Exhibit 10.1


 


THIRD AMENDMENT TO

THIRD AMENDED AND RESTATED CREDIT AGREEMENT


 


This THIRD AMENDMENT TO THIRD AMENDED AND RESTATED
CREDIT AGREEMENT (this “Amendment”), dated November 9, 2005, is
among DIGITAL GENERATION SYSTEMS, INC., a Delaware corporation (the “Borrower”),
each of the banks or other lending institutions which is or may from time to
time become a party to the Agreement (hereinafter defined) (each a “Lender”
and collectively, the “Lenders”), JPMORGAN CHASE BANK, N.A. (formerly
known as JPMorgan Chase Bank), a national banking association (“Chase”),
as administrative agent for the Lenders and the Issuing Bank (in such capacity,
together with its successors in such capacity, the “Administrative Agent”),
and as issuer of Letters of Credit under the Agreement (in such capacity,
together with its successors in such capacity, the “Issuing Bank”).


 


RECITALS:


 


A.            The Borrower, the Lenders, the
Issuing Bank and the Administrative Agent have entered into that certain Third
Amended and Restated Credit Agreement dated as of April 15, 2005, as
amended by that certain First Amendment to Third Amended and Restated Credit
Agreement dated as of May 10, 2005, as further amended by that certain
Second Amendment to Third Amended and Restated Credit Agreement dated as of August 5,
2005 (as amended, the “Agreement”).


 


B.            The parties hereto now desire to
amend the Agreement as provided herein.


 


NOW, THEREFORE, in consideration of the premises
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:


 


ARTICLE I


 


DEFINITIONS


 


1.1          DEFINITIONS.  Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.


 





















 


ARTICLE II


 


AMENDMENTS


 


2.1          AMENDED DEFINITIONS.


 


(a)           Effective as of the date hereof, the
last sentence of the definition of “Revolving Credit Commitment” set forth in Section 1.01
of the Agreement is hereby amended to read in its entirety as follows:


 


“As of November 9, 2005, the aggregate amount of the Lenders’
Revolving Credit Commitments is $4,500,000.”


 


(b)           Effective as of the date hereof, the
definition of “Applicable Margin” set forth in Section 1.01 of the
Agreement is hereby amended to read in its entirety as follows:


 


“Applicable
Margin” means, for any day, (a) with respect to the Loans comprising
each Eurodollar Borrowing, 4.25% per annum over the Adjusted LIBO Rate, (b) with
respect to the Loans comprising each ABR Borrowing, 2.75% per annum over the
Alternate Base Rate, and (c) with respect to Commitment Fees, 0.50% per
annum.


 


(c)           Effective as of the date hereof, the
definition of “Availability Period” set forth in Section 1.01 of the
Agreement is hereby amended to read in its entirety as follows:


 


“Availability
Period” means the period from and including the Effective Date of the
Agreement to November 9, 2005.


 


2.2          DELETED DEFINITION.  Effective as of the date hereof, Section 1.01
of the Agreement is hereby amended to delete the definition of “Permitted
Media DVX Payments” in its entirety.


 


2.3          COMMITMENTS.  Effective as of the date hereof, the
following sentence is hereby added to Section 2.01 of the Agreement to
read in its entirety as follows:


 


“From and after the expiration of the Availability Period, Borrower may
not reborrow amounts repaid in respect of the Revolving Loans, and the
obligation of Lenders to make any further Revolving Loans terminates as of the
expiration of the Availability Period.


 


2.4          DELETION OF INCREASED COMMITMENTS
PROVISION.  Effective as of the date
hereof, Section 2.15 of the Agreement is hereby deleted in its entirety.


 


2.5          RESTRICTED PAYMENTS.  Effective as of the date hereof, Section 8.06(a) of
the Agreement is hereby amended to read in its entirety as follows:


 


“(a)         The Borrower will
not, and will not permit any of its Subsidiaries to, declare or make, or agree
to pay or make, directly or indirectly, any Restricted Payment or incur any
obligation, (contingent or otherwise) to do so, except (i) the Borrower
may declare and pay dividends with respect to its capital stock payable solely
in additional shares of its common stock, and (ii) Subsidiaries may
declare and pay dividends to the Borrower or any Guarantor that is a Loan Party.”


 


2





















 


2.6          MEDIA DVX PAYMENTS. Effective November 9,
2005, Section 8.15 of the Agreement is hereby amended to read in its
entirety as follows:


 


“8.15 Media DVX Payments Not Permitted. Without in any way
limiting any other covenant set forth in this Agreement, the Borrower will not,
and will not permit any Subsidiary to make any payment of any kind whatsoever
(whether by means of any loan, advance, capital contribution, fee or otherwise)
or transfer any assets to Media DVX Acquisition Corp.”


 


2.7          CAPITAL EXPENDITURES.  Effective October 1, 2005, Section 9.05
of the Agreement is hereby amended to read in its entirety as follows:


 


“9.05      Capital Expenditures.  The Borrower will not permit the aggregate
Capital Expenditures of the Loan Parties to exceed (a) $400,000 during the
Borrower’s fiscal quarter ending December 31, 2005, or (b) $300,000
during each fiscal quarter of Borrower ending on March 31, 2006 or any
fiscal quarter of Borrower thereafter.


 


2.8          COMMITMENTS.  Effective as of the date hereof, Schedule 1.01
to the Agreement is hereby amended to read in its entirety as set forth on
Annex 1 hereto.


 


ARTICLE III


 


WAIVER


 


3.1          WAIVER. Borrower has informed
Administrative Agent and Lenders that Borrower violated a financial covenant in
the Agreement as hereinafter described. 
Borrower has requested that the Administrative Agent and Lenders waive,
and Administrative Agent and Lenders have agreed to waive the violation of the
Senior Leverage Ratio, set forth in Section 9.02 of the Agreement
for the fiscal quarter ending September 30, 2005.


 


3.2          ADDITIONAL LIMITATIONS ON WAIVER.
The waiver referenced in this Article is only for the specific financial
covenant and time period set forth in this Article.  The waiver referenced in this Article is
a one-time waiver, does not concern compliance (or the effect of
non-compliance) with any other provision of the Agreement, and does not amend
or modify the Agreement.  The waiver
referenced in this Article does not create any obligation on the part of
Administrative Agent or any Lenders to grant a similar waiver or waivers under
similar or dissimilar future circumstances. 
Except as expressly limited by the waiver referenced in this Article,
Administrative Agent or any Lenders reserve the right to enforce each provision
of the Agreement and the other Loan Documents in strict accordance with the
terms and conditions thereof.


 


ARTICLE IV


 


AMENDMENT FEE


 


4.1          AMENDMENT FEE. The Borrower
agrees to pay to the Administrative Agent for the account of each Lender (pro
rata in accordance with the Total Commitment of each Lender) an Amendment Fee
in the amount of the Total Commitment times 0.40%.


 


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ARTICLE V


 


CONDITIONS PRECEDENT


 


5.1          CONDITIONS.  The effectiveness of this Amendment is
subject to the satisfaction of the following conditions precedent:


 


(a)           Fees and Expenses.  Borrower shall have paid all fees, costs and
expenses payable to Lenders or Administrative Agent under the Agreement or any
other agreement or arrangement, including without limitation the Amendment Fee
referenced in Section 4.1 of this Amendment and those referred to in Section 12.03
of the Agreement and in any fee letter.


 


(b)           Representations and Warranties.  The representations and warranties contained
herein and in all other Loan Documents, as amended hereby, shall be true and
correct as of the date hereof as if made on the date hereof.


 


(c)           No Default.  After giving effect to this Amendment, no
Default shall have occurred and be continuing.


 


(d)           Revolving Credit Notes.
Borrower shall have executed and delivered to Administrative Agent the amended
and restated Revolving Credit Notes provided by Administrative Agent to
Borrower for execution.


 


ARTICLE VI


 


RATIFICATIONS, REPRESENTATIONS AND WARRANTIES


 


6.1          RATIFICATIONS.  The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement and the other Loan
Documents are ratified and confirmed and shall continue in full force and
effect.  Borrower agrees that the
Agreement, as amended hereby, and the other Loan Documents shall continue to be
legal, valid, binding and enforceable in accordance with their respective
terms.


 


6.2          REPRESENTATIONS AND WARRANTIES.  Borrower hereby represents and warrants to
the Administrative Agent and the Lenders that (1) the execution, delivery,
and performance by the Borrower and the Guarantors of this Amendment and
compliance with the terms and provisions hereof have been duly authorized by
all requisite action on the part of each such Person and do not and will not (a) violate
or conflict with, or result in a breach of, or require any consent under (i) the
articles of incorporation, certificate of incorporation, bylaws, partnership
agreement or other organizational documents of any such Person, (ii) any
applicable law, rule, or regulation or any order, writ, injunction, or decree
of any Governmental Authority or arbitrator, or (iii) any material
agreement or instrument to which any such Person is a party or by which any of
them or any of their property is bound or subject, (2) after giving effect
to this Amendment,


 


4





















 


the representations and warranties contained in the
Agreement, as amended hereby, and any other Loan Document are true and correct
on and as of the date hereof as though made on and as of the date hereof, and (3) after
giving effect to this Amendment, no Default has occurred and is continuing.


 


ARTICLE VII


 


MISCELLANEOUS


 


7.1          SURVIVAL OF REPRESENTATIONS AND
WARRANTIES.  All representations and
warranties made in this Amendment or any other Loan Document shall survive the
execution and delivery of this Amendment, and no investigation by the
Administrative Agent or any Lender or any closing shall affect the
representations and warranties or the right of the Administrative Agent or any
Lender to rely upon them.


 


7.2          REFERENCE TO AGREEMENT.  Each of the Loan Documents, including the
Agreement and any and all other agreements, documents, or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to
the terms of the Agreement as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Agreement shall mean a reference to the
Agreement as amended hereby.


 


7.3          EXPENSES.  Borrower agrees to pay on demand all
reasonable out-of-pocket costs and expenses incurred by the Administrative
Agent in connection with the preparation, negotiation, and execution of this
Amendment and any and all amendments, modifications, and supplements thereto,
including without limitation the reasonable costs and fees of the Administrative
Agent’s legal counsel, and all out-of-pocket costs and expenses incurred by the
Administrative Agent and the Lenders, or any of them, in connection with the
enforcement or preservation of any rights under the Agreement, as amended
hereby, or any other Loan Document, including without limitation the costs and
fees of the Administrative Agent’s legal counsel and of the respective Lenders’
legal counsel.


 


7.4          SEVERABILITY.  Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.


 


7.5          APPLICABLE LAW. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE OTHER LOAN DOCUMENTS,
THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS SHALL BE DEEMED TO HAVE BEEN MADE
AND TO BE PERFORMABLE IN DALLAS, DALLAS COUNTY, TEXAS AND SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.


 


7.6          SUCCESSORS AND ASSIGNS.  This Amendment is binding upon and shall
inure to the benefit of the Borrower, the Lenders, the Issuing Bank, the
Administrative Agent and their respective successors and assigns, except the
Borrower shall not assign or transfer any of its rights or obligations
hereunder without the prior written consent of the Administrative Agent.


 


5





















 


7.7          COUNTERPARTS.  This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.  This Amendment shall not be
effective unless and until the Administrative Agent, the requisite Lenders, the
Borrower and the Guarantors have each executed and delivered a counterpart
hereof.


 


7.8          HEADINGS.  The headings, captions, and arrangements used
in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.


 


7.9          RELEASE OF CLAIMS.  The Borrower and the Guarantors each hereby
acknowledge and agree that none of them has any and there are no defenses,
counterclaims, offsets, cross-complaints, claims or demands of any kind or
nature whatsoever to or against the Administrative Agent, the Issuing Bank, any
of the Lenders or the terms and provisions of or the obligations of the
Borrower, any Guarantor or any Subsidiary created or evidenced by the Agreement
or any of the other Loan Documents, and that neither the Borrower nor any of
the Guarantors has any right to seek affirmative relief or damages of any kind
or nature from the Administrative Agent, the Issuing Bank, or any of the
Lenders.  To the extent any such
defenses, counterclaims, offsets, cross-complaints, claims, demands or rights
exist, Borrower and the Guarantors each hereby waives, and hereby knowingly and
voluntarily releases and forever discharges the Administrative Agent, the
Issuing Bank, each of the Lenders and their respective predecessors, officers,
directors, agents, attorneys, employees, successors and assigns, from all
possible claims, demands, actions, causes of action, defenses, counterclaims,
offsets, cross-complaints, damages, costs, expenses and liabilities whatsoever,
whether known or unknown, such waiver and release being with full knowledge and
understanding of the circumstances and effects of such waiver and release and
after having consulted legal counsel with respect thereto.


 


7.10        ENTIRE AGREEMENT.  THIS AMENDMENT AND ALL OTHER INSTRUMENTS,
DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS
AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO REGARDING
THIS AMENDMENT AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS
AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO.  THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES HERETO.


 


[REMAINDER OF PAGE INTENTIONALLY BLANK]


 


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IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed by their respective authorized officers as
of the day and year first above written.


 


	
   

  	
  DIGITAL
  GENERATION SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ OMAR A.
  CHOUCAIR

  
	
   

  	
   

  	
  Omar A. Choucair

  
	
   

  	
   

  	
  Chief Financial Officer and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE BANK, N.A.

  
	
   

  	
  (formerly
  known as JPMorgan Chase Bank),

  
	
   

  	
  as a Lender,
  as Issuing Bank and as

  
	
   

  	
  Administrative
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DAVID E.
  NOLET

  
	
   

  	
   

  	
  David E. Nolet

  
	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMERICA
  BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DAVID
  WHITING

  
	
   

  	
   

  	
  David Whiting

  
	
   

  	
   

  	
  Senior Vice President

  



 


SIGNATURE PAGE


 





















 


Each of the undersigned Guarantors hereby (a) consents
and agrees to this Amendment, and (b) agrees that its Guaranty shall
continue to be the legal, valid and binding obligation of such Guarantor
enforceable against such Guarantor in accordance with its terms.


 


	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  DIGITAL
  GENERATION SYSTEMS OF NEW

  
	
   

  	
  YORK, INC.,

  
	
   

  	
  a New York
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ OMAR A.
  CHOUCAIR

  
	
   

  	
   

  	
  Omar A. Choucair

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STARGUIDE DIGITAL NETWORKS, INC.,

  
	
   

  	
  a Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ OMAR A.
  CHOUCAIR

  
	
   

  	
   

  	
  Omar A.
  Choucair

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STARCOM MEDIATECH, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ OMAR A.
  CHOUCAIR

  
	
   

  	
   

  	
  Omar A.
  Choucair

  
	
   

  	
   

  	
  President

  



 





















 


	
   

  	
  CORPORATE COMPUTER SYSTEMS

  
	
   

  	
  CONSULTANTS, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ OMAR A.
  CHOUCAIR

  
	
   

  	
   

  	
  Omar A.
  Choucair

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CORPORATE COMPUTER SYSTEMS, INC.,

  
	
   

  	
  (d/b/a Musicam
  USA),

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ OMAR A.
  CHOUCAIR

  
	
   

  	
   

  	
  Omar A.
  Choucair

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MUSICAM EXPRESS, L.L.C.,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ OMAR A.
  CHOUCAIR

  
	
   

  	
   

  	
  Omar A.
  Choucair

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DG SYSTEMS ACQUISITION CORPORATION,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ OMAR A.
  CHOUCAIR

  
	
   

  	
   

  	
  Omar A.
  Choucair

  
	
   

  	
   

  	
  President

  



 





















 


	
   

  	
  DG SYSTEMS ACQUISITION II CORPORATION,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ OMAR A.
  CHOUCAIR

  
	
   

  	
   

  	
  Omar A.
  Choucair

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DG SYSTEMS ACQUISITION III CORPORATION,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ OMAR A.
  CHOUCAIR

  
	
   

  	
   

  	
  Omar A.
  Choucair

  
	
   

  	
   

  	
  President

  



 





















 


ANNEX 1

TO

THIRD AMENDMENT TO


THIRD
AMENDED AND RESTATED

CREDIT AGREEMENT


 


SCHEDULE 1.01


 


LENDERS AND COMMITMENTS


 


	
  Lender

  	
   

  	
  Revolving Credit

  Commitment

  	
   

  	
  Term Loan

  Commitment

  	
   

  	
  Total Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JPMorgan
  Chase Bank

  	
   

  	
  $

  	
  1,875,000

  	
   

  	
  $

  	
  5,208,333.33

  	
   

  	
  $

  	
  7,083,333.33

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Comerica
  Bank

  	
   

  	
  $

  	
  1,875,000

  	
   

  	
  $

  	
  5,208,333.33

  	
   

  	
  $

  	
  7,083,333.33

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MetroBank,
  N.A.

  	
   

  	
  $

  	
  750,000

  	
   

  	
  $

  	
  2,083,333.33

  	
   

  	
  $

  	
  2,833,333.33

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  4,500,000

  	
   

  	
  $

  	
  12,500,000

  	
   

  	
  $

  	
  17,000,000

  	
   

  



 


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