<PAGE> 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).
<PAGE> 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!
<PAGE> 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!
<PAGE> 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!
<PAGE> 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!
<PAGE> 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!
<PAGE> 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!
<PAGE> 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!
<PAGE> 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!
<PAGE> 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!
<PAGE> 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!
<PAGE> 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!
<PAGE> 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!
<PAGE> 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!
<PAGE> 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!
<PAGE> 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!
<PAGE> 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!
<PAGE> 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!
<PAGE> 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!
<PAGE> 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
<PAGE> 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.
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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.
<PAGE> 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.
<PAGE> 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
<PAGE> 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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 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:
<TABLE>
<CAPTION>
EQUITY PERCENTAGE OF
SECURITIES EQUITY-SECURITIES
BENEFICIALLY BENEFICIALLY
NAME OWNED (#) OWNED (%)
---- --------- -----------------
<S> <C> <C>
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
</TABLE>
(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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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.
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 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
