**Exhibit10.1**

**THISAGREEMENT IS SUBJECT TO ARBITRATION**
| STATE OF FLORIDA     |   | § |
|----------------------|--------|--------|
|                 |   | § |
| COUNTY OF PALM BEACH |   | § |

**EMPLOYMENT AGREEMENT**

THIS EMPLOYMENT AGREEMENT is made and entered into asof the 31st day of August, 2004, by and between Digital Generation Systems,Inc., a Delaware corporation (the “Company”), and Pamela Maythenyi (the “Employee”).

WHEREAS, the Company desires to enter into anemployment relationship with the Employee on certain terms and conditions asset forth herein; and

WHEREAS, the Employee is willing to accept suchemployment;

NOW, THEREFORE, the parties hereto, in considerationof the mutual covenants and promises hereinafter contained, do hereby agree asfollows:

# 1.             Employment. The Company hereby employs Employee and Employee hereby acceptsemployment by the Company, on the terms and subject to the conditionshereinafter set forth.

# 2.             Duties. The Employee’s principal duties and responsibilities shall be thoseduties assigned to Employee from time to time by the Chief Executive Officer orChief Financial Officer of the Company, or such other persons specified by suchofficers, provided such duties and responsibilities are commensurate withEmployee’s title as Senior Vice President. Employee agrees to perform such services and duties and hold suchoffices as may be assigned to her from time to time by the Company and todevote substantially her full time, energies and best efforts to theperformance thereof to the exclusion of all other business activities.  Notwithstanding the foregoing, the Companyagrees that Employee shall be permitted to attend approximately five meetingsper year on behalf of Heads of Production Associates, Inc., a Floridacorporation owned in part by Employee, at Employer’s expense.  The Company shall, for a minimum of threeyears, maintain an office in Boca Raton, Florida, and Employee shall beassigned to work at such office.

# 3.             Term.  Theterm of employment shall begin on the date hereof and continue until terminatedas herein provided.

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# 4.             Salary and Other Compensation.  As compensation for the services to berendered by the Employee to the Company pursuant to this Agreement, theEmployee shall be paid the following compensation and other benefits:

## (a)           Salary:  (i) $160,000 from the date hereof until thefirst anniversary of the date hereof, (ii) $170,000 from the first anniversaryuntil the second anniversary of the date hereof, and (iii) $180,000 from thesecond anniversary until the third anniversary of the date hereof, each payablein equal monthly installments in arrears, or such higher compensation as may beestablished by the Company from time to time. Should the Employee become “Partially Disabled,” which for purposes ofthis subsection means the inability because of any physical or emotionalillness to perform her assigned duties under this Agreement for 40 hours perweek, the Employee’s salary shall be adjusted based on the percentage of a40-hour work week during which Employee is able to perform her duties.  If the Employee, during any period of PartialDisability, receives any periodic payments representing lost compensation underany health and accident policy or under any salary continuation insurancepolicy, the premiums for which have been paid by the Company, the amount ofsalary that the Employee would be entitled to receive from the Company duringthe Partial Disability shall be decreased by the amounts of such payments.  Sick days taken by Employee in accordancewith the Company’s sick day policies for its other employees shall not beconsidered a Partial Disability.

## (b)           Bonus:  Employee shall be eligible to receive anannual bonus in an amount up to $30,000 per year, provided Employer (or thedivision of the Company to which Employee devotes most of her time) achieves atleast that percentage of the budgeted revenues indicated on Exhibit A,as such Exhibit may be amended by mutual agreement of the parties.  The budget attached as Exhibit A is forcalendar year 2005; the parties agree to negotiate in good faith for budgetedrevenues for subsequent years.

## (c)           Stock Options:  The Company shall grant to the Employee stockoptions under its 1992 Stock Option Plan, each exercisable into 25,000 sharesof common stock of the Company, at an exercise price per share equal to the fairmarket value on the respective date of grant: (i) on the date hereof and (ii) if Employee’s employment has notterminated prior to such time, on each of the first two anniversaries of thedate hereof.

## (d)           Employee BenefitPlans: The Employee shall be eligible to participate, to the extent she may beeligible, in any profit sharing, retirement, insurance or other employeebenefit plan maintained by the Company.

# 5.             Vacations and Leave.  The Employee shall be entitled to the samevacation and leave time as the other employees of the Company performingsimilar functions.  At a minimum,Employee shall be entitled to not less than four weeks paid vacation.

# 6.             Non-Disclosure of Confidential Information.  The Employee acknowledges that in and as aresult of her employment by the Company, she will be making use of, acquiring,and/or adding to confidential information of a special and unique nature andvalue relating to such matters as the Company’s patents, copyrights,proprietary information, trade secrets, systems, procedures, manuals,confidential reports, and lists of customers (which are deemed for all purposesconfidential and proprietary), as well as the nature and type of servicesrendered by the

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# Company, the equipment and methods used and preferredby the Company’s customers, and the fees paid by them.  As a material inducement to the Company toenter into this Agreement and to pay to Employee the compensation stated inSection 4, Employee covenants and agrees that she shall not, at any time duringor following the term of her employment, directly or indirectly divulge ordisclose for any purpose whatsoever any confidential information that has beenobtained by, or disclosed to, her as a result of her employment by the Company.

# 7.             Covenants Against Competition.  The Employee acknowledges that the servicesshe is to render are of a special and unusual character with a unique value tothe Company, the loss of which cannot adequately be compensated by damages inaction at law.  In view of the uniquevalue to the Company of the services of Employee because of the confidentialinformation to be obtained by or disclosed to Employee, as hereinabove setforth, and as a material inducement to the Company to enter into this Agreementand to pay to Employee the compensation stated in Section 4, Employee covenantsand agrees that during Employee’s employment and for a period of four yearsafter she ceases to be employed by the Company for any reason, she will not,except as otherwise authorized by this Agreement, compete with the Company orany affiliate of the Company, solicit the Company’s customers or the customersof any affiliate or directly or indirectly solicit for employment any of theCompany’s employees.  Notwithstanding theforegoing, Employee shall have the right to be employed by, or provideconsulting services to, an advertising agency so long as such employment orconsulting services do not relate to advertising and production databaseinformation services.  Furthermore, therestrictive covenants set forth in this Section 7 shall be void andinapplicable in the event this Agreement is terminated by Employee due to amaterial breach by the Company that is not remedied within thirty (30) daysafter written notice thereof.  For purposesof this Section:

## (a)           the term “compete”means engaging in the same or any substantially similar business as the Companyor any of its affiliates in any manner whatsoever (other than as a passiveinvestor), including without limitation, as a proprietor, partner, investor,shareholder, director, officer, employee, consultant, independent contractor,or otherwise;

## (b)           the term “affiliate”means any legal entity that directly or indirectly through one or moreintermediaries controls, is controlled by, or is under the common control withthe Company; and

## (c)           the term “customers”means all persons to whom the Company or any of its affiliates has sold anyproduct or service whether or not for compensation within a period of fiveyears prior to the time Employee ceases to be employed by the Company.

# 8.             Reasonableness of Restrictions

## (a)           The Employee hascarefully read and considered the provisions of Sections 6 and 7, and, havingdone so, agrees that the restrictions set forth in these sections, including,but not limited to, the time period of restriction and geographical areas ofrestriction are fair and reasonable and are reasonably required for theprotection of the interests of the Company and its parent or subsidiarycompanies, officers, directors, shareholders and other Employees.

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## (b)           In the event that,notwithstanding the foregoing, any of the provisions of Sections 6 and 7 shallbe held to be invalid or unenforceable, the remaining provisions thereof shallnevertheless continue to be valid and enforceable as though the invalid orunenforceable parts had not been included therein.  In the event that any provision of Sections 6or 7 relating to the time period and/or the areas of restriction and/or relatedaspects shall be declared by a court of competent jurisdiction to exceed themaximum restrictiveness such court deems reasonable and enforceable, the timeperiod and/or areas of restriction and/or related aspects deemed reasonable andenforceable by the court shall become and thereafter be the maximum restrictionin such regard, and the restriction shall remain enforceable to the fullestextent deemed reasonable by such court.

# 9.             Remedies for Breach of Employee’s Covenants ofNon-Disclosure and Noncompetition. In the event of a breach of any of the covenants in Sections 6 and 7,the Company shall have the right to seek monetary damages for any suchbreach.  In addition, in the event of abreach or threatened breach of any of the covenants in Section 6 and 7, theCompany shall have the right to seek equitable relief, including specificperformance by means of an injunction against the Employee or against theEmployee’s partners, agents, representatives, servants, employers, employees,family members and/or any and all persons acting directly or indirectly by orwith her, to prevent or restrain any such breach.

# 10.           Termination.  Employment of the Employee under thisAgreement may/will be terminated:

## (a)           By the Employee’sdeath.

## (b)           If the Employee isTotally Disabled.  For the purposes ofthis Agreement, the Employee will be totally disabled if she is “totallydisabled” as defined in and for the period necessary to qualify for benefitsunder any disability income insurance policy and any replacement policy orpolicies covering Employee and the Employee has been declared to be totallydisabled by the insurer for a period of three consecutive months.

## (c)           When the Employeereaches mandatory retirement age under any retirement policy applicable toEmployee.

## (d)           By mutual agreementof the Employee and the Company.

## (e)           By the dissolutionand liquidation of the Company (other than as part of a reorganization, merger,consolidation or sale of all or substantially all of the assets of the Companywhereby the business of the Company is continued).  In such event, the restrictive covenants inSection 7 above shall be inapplicable with respect to Employee.

## (f)            By the Company forJust Cause.  This Agreement and theEmployee’s employment with the Company may be terminated for “Just Cause” atany time in accordance with subsection (h) of this section.  For purposes of this Agreement, Just Causeshall mean only the following:  (i) aconviction of or a plea of guilty or *nolocontendre* by the Employee to a felony or misdemeanor involvingfraud, embezzlement, theft or dishonesty or other criminal conduct, (ii)habitual neglect of the Employee’s duties or failure by the Employee to performor observe any substantial lawful obligation of such employment that is notremedied within thirty

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## (30) daysafter written notice thereof from the Company or its Board of Directors or(iii) any material breach by the Employee of this Agreement or written policiesof the Company applicable to employees generally that can be remedied and isnot remedied within thirty (30) days after written notice thereof from theCompany or its Board of Directors. Should the Employee dispute whether she was terminated for Just Cause,then the Company and the Employee shall enter immediately into bindingarbitration pursuant to the Commercial Arbitration Rules of the AmericanArbitration Association, the cost of which shall be the non-prevailing party.

## (g)           At the election ofthe Employee upon six months advance notice or upon material breach of theterms hereof by the Company.

## (h)           Notice ofTermination.  Any purported terminationby the Employee’s employment, either by the Company for Just Cause or by theEmployee pursuant to Section 10(g), shall be communicated by a written Noticeof Termination to the other party hereto. Such notice shall indicate a specific termination provision in thisAgreement which is relied upon, recite the facts and circumstances claimed toprovide the basis for such termination and specify the “Date of Termination.”  As used in this Agreement, Date ofTermination shall mean the date specified in the Notice of Termination, whichdate shall not be less than thirty (30) nor more than sixty (60) days from thedate the Notice of Termination is given. If within thirty (30) days from the date the Notice of Termination isgiven, the party receiving such notice notifies the other party that a disputeexists concerning such termination, the Date of Termination shall be the dateon which the dispute is finally resolved. The Date of Termination shall be extended by a notice of dispute only ifsuch notice is given in good faith and the party giving such notice pursues theresolution of such dispute by entering immediately into binding arbitrationpursuant to the Commercial Arbitration Rules of the American ArbitrationAssociation, the cost of which shall be borne by the non-prevailing party.

## (i)            At the end of threeyears from the date hereof.

## (j)            In the eventEmployee’s employment is terminated by the Company without Just Cause, or forany reason not covered by subsections 10(a) through 10(g) above, the Companyshall pay to Employee the amount otherwise payable to Employee for theremainder of the term this Agreement in accordance with Employer’s normalpayroll practices as though Employee were employed by the Company through theend of such term.  Furthermore, therestrictive covenants in Section 7 shall become inapplicable.

# 11.           Payments Upon Termination.  If the Employee is terminated upon deathpursuant to 10(a), Total Disability pursuant to Section 10(b), retirementpursuant to Section 10(c), mutual agreement of Employer and Employeepursuant to Section 10(d), dissolution and liquidation of the Companypursuant to Section 10(e), Just Cause pursuant to Section 10(f), atEmployee’s election pursuant to Section 10(G), or time certain pursuant toSection 10(i), the Employee shall be entitled to all arrearages of salaryand expenses as of the Date of Termination but shall not be entitled to furthercompensation.

# 12.           Resignation Upon Termination.  In the event of termination of this Agreementother than for death, the Employee hereby agrees to resign from all positionsheld in the

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# Company, including without limitations any position asa director, officer, agent, trustee or consultant of the Company or anyaffiliate of the Company.  For thepurposes of this provision, the term “affiliate” has the same meaning as inSection 7.

# 13.           Waiver.  A party’s failure to insist on compliance orenforcement of any provision of this Agreement, shall not affect the validityor enforceability or constitute a waiver of future enforcement of thatprovision or of any other provision of this Agreement by that party or anyother party.

# 14.           Governing Law.  This Agreement shall in all respects besubject to, and governed by, the laws of the State of Florida.  Venue for any litigation or arbitrationarising out of this Agreement shall be proper only in Palm Beach County,Florida.  The parties hereto herebyconsent to the personal jurisdiction of the state and Federal courts situatedin Palm Beach County, Florida.

# 15.           Severability.  The invalidity or unenforceability of anyprovision in the Agreement shall not in any way affect the validity orenforceability of any other provision, and this Agreement shall be construed inall respects as if such invalid or unenforceable provision had never been inthe Agreement.

# 16.           Notice.  Any and all notices required or permittedherein shall be deemed delivered if delivered personally or if mailed byregistered or certified mail to the Company at its principal place of businessand to the Employee at the address hereinafter set forth following the Employee’ssignature, or at such other address or addresses as either party may hereafterdesignate in writing to the other.

# 17.           Amendments.  This Agreement may be amended at any time bymutual consent of the parties hereto, with any such amendment to be invalidunless in writing, signed by the Company and the Employee.

# 18.           Entire Agreement.  This Agreement, along with the Companyhandbook to the extent it does not specifically conflict with any provision ofthis Agreement, contains the entire agreement and understanding by and betweenthe Employee and the Company with respect to the employment of the Employee,and no representations, promises, agreements, or understandings, written ororal, relating to the employment of the Employee by the Company not containedherein shall be of any force or effect.

# 19.           Burden and Benefit.  This Agreement shall be binding upon, andshall inure to the benefit of, the Company and Employee, and their respectiveheirs, personal and legal representatives, successors, and assigns.

# 20.           References to Gender and NumberTerms.  In construing this Agreement,feminine or number pronouns shall be substituted for those masculine in formand vice versa, and plural terms shall be substituted for singular and singularfor plural in any place which the context so requires.

# 21.           Headings.  The various headings in this Agreement areinserted for convenience only and are not part of the Agreement.

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# 22.           Assignment.  This Agreement is not assignable by eitherparty without the prior written consent of the other party.

# **[REMAINDEROF PAGE INTENTIONALLY LEFT BLANK.]**

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IN WITNESS WHEREOF, the Company and Employee have dulyexecuted this Agreement as of the day and year first above written.
|   | COMPANY:                         |
|--------|----------------------------------|
|   |                             |
|   | DIGITAL GENERATION SYSTEMS, INC. |
|   |                             |
|   |                             |
|   | By:                              | /s/ SCOTT K. GINSBURG |
|   |                             | Scott K. Ginsburg |
|   |                             | Chief Executive Officer |

 

Addressfor Notice Purposes:

Digital Generation Systems, Inc.

750 West John Carpenter Freeway

Suite 700

Irving, Texas 75039

Attention:  Chief Financial Officer
|   | EMPLOYEE:            |
|--------|----------------------|
|   |                 |
|   |                 |
|   | /s/ PAMELA MAYTHENYI |
|   | PAMELA MAYTHENYI     |

 

 

 

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