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Exhibit 10.3  

 
 

REGISTRATION RIGHTS AND STANDSTILL AGREEMENT    
    

        This Registration Rights and Standstill Agreement (this "Agreement") is made and entered into as of the 28th day
of April, 2006, by and between Digital Generation Systems, Inc., a Delaware corporation (the "Company"), and Scott K. Ginsburg. 

        This
Agreement is made pursuant to the terms of the Second Amended and Restated Agreement and Plan of Merger, dated as of April 14, 2006 among the Company, DG Acquisition Corp.
IV, a wholly owned subsidiary of the Company, and FastChannel Network, Inc., a Delaware corporation (the "Merger Agreement"), in order to permit
certain holders of Registrable Securities (as defined herein) to provide for an orderly sale of the shares so as to minimize an adverse affect of the market for such shares. 

        The
parties hereto hereby agree as follows: 

        1.     Definitions. 

        Capitalized
terms used and not otherwise defined herein that are defined in the Merger Agreement shall have the meanings given such terms in the Merger Agreement. As used in this
Agreement, the following terms shall have the following meanings: 

        "Effectiveness Date" means, with respect to the initial Registration Statement required to be filed hereunder, the 365th calendar day
following the Closing of the Merger and, with respect to any additional Registration Statements which may be required pursuant to Section 3(c), the 45th calendar day following the
date on which the Company first knows, or reasonably should have known, that such additional Registration Statement is required hereunder; provided,
however, in the event the Company is notified by the Commission that one of the above Registration Statements will not be reviewed or is no longer subject to further review and
comments, the Effectiveness Date as to such Registration Statement shall be the fifth Trading Day following the date on which the Company is so notified if such date precedes the dates required above. 

        "Annual Limitation" shall mean that each holder of Registrable Shares shall be entitled to sell no more than the number of Eligible Shares
during any 12-month period as calculated at the commencement of such period. 

        "Effectiveness Period" shall have the meaning set forth in Section 2(a). 

        "Eligible Shares" shall mean such number of Registrable Securities as is equal to four percent (4.0%) of the total number of shares of
Company Common Stock issued and outstanding at such time. 

        "Event" shall have the meaning set forth in Section 2(b). 

        "Event Date" shall have the meaning set forth in Section 2(b). 

        "Filing Date" means, with respect to the initial Registration Statement required hereunder, the 335th calendar day following the Closing
of the Merger and, with respect to any additional Registration Statements which may be required pursuant to Section 3(c), the 15th day following the date on which the Company
first knows, or reasonably should have known that such additional Registration Statement is required hereunder. 

        "Holder" or "Holders" means Scott K. Ginsburg and his permitted assigns. 

        "Indemnified Party" shall have the meaning set forth in Section 5(c) hereof. 

        "Indemnifying Party" shall have the meaning set forth in Section 5(c) hereof. 

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        "Losses" shall have the meaning set forth in Section 5(a). 

        "Proceeding" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened. 

        "Prospectus" means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. 

        "Registrable Securities" means, as of the date in question, (i) all of the shares of Common Stock held by the Holders immediately
following the Merger, and (iii) any securities issued or issuable upon any stock split, dividend or other distribution recapitalization or similar event with respect to the foregoing. 

        "Registration Statement" means the registration statements required to be filed hereunder and any additional registration statements
contemplated by Section 3(c), including (in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. 

        "Rule 415" means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule. 

        "Rule 424" means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule. 

        2.     Shelf Registration

        (a)   On
or prior to each Filing Date, the Company shall prepare and file with the Commission a "Shelf" Registration Statement covering the resale of 120% of the Eligible
Shares with respect to each year of the two (2) year Effectiveness Period (as defined below) for each Holder and/or his permitted assigns who has duly requested that such shares be registered
on such Filing Date for an offering to be made on a continuous basis pursuant to Rule 415; provided, however, that each Holder and his or its
affiliates, collectively, shall not be permitted to sell an amount greater than the Annual Limitation under registration statements filed pursuant to this Agreement. The Registration Statement shall
be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be
on another appropriate form in accordance herewith) and shall contain (unless otherwise directed by the Holders) substantially the "Plan of
Distribution" attached hereto as Annex A. Subject to the terms of this Agreement, the Company shall use its reasonable best
efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event prior to the applicable Effectiveness
Date, and shall use its reasonable best efforts to keep such Registration Statement continuously effective under the Securities Act for a period of two (2) years (the
"Effectiveness Period"). The Company shall immediately notify the Holders via facsimile or other equally promt means of the effectiveness of the
Registration Statement on the same day that the Company receives notification of the effectiveness from the Commission. Failure to so notify the Holder within 24 hours of the day that the
Company receives such notification shall be deemed an Event under Section 2(b). 

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        (b)   If:
(i) a Registration Statement is not filed on or prior to the applicable Filing Date (if the Company files a Registration Statement without affording the
Holders the opportunity to review and comment on the same as required by Section 3(a), the Company shall not be deemed to have satisfied this clause (i)), or (ii) the Company
fails to file with the Commission a request for acceleration in accordance with Rule 461 promulgated under the Securities Act (the "Acceleration
Request"), within five (5) Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission that a Registration
Statement will not be "reviewed," or not subject to further review, or (iii) prior to its Effectiveness Date, the Company fails to file a pre-effective amendment and
otherwise respond in writing to comments made by the Commission in respect of such Registration Statement within ten (10) Trading Days after the receipt of comments by or notice from the
Commission that such amendment is required in order for a Registration Statement to be declared effective, or (iv) a Registration Statement filed or required to be filed hereunder is not
declared effective by the Commission by its Effectiveness Date, or (v) after the Effectiveness Date, a Registration Statement ceases for any reason to remain continuously effective as to all
Registrable Securities for which it is required to be effective, or the Holders are not permitted to utilize the Prospectus therein to resell such Registrable Securities for ten
(10) consecutive Trading Days but no more than an aggregate of fifteen (15) Trading Days during any 12-month period (which need not be consecutive Trading Days), or
(vi) the Company fails to provide the Holder with a copy of the Acceleration Request within 24 hours of the time the Company provides such Acceleration Request to the Commission (any
such failure or breach being referred to as an "Event," and for purposes of clause (i), (iv) or (vi) the date on which such Event
occurs, or for purposes of clause (ii) the date on which such five Trading Day period is exceeded, or for purposes of clause (iii) the date which such 10 Trading Day period is exceeded,
or for purposes of clause (v) the date on which such 10 or 15 Trading Day period, as applicable, is exceeded being referred to as "Event Date"),
then in addition to any other rights the Holders may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event
shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to 1.0%
of the aggregate market value of the Eligible Shares to be registered by such Holder; provided, however, that notwithstanding the foregoing, the Holders of a majority of the Registrable Securities
then outstanding shall be entitled to waive such partial liquidated damages in whole or in part. If the Company fails to pay any partial liquidated damages not otherwise waived pursuant to this
Section 2(b) in full within seven (7) Trading Days after the date payable, the Company will pay interest thereon at a rate of 12.0% per annum (or such lesser maximum amount that is
permitted to be paid by applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The
partial liquidated damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of an Event. 

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        3.     Registration Procedures. 

        In
connection with the Company's registration obligations hereunder, the Company shall: 

        (a)   Not
less than five (5) Trading Days prior to the filing of each Registration Statement or any related Prospectus or any amendment or supplement thereto (including
any document that would be incorporated or deemed to be incorporated therein by reference), the Company shall, (i) furnish to each Holder copies of all such documents proposed to be filed,
which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the reasonable review of such Holders, and (ii) cause its officers and directors,
counsel and independent certified public accountants to promptly respond to such inquiries from Holders as shall be necessary, in the reasonable opinion of respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not file the Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a
majority of the Registrable Securities then outstanding shall reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than five (5) Trading
Days after the Holders have been so furnished copies of such documents; and provided further that the Company shall not be obligated to pay any partial liqiquidated damages with respect to any delay
in filing caused by this provision. Each Holder agrees to furnish to the Company a completed Questionnaire in the form attached to this Agreement as Annex
B (a "Selling Holder Questionnaire") not less than two Trading Days prior to the Filing Date or by the end of the fourth Trading
Day following the date on which such Holder receives draft materials in accordance with this Section 3. 

        (b)   (i) Prepare
and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the
Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as promptly
as reasonably possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and as promptly as reasonably possible provide the Holders true
and complete copies of all correspondence from and to the Commission relating to a Registration Statement; and (iv) comply in all material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement)
with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented. 

        (c)   If
during the Effectiveness Period, the number of Eligible Shares for any holder at any time exceeds the number of shares of Common Stock then registered in a
Registration Statement, then the Company shall file as soon as reasonably practicable but in any case prior to the applicable Filing Date, an additional Registration Statement covering the resale by
the Holders of not less than the actual number of such Eligible Shares. 

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        (d)   Notify
the Holders of Eligible Shares to be sold (which notice shall, pursuant to clauses (ii) through (vi) hereof, be accompanied by an instruction to
suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than five (5) Trading Days prior to
such filing) and (if requested by any such Person) confirm such notice in writing no later than one (1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will be a "review" of such Registration
Statement and whenever the Commission comments in writing on such Registration Statement (the Company shall provide true and complete copies thereof and all written responses thereto to each of the
Holders); and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any
other Federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information; (iii) of the issuance by the Commission or
any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; (v) of the occurrence of any event or passage of time that makes the
financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration
Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading; and (vi) the occurrence or existence of any pending corporate development with respect to the
Company that the Company's Board of Directors reasonably believes may be material and therefore, in the reasonable determination of the Company's Board, it is not in the best interests of the Company
to disclose such occurrence or event; provided that any and all of such information shall remain confidential to each Holder until such information otherwise becomes public, unless a Holder, after
consultation with its legal counsel, reasonably determines that such disclosure is required by law, in which case Holder shall provide the Company with the opportunity to make such disclosure;  provided,
further, notwithstanding each Holder's agreement to keep such information confidential, the
Holders make no acknowledgement that any such information is material, non-public information in advance of its receipt thereof 

        (e)   Use
its reasonable best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of a Registration
Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment. 

        (f)    Furnish
to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and
schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those
previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission. 

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        (g)   Promptly
deliver to each Holder, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement
thereto as such Persons may reasonably request in connection with resales by the Holder of Registrable Securities. Subject to the terms of this Agreement, the Company hereby consents to the use of
such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any
amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d). 

        (h)   Prior
to any resale of Registrable Securities by a Holder, use its reasonable best efforts to register or qualify or cooperate with the selling Holders in connection
with the registration or qualification (or exemption from the registration or qualification) of such Registrable Securities for resale by the Holder under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and
to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that the
Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is
not then so subject or file a general consent to service of process in any such jurisdiction. 

        (i)    If
requested by the Holders, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be
delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Merger Agreement, of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and registered in such names as any such Holders may request. 

        (j)    Upon
the occurrence of any event or circumstance contemplated by Section 3(d), as promptly as reasonably possible under the circumstances taking into account the
Company's good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a supplement or amendment, including a
post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance
with clauses (ii) through (vi) of Section 3(d) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall
immediately suspend use of such Prospectus. The Company shall use its reasonable best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable in light of all the
circumstances. The Company shall be entitled to exercise its right under this Section 3(j) to suspend the availability of a Registration Statement and Prospectus, subject to the payment of
partial liquidated damages pursuant to Section 2(b), for a period not to exceed 60 Trading Days (which need not be consecutive days) in any consecutive 12 month period. 

        (k)   Comply
with all applicable rules and regulations of the Commission. 

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        (l)    The
Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder
and, if required by the Commission, the person thereof that has voting and dispositive control over the Shares. During any periods that the Company is unable to meet its obligations hereunder with
respect to the registration of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days of the Company's request, any liquidated damages that
are accruing at such time as to such Holder only shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended as to such Holder only, until such information
is delivered to the Company. 

        4.     Registration Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the
Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the Trading
Market on which the Common Stock is then listed for trading, and (B) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including,
without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities and determination of the eligibility of the
Registrable Securities for investment under the laws of such jurisdictions as requested by the Holders), (ii) printing expenses (including, without limitation, expenses of printing certificates
for Registrable Securities and of printing prospectuses if the printing of prospectuses is reasonably requested by the holders of a majority of the Registrable Securities included in a Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so
desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In
addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions or, except to the extent
provided for in the Transaction Documents, any legal fees or other costs of the Holders. 

        5.     Indemnification. 

        (a)   Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold
harmless each Holder, the officers, directors, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a
margin call of Common Stock), investment advisors and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and
all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys' fees) and expenses (collectively, "Losses"), as
incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent, but only
to the extent, that (i) such untrue statements or omissions are based solely upon 

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information
regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder's proposed
method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event of the
type specified in Section 3(d)(ii)(vi), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or
defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(d). The Company shall notify the Holders promptly of the institution, threat or assertion of any
Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. 

        (b)   Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based
solely upon: (x) such Holder's failure to comply with the prospectus delivery requirements of the Securities Act or (y) any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading (i) to the extent, but only to the extent, that such
untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company specifically for inclusion in such Registration Statement or such Prospectus or
(ii) to the extent that (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for
use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing
by such Holder expressly for use in the Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (2) in the case of an occurrence of an event of the type specified in Section 3(d)(ii)-(vi), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(d).
In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation. 

        (c)   Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to
indemnity hereunder (an "Indemnified Party"), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the
"Indemnifying Party") in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such
notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of
competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have prejudiced the Indemnifying Party. 

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        An
Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed
promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall reasonably believe that a material conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of one separate
counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent
shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding. 

        Subject
to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten (10) Trading Days of written
notice thereof to the Indemnifying Party; provided, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for
which such Indemnified Party is not entitled to indemnification hereunder, determined based upon the relative faults of the parties. 

        (d)   Contribution. If a claim for indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party (by
reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a
result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement
or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for
in this Section was available to such party in accordance with its terms. 

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        The
parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall
be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the
Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, except in the
case of fraud by such Holder. 

        The
indemnity and contribution agreements contained in this Section 5 are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties. 

        6.     Standstill Provisions. Each Holder agrees that, until the earlier of the termination of this Agreement or the first
anniversary of this Agreement, without the Company's prior written consent, such Holder shall not: 

        (a)   acquire,
publicly announce an intention to acquire, publicly offer or propose to acquire, or agree to acquire, by purchase or otherwise, beneficial ownership of any
Common Stock, or rights or options to acquire any Common Stock if as a result of such acquisition such Holder would beneficially own or have the right to acquire Common Stock representing more than
50% of the issued and outstanding Common Stock; 

        (b)   make
any public announcement or proposal whatsoever with respect to a tender offer, merger or other business combination, sale or transfer of substantially all of the
assets, recapitalization, dividend, share repurchase, liquidation or other extraordinary corporate transaction with the Company or any other transaction that would result in a change of control of the
Company; or 

        (c)   make
a public request to the Company (or its directors, officers, stockholders, employees or agents) to take any action in respect of the foregoing matters. 

        7.     Miscellaneous. 

        (a)   Remedies. In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, each
Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of
any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law
would be adequate. 

        (b)   No Piggyback on Registrations. Without the consent of Holders of a majority of the Registrable Securities, neither the
Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in the Registration Statement other than the Registrable
Securities. 

        (c)   Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the
Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement. 

10

 

        (d)   Discontinued Disposition. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a
notice from the Company of the occurrence of any event of the kind described in Section 3(d), such Holder will forthwith discontinue disposition of such Registrable Securities under a
Registration Statement until such Holder's receipt of the copies of the supplemented Prospectus and/or amended Registration Statement, or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company shall use its reasonable best efforts to ensure that the
use of the Prospectus may be resumed as promptly as is practicable under the circumstances. The Company agrees and acknowledges that any periods during which the Holder is required to discontinue the
disposition of the Registrable Securities hereunder shall be subject to the provisions of Section 2(b). 

        (e)   Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an effective
Registration Statement covering all of the Eligible Securities for each Holder and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering
for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated
under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in
connection with the stock option or other employee benefit plans, then the Company shall send to each Holder a written notice of such determination and, if within fifteen days after the date of such
notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such holder requests to be registered;
provided, that, the Company shall not be required to register any Registrable Securities pursuant to this Section 6(e) that are eligible for resale pursuant to Rule 144(k) promulgated
under the Securities Act or that are the subject of a then effective Registration Statement. 

        (f)    Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of a majority
of the then outstanding Registrable Securities. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights
of Holders and that does not directly or indirectly affect the rights of other Holders may be given by Holders of all of the Registrable Securities to which such waiver or consent relates;  provided,
however, that the provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately preceding sentence. 

        (g)   Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall
be delivered to the addresses as set forth on the signature pages hereto in the manner set forth in the Merger Agreement. 

        (h)   Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted
assigns of each of the parties and shall inure to the benefit of each Holder. Each Holder shall be permitted, without the consent of the Company, to assign the registration rights granted hereunder to
any of his or its affiliates. The Company may not assign its rights or obligations hereunder without the prior written consent of all of the Holders of the then-outstanding Registrable
Securities. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under the Merger Agreement. 

11

 

        (i)    No Inconsistent Agreements. Neither the Company nor any of its subsidiaries has entered, as of the date hereof, nor shall
the Company or any of its subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof. Neither the Company nor any of its subsidiaries has previously entered into any agreement granting any registration
rights with respect to any of its securities to any Person that have not been satisfied in full. 

        (j)    Execution and Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed
shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature
shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original
thereof. In the event that the Merger Agreement is terminated, or the Merger is not consummated, this Agreement shall have no force or effect whatsoever. 

        (k)   Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement
shall be determined under the laws of the State of Texas. 

        (l)    Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. 

        (m)  Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no
way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 

        (n)   Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect
the meaning hereof. 

        (o)   Independent Nature of Holders' Obligations and Rights. The obligations of each Holder hereunder are several and not joint
with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in
any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert with respect to such obligations or the transactions contemplated by this
Agreement. Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to
be joined as an additional party in any proceeding for such purpose. 

******************** 

12

 

        IN
WITNESS WHEREOF, the parties have executed this Registration Rights and Standstill Agreement as of the date first written above. 

	

 	
 	

 	
 	

 
	 	 	DIGITAL GENERATION SYSTEMS, Inc.
	

 	
 	

By:	
 	

/s/ Omar A. Choucair
 Name: Omar A. Choucair

Title: Chief Financial Officer
	

 	
 	

 	
 	

 
	

 	
 	

 	
 	

 
	/s/ Scott K. Ginsburg
 Scott K. Ginsburg	 	 	 	 

13

 

ANNEX A 

Plan of Distribution  

        Each Selling Stockholder (the "Selling Stockholders") of the common stock ("Common
Stock") of Digital Generation Systems, Inc., a Delaware corporation (the "Company") and any of their pledgees, assignees
and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on the Trading Market or any other stock exchange, market or trading facility
on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling shares: 

	•
	ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers;

	•
	block
trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the
transaction;

	•
	purchases
by a broker-dealer as principal and resale by the broker-dealer for its account;

	•
	an
exchange distribution in accordance with the rules of the applicable exchange;

	•
	privately
negotiated transactions;

	•
	settlement
of short sales entered into after the date of this prospectus;

	•
	broker-dealers
may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;

	•
	a
combination of any such methods of sale;

	•
	through
the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; or

	•
	any
other method permitted pursuant to applicable law. 

        The
Selling Stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"),
if available, rather than or in addition to sales under this prospectus. 

        Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling
Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. Each Selling Stockholder does not expect these commissions and
discounts relating to its sales of shares to exceed what is customary in the types of transactions involved. 

        In
connection with the sale of our common stock or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions,
which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The Selling Stockholders may also sell shares of our common stock short and deliver
these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or
other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial
institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction). 

14

 

        The
Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in
connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any agreement or understanding, directly or indirectly, with any person to
distribute the Common Stock. 

        The
Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the shares. The Company has agreed to indemnify the Selling Stockholders
against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. 

        Because
Selling Stockholders may be deemed to be "underwriters" within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities
Act. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this
prospectus. Each Selling Stockholder has advised us that they have not entered into any agreements, understandings or arrangements with any underwriter or broker-dealer regarding the sale of the
resale shares. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the Selling Stockholders. 

        We
agreed to keep this prospectus effective until the earlier of (i) the date on which the shares may be resold by the Selling Stockholders without registration and without regard
to any volume limitations by reason of Rule 144(e) under the Securities Act or any other rule of similar effect or (ii) all of the shares have been sold pursuant to the prospectus or
Rule 144 under the Securities Act or any other rule of similar effect. The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state
securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with. 

        Under
applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with
respect to our common stock for a period of two business days prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of our common stock by the Selling Stockholders or any
other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the
time of the sale. 

15

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Exhibit 10.4  

 
 

LOCK-UP LETTER AGREEMENT    
    

May    ,
2006 

Digital
Generation Systems, Inc.

750 West John Carpenter Freeway

Suite 700

Irving, TX 75039 

	Re:
	FASTCHANNEL
NETWORK MERGER 

Ladies
and Gentlemen: 

        THIS
LOCK-UP LETTER AGREEMENT (this "Agreement") is made as of the            day of May, 2006 by and among
(i) Digital Generation Systems, Inc., a Delaware corporation (the "Company"), and (ii) CrossPoint Venture Partners and its
affiliates who are signatories hereto (collectively, "CrossPoint"). 

        As
you are aware, the Company and FastChannel Network, Inc. ("FCN") are consummating a merger transaction (the
"Merger") pursuant to that certain Second Amended and Restated Agreement and Plan of Merger, dated as of April 14, 2006 (the
"Merger Agreement"), as a result of which, among other things, the holders of FCN common and preferred stock (including CrossPoint) will receive shares
of common stock, par value $0.001 per share, of the Company (the "Common Stock"). 

        Because
CrossPoint's entry into this Agreement is a condition to the Company's obligations to consummate the transactions contemplated by the Merger Agreement, CrossPoint hereby
irrevocably agrees as follows with respect all shares of Common Stock it will receive in the Merger and any other shares of Common Stock now or hereafter beneficially owned by CrossPoint: 

        (i)    that
CrossPoint will not, without the prior written consent of the Company, directly or indirectly, during a period of at least one hundred eighty (180) days from
the date of this Agreement (the "Lock-Up Period"), issue, sell, offer or agree to sell, grant any option for the sale of, pledge, make any
short sale or maintain any short position, establish or maintain a "put equivalent position" (within the meaning of Rule 16-a-1(h) under the Securities Exchange Act of
1934, as amended), enter into any swap, derivative transaction or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock
(whether any such transaction is to be settled by delivery of Common Stock, other securities, cash or other consideration) or otherwise dispose of, any Common Stock (or any securities convertible
into, exercisable for or exchangeable for Common Stock) or interest therein of the Company; and 

        (ii)   that
CrossPoint authorizes the Company during the Lock-Up Period to cause the transfer agent (1) to decline to transfer and/or (2) to note
stop transfer restrictions on the transfer books and records of the Company and/or (3) to place appropriate legends on the certificates with respect to any shares of Common Stock and any
securities convertible into or exercisable or exchangeable for Common Stock for which the undersigned is the record holder and, in the case of any such share or securities for which the undersigned is
the beneficial but not the record holder, agrees to cause the record holder to cause the transfer agent (1) to decline to transfer and/or (2) to note stop transfer restrictions on such
books and records with respect to such shares or securities and/or (3) to place appropriate legends on the certificates. 

1

 

        The
undersigned parties further agree, from the date hereof until the end of the Lock-Up Period, that the undersigned will not exercise and will waive his, her or its rights,
if any, to require the Company to register its Common Stock and to receive notice thereof, and further acknowledges that the Company reserves the right to diligently pursue and prosecute any of the
undersigned acting in contravention of the foregoing. 

        The
undersigned parties hereby represent and warrant that the undersigned has full power and authority to enter into this Agreement, and that, upon request, the undersigned will execute
any additional documents necessary in connection with enforcement hereof. Any obligations of the undersigned shall be binding upon the successors and assigns of the undersigned. 

	 	 	Very truly yours,
	

 	
 	

CROSSPOINT VENTURE PARTNERS
	

 	
 	

By:	
 	

    
 Name:

Title:
	

 	
 	

[____________________________]
	

 	
 	

By:	
 	

    
 Name:

Title:
	

 	
 	

[____________________________]
	

 	
 	

By:	
 	

    
 Name:

Title:

Accepted and agreed as of 

the date first written above: 

DIGITAL
GENERATION SYSTEMS, INC. 

	By:	 	    
 Name:

Title:	 	 

2

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LOCK-UP LETTER AGREEMENT

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