAS, the parties have agreed to execute this amendment to induce
DG Systems to complete the transaction pursuant to the Stock Purchase
Agreement.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, it is agreed as follows:
1. The Indemnification Obligations of PDR, Stockholder as set
forth in Article XII of the Stock Purchase Agreement shall
apply to all Claims (as defined in Section 12.1 of the Stock
Purchase Agreement) relating to the Copyright Infringement
Litigation.
2. The Threshold, Indemnity Limit and Expiration Period (as such
as term are defined in Section 12.3 (a) (b) and (c) of the
Stock Purchase Agreement), shall not apply to any Claims
relating to the Copyright Infringement Litigation it being the
intent that DG Systems shall be fully, completely and forever
indemnified as to any of the foregoing.
3. Except as set forth herein, all of the terms of the Stock
Purchase Agreement shall remain in full force and effect.
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In Witness Whereof, the undersigned have executed this agreement as of
the date first written above.
WITNESS OR ATTEST: DIGITAL GENERATION SYSTEMS, INC.
BY: /s/ HENRY W. DONALDSON
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Name: Henry W. Donaldson
Title: Chief Executive Officer
PDR PRODUCTIONS, INC.
BY: /s/ PAT DEROSA
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Name: Pat DeRosa
Title: President
/s/ PAT DEROSA
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Pat DeRosa
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