Document:

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                                                                     EXHIBIT 4.1

                       DIGITAL GENERATION SYSTEMS, INC.

                             1992 STOCK OPTION PLAN

                         (AS AMENDED NOVEMBER 21, 2000)

     1.   PURPOSES OF THE PLAN.  The purposes of this Stock Option Plan are to
          --------------------
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.

          Options granted hereunder may either be Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected in
the terms of the written option agreement.

     2.   DEFINITIONS.  As used herein, the following definitions shall apply:
          -----------

          (a)  "Board" shall mean the Committee, if one has been appointed, or
                -----
the Board of Directors of the Company, if no Committee is appointed.

          (b)  "Code" means the Internal Revenue Code of 1986, as amended.
                ----

          (c)  "Committee" shall mean the Committee appointed by the Board of
                ---------
Directors in appointed.

          (d)  "Common Stock" shall mean the Common Stock of the Company.
                ------------

          (e)  "Company" shall mean Digital Generation Systems, Inc., a
                -------
California corporation.

          (f)  "Consultant" shall mean (i) any person who is engaged by the
                ----------
Company or any Parent or Subsidiary to render consulting services and is
compensated for such consulting services and (ii) any director of the Company
whether compensated for such services or not.

          (g)  "Continuous Status as an Employee or Consultant" shall mean the
                ----------------------------------------------
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave or any other
leave of absence approved by the Board; provided that such leave is for a period
of not more than 90 days or reemployment upon the expiration of such leave is
guaranteed by contract or statute.

          (h)  "Employee" shall mean any person, including officers and
                --------
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.

          (i)  "Executive Officer" shall mean an officer of the Company at or
                -----------------
above the level of vice president.

          (j)  "Incentive Stock Option" shall mean an Option intended to
                ----------------------
qualify as an incentive stock option within the meaning of Section 422A of the
Code.

          (k)  "Nonstatutory Stock Option" shall mean an Option not intended to
                -------------------------
qualify as an Incentive Stock Option.

          (l)  "Option" shall mean a stock option granted pursuant to the Plan.
                ------

                             Exhibit 4.1 - Page 1
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          (m)  "Optioned Stock" shall mean the Common Stock subject to an
                --------------
Option.

          (n)  "Optionee" shall mean an Employee or Consultant who receives an
                --------
Option.

          (o)  "Parent" shall mean a "parent corporation," whether now or
                ------
hereafter existing, as defined in Section 424(e) of the Code.

          (p)  "Plan" shall mean this 1992 Stock Option Plan.
                ----

          (q)  "Share" shall mean a share of the Common Stock, as adjusted in
                -----
accordance with Section 11 of the Plan.

          (r)  "Subsidiary" shall mean a "subsidiary corporation," whether now
                ----------
or hereafter existing, as defined in Section 424(f) of the Code.

     3.   STOCK SUBJECT TO PLAN.  Subject to the provisions of Section 11 of
          ---------------------
the Plan, the maximum aggregate number of shares that may be optioned and sold
under the Plan is 14,950,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.

          If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan.  Notwithstanding any other provision of the Plan,
shares issued under the Plan and later repurchased by the Company shall not
become available for future grant or sale under the Plan.

     4.   ADMINISTRATION OF THE PLAN.
          --------------------------

          (a)  Procedure.
               ---------

               (i)    Multiple Administrative Bodies.  The Plan may be
                      ------------------------------
administered by different Committees with respect to different groups of
Employees and Consultants.

               (ii)   Section 162(m).  To the extent that the Board determines
                      --------------
it to be desirable to qualify Options granted hereunder as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the Plan shall
be administered by a Committee of two or more "outside directors" within the
meaning of Section 162(m) of the Code.

               (iii)  Rule 16b-3.  To the extent desirable to qualify
                      ----------
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.

               (iv)   Other Administration.  Other than as provided above, the
                      --------------------
Plan shall be administered by (A) the Board of (B) a Committee, which committee
shall be constituted to satisfy applicable laws.

          (b)  Powers of the Board.  Subject to the provisions of the Plan, the
               -------------------
Board shall have the authority, in its discretion: (i) to grant Incentive Stock
Options or Nonstatutory Stock Options; (ii) to determine, upon review of
relevant information, the Fair Market Value of the Common Stock; (iii) to
determine the exercise price per share of Options to be granted, which exercise
price shall be determined in accordance with Section 8 of the Plan; (iv) to
determine the Employees or Consultants to whom, and the time or times at which,
Options shall be granted and the number of shares to be represented by each
Option; (v) to interpret the Plan; (vi) to prescribe, amend and rescind rules
and regulations relating to the Plan; (vii) to determine the terms and
provisions of each Option granted (which need not be identical) and, with the
consent of the holder thereof, modify or amend each Option; (viii) to accelerate
or defer (with the consent of the Optionee) the exercise date of any Option,
consistent with the provisions of Section 5 of the Plan; (ix) to authorize any
person to execute on behalf of the Company any instrument required to effectuate
the grant of an Option previously granted by the Board; (x) to reduce the
exercise price of any Option to the then current Fair Market Value if the Fair
Market Value of the Common Stock covered by such Option

                              Exhibit 4.1 Page 2
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shall have declined since the date the Option was granted; (xi) to allow
Optionees to satisfy withholding tax obligations by electing to have the Company
withhold from the Shares to be issued upon exercise of an Option that number of
Shares having a Fair Market Value equal to the amount required to be withheld;
and (xii) to make all other determinations deemed necessary or advisable for the
administration of the Plan. The Fair Market Value of the Shares to be withheld
pursuant to clause (xi) hereof shall be determined on the date that the amount
of tax to be withheld is to be determined. All elections by an Optionee to have
Shares withheld for this purpose shall be made in such form and under such
conditions as the Board may deem necessary or advisable.

          (c)  Effect of Board's Decision.  All decisions, determinations and
               --------------------------
interpretations of the Board shall be final and binding on all Optionees and any
other holds of any Options granted under the Plan.

     5.   ELIGIBILITY; LIMITATIONS.
          ------------------------

          (a)  Nonstatutory Stock Options may be granted only to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he is otherwise
eligible, be granted an additional Option or Options.

          (b)  No Incentive Stock Option may be granted to an Employee which,
when aggregated with all other incentive stock options granted to such Employee
by the Company or any Parent or Subsidiary, would result in Shares having an
aggregate Fair Market Value (determined for each Share as of the date of grant
of the Option covering such Share) in excess of $100,000 becoming first
available for purchase upon exercise of one or more incentive stock options
during any calendar year.

          (c)  Section 5(b) of the Plan shall apply only to an Incentive Stock
Option evidenced by an "Incentive Stock Option Agreement" which sets forth the
intention of the Company and the Optionee that such Option shall qualify as an
incentive stock option. Section 5(b) of the Plan shall not apply to any Option
evidenced by a "Nonstatutory Stock Option Agreement" which sets forth the
intention of the Company and the Optionee that such Option shall be a
Nonstatutory Stock Option.

          (d)  The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his right or the Company's right
to terminate his employment or consulting relationship at any time, with or
without cause.

          (e)  The following limitations shall apply to grants of Options:

               (i)   No Employee or Consultant shall be granted, in any fiscal
year of the Company, Options to purchase more than 1,000,000 Shares.

               (ii)  In connection with his or her initial service, an Employee
or Consultant may be granted Options to purchase up to an additional 500,000
Shares that shall not count against the limit set forth in subsection (i) above.

               (iii) The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 11(a).

               (iv)  If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 11(a)), the cancelled Option will be counted against the
limits set forth in subsections (i) and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.

     6.   TERM OF PLAN.  The Plan shall become effective upon the earlier to
          ------------
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company as described in Section 17 of the Plan. It shall
continue in effect until July 31, 2009 unless sooner terminated under Section 13
of the Plan.

                             Exhibit 4.1 - Page 3
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     7.   TERMS OF OPTION.  The term of each Incentive Stock Option shall be
          ---------------
ten (10) years from the date of grant thereof or such shorter term as may be
provided in the Incentive Stock Option Agreement. The term of each Nonstatutory
Stock Option shall be ten (10) years and one (1) day from the date of grant
thereof or such shorter term as may be provided in the Nonstatutory Stock Option
Agreement. However, in the case of an Option granted to an Optionee who, at the
time the Option is granted, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, (a) if the Option is an Incentive Stock Option, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the Incentive Stock Option Agreement or (b) if the
Option is a Nonstatutory Stock Option, the term of the Option shall be five (5)
year and one (1) day from the date of grant thereof or such shorter term as may
be provided in the Nonstatutory Stock Option Agreement.

     8.   EXERCISE PRICE AND CONSIDERATION.
          --------------------------------

          (a)  The per Share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the Board but
shall be subject to the following:

               (i)  In the case of an Incentive Stock Option

                    (A)  granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.

                    (B)  granted to any Employee, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the date of
grant.

               (ii) In the case of a Nonstatutory Stock Option

                    (A)  In the case of a Nonstatutory Stock Option, the per
Share exercise price shall be determined by the Board. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

                    (B)  Notwithstanding the foregoing, Options may be granted
with a per Share exercise price of less than 100% of the Fair Market Value per
Share on the date of grant pursuant to a merger or other corporate transaction.

          (b)  The fair market value of the Common Stock (the "Fair Market
Value") shall be determined by the Board as follows:

               (i)  If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or the Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Board deems reliable;

               (ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable; or

                             Exhibit 4.1 - Page 4
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               (iii)  In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the Board.

          (c)  Form of Consideration.  The Board shall determine the acceptable
               ---------------------
form of consideration for exercising an Option, including the method of payment.
In the case of an Incentive Stock Option, the Board shall determine the
acceptable form of consideration at the time of grant. Such consideration may
consist entirely of:

               (i)    cash;

               (ii)   check;

               (iii)  promissory note;

               (iv)   other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six months
on the date of surrender and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;

               (v)    consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;

               (vi)   a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;

               (vii)  any combination of the foregoing methods of payment; or

               (viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by applicable laws.

     9.   EXERCISE OF OPTION.
          ------------------

          (a)  Procedure for Exercise; Rights as a Stockholder.  Any Option
               -----------------------------------------------
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.

               An Option may not be exercised for a fraction of a Share.

               An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8 of the Plan. Until
the issuance (as evidenced by the appropriate entry on the books of the Company)
of the stock certificate evidencing such Shares, no right to vote or any other
rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.

               Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

                             Exhibit 4.1 - Page 5
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          (b)  Termination of Status as an Employee or Consultant.  In the
               --------------------------------------------------
event of termination of an Optionee's Continuous Status as an Employee or
Consultant (as the case may be), Optionee may, but only within thirty (30) days
(or such other period of time, not exceeding three (3) months in the case of an
Incentive Stock Option or six (6) months in the case of a Nonstatutory Stock
Option, as is determined by the Board, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option) after the
date of such termination (but in no event later than the date of expiration of
the term of such Option as set forth in the Option Agreement), exercise his
Option to the extent that he was entitled to exercise it at the date of such
termination. To the extent that he was not entitled to exercise the Option at
the date of such termination, or if he does not exercise such Option (which he
was entitled to exercise) within the time specified herein, the Option shall
terminate.

          (c)  Disability of Optionee.  Notwithstanding the provisions of
               ----------------------
Section 9(b) above, in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of his total and permanent
disability (as defined in Section 22(e)(3) of the Code), he may, but only within
six (6) months (or such other period of time not exceeding twelve (12) months as
is determined by the Board, with such determination in the case of an Incentive
Stock Option being made at the time of grant of the Option) from the date of
such termination (but in no event later than the date of expiration of the term
of such Option as set forth in the Option Agreement), exercise his Option to the
extent he was entitled to exercise it at the date of such termination. To the
extent that he was not entitled to exercise such Option (which he was entitled
to exercise) within the time specified herein, the Option shall terminate.

          (d)  Death of Optionee.  In the event of the death of an Optionee:
               -----------------

               (i)  during the term of the Option who is at the time of his
death an Employee or Consultant of the Company and who shall have been in
Continuous Status as an Employee or Consultant since the date of grant of the
Option, the Option may be exercised, at any time within six (6) months following
the date of death (but in no event later than the date of expiration of the term
of such Option as set forth in the Option Agreement), by the Optionee's estate
or by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise that would have
accrued had the Optionee continued living and remained in Continuous Status as
an Employee or consultant six (6) months after the date of death, subject to the
limitations set forth in Section 5(b); or

               (ii) within thirty (30) days (or such other period of time not
exceeding three (3) months as is determined by the Board, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) after the termination of Continuous Status as an Employee
or Consultant, the Option may be exercised, at any time within six (6) months
following the date of death (but in no event later than the date of expiration
of the term of such Option as set forth in the Option Agreement), by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the date of termination.

     10.  NON-TRANSFERABILITY OF OPTIONS.  Unless determined otherwise by the
          ------------------------------
Board, an Option may not be sold, pledged, assigned, hypothecated, transferred
or disposed of in any manner other than by will or by the laws of descent or
distribution and may be exercised, during the life time of the Optionee, only by
the Optionee. If the Board makes an Option transferable, such Option shall
contain such additional terms and conditions as the Board deems appropriate.

     11.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, LIQUIDATION,
          ---------------------------------------------------------------------
MERGER, ASSET SALE OR CHANGE IN CONTROL.
---------------------------------------

          (a)  Changes in Capitalization.  Subject to any required action by the
               -------------------------
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the

                             Exhibit 4.1 - Page 6
<PAGE>

number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration". Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.

          (b)  Dissolution or Liquidation.  In the event of the proposed
               --------------------------
dissolution or liquidation of the Company, the Board shall notify the Optionee
at least fifteen (15) days prior to such proposed action. To the extent an
Option has not been previously exercised, such Option shall terminate prior to
consummation of such proposed dissolution or liquidation.

          (c)  Merger or Asset Sale.  Subject to the provisions of Section
               --------------------
11(d) hereof, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company, each
outstanding Option shall be assumed or an equivalent option substituted by the
successor corporation or a Parent or Subsidiary of the successor corporation. In
the event that the successor corporation refuses to assume or substitute for the
Option, the Board shall notify the Optionee that the Option shall be exercisable
to the extent that the Optionee is otherwise entitled to exercise the Option for
a period of fifteen (15) days from the date of such notice, and the Option shall
terminate upon the expiration of such period. For the purposes of this
paragraph, the Option shall be considered assumed if, following the merger or
sale of assets, the Option confers the right to purchase or receive, for each
Share of Optioned Stock subject to the Option immediately prior to the merger or
sale of assets by holders of Common Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger or
sale of assets was not solely common stock of the successor corporation or its
Parent, the Board may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option, to be
solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common Stock
in the merger or sale of assets.

          (d)  Change in Control.  In the event of a "Change in Control" of the
               -----------------
Company, as defined in Subsection (e) below, then the following provisions shall
apply:

               (i)   For each Optionee who is an Executive Officer and has any
Option outstanding on the date of such Change in Control which is not yet fully
exercisable and fully vested as of the date of such Change in Control, such
Option shall become exercisable and vested on the date of such Change in Control
with respect to fifty percent (50%) of the Shares covered by such Option which
are not exercisable or vested on the date of such Change in control without
reference to this subsection (an "Outstanding Option");

               (ii)  Each Outstanding Option held by an Executive Officer which
is vested and exercisable on the date of such Change in Control shall be assumed
by the successor corporation (if any) or by a Parent or Subsidiary of the
successor corporation (if any);

               (iii) Each Outstanding Option held by an Executive Officer which
is vested and exercisable on the date of such Change in Control shall remain
exercisable by the Optionee for a period of at least fifteen (15) days from the
date of the Change in Control; and

               (iv)  Each Optionee who is an Executive Officer with an
Outstanding Option which is vested and exercisable on the date of such Change in
Control shall be provided with written notice of the period of exercisability
provided for in subsection (d)(iii) above promptly after the date of the Change
in Control by the Company or by the entity surviving after the Change in
Control.

          (e)  Definition of "Change in Control".  For purposes of this Section
               ---------------------------------
11, a "Change in Control" means the happening of any of the following:

                             Exhibit 4.1 - Page 7
<PAGE>

               (i)   when any "person or "group" of persons, as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee) is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing more
than fifty percent (50%) of the combined voting power of the Company's then
outstanding securities entitled to vote generally in the election of directors;
provided that "person" shall not include any person (or any person acting as a
group) which, as of the date of the adoption of this 1992 Stock Option Plan, is
the "beneficial owner" of securities of the Company representing more than fifty
percent (50%) of the combined voting power of the Company's outstanding
securities entitled to vote generally in the election of directors;

               (ii)  a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or

               (iii) a change in the composition of the Board of Directors of
the Company, during any twenty-four month period, as a result of which fewer
than a majority of the directors are Incumbent Directors. "Incumbent Directors"
shall mean directors who either (A) are directors of the Company as of the date
the Plan is approved by the shareholders or (B) are elected, or nominated for
election, to the Board of Directors of the Company with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such election or
nomination (but shall not include an individual not otherwise an Incumbent
Director whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors to the Company).

     12.  TIME OF GRANTING OPTIONS.  The date of grant of an Option shall, for
          ------------------------
all purposes, be the date on which the Board makes the determination granting
such Option. Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.

     13.  AMENDMENT AND TERMINATION OF THE PLAN.
          -------------------------------------

          (a)  Amendment and Termination.  The Board may amend or terminate the
               -------------------------
Plan from time to time in such respects as the Board may deem advisable;
provided that, the following revisions or amendments shall require approval of
the shareholders of the Company in the manner described in Section 17 of the
Plan:

               (i)   any increase in the number of Shares subject to the Plan,
other than in connection with an adjustment under Section 11 of the Plan; or

               (ii)  any change in the designation of the class of persons
eligible to be granted Options.

          (b)  Shareholder Approval.  If any amendment requiring shareholder
               --------------------
approval under Section 13(a) of the Plan is made subsequent to the first
registration of any class of equity securities by the Company under Section 12
of the Exchange Act, such shareholder approval shall be solicited as described
in Section 17 of the Plan.

          (c)  Effect of Amendment or Termination.  Any such amendment or
               ----------------------------------
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if the Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.

     14.  CONDITIONS UPON ISSUANCE OF SHARES.  Shares shall not be issued
          ----------------------------------
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder and the requirements of any stock

                             Exhibit 4.1 - Page 8
<PAGE>

exchange upon which the Shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.

          As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law

     15.  RESERVATION OF SHARES.  The Company, during the term of this Plan,
          ---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

          The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

     16.  OPTION AGREEMENT.  Options shall be evidenced by written option
          ----------------
agreements in such form as the Board shall approve.

     17.  SHAREHOLDER APPROVAL.
          --------------------

          (a)  Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the date
the Plan is adopted.

          (b)  If and in the event that the Company registers any class of
equity securities pursuant to Section 12 of the Exchange Act, any required
approval of the shareholders of the Company obtained after such registration
shall be solicited substantially in accordance with Section 14(a) of the
Exchange Act and the rules and regulations promulgated thereunder.

          (c)  If any required approval by the shareholders of the Plan itself
or of any amendment thereto is solicited at anytime otherwise than in the manner
described in Section 17(b) hereof, then the Company shall, at or prior to the
first annual meeting of shareholders held subsequent to the later of (1) the
first registration of any class of equity securities of the Company under
Section 12 of the Exchange Act or (2) the granting of an Option hereunder to an
officer or director after such registration, do the following:

               (i)  furnish in writing to the holders entitled to vote for the
Plan substantially the same information which would be required (if proxies to
be voted with respect to approval or disapproval of the Plan or amendment were
then being solicited) by the rules and regulations in effect under Section 14(a)
of the Exchange Act at the time such information is furnished; and

               (ii) file with, or mail for filing to, the Securities and
Exchange Commission four copies of the written information referred to in
subsection (i) hereof not later than the date on which such information is first
sent or given to shareholders.

     18.  INFORMATION TO OPTIONEES.  The Company shall provide to each Optionee,
          ------------------------
during the period for which such Optionee has one or more Options outstanding,
copies of all annual reports and other information that are provided to all
shareholders of the Company.  The Company shall not be required to provide such
information if the issuance of Options under the Plan is limited to key
employees whose duties in connection with the Company assure their access to
equivalent information.

                             Exhibit 4.1 - Page 9<PAGE>

                                                                     EXHIBIT 4.2

                       DIGITAL GENERATION SYSTEMS, INC.

                AMENDED AND RESTATED 1995 DIRECTOR OPTION PLAN

                          (AS AMENDED JUNE 14, 2001)

     1.   PURPOSES OF THE PLAN.  The purposes of this 1995 Director Option Plan
          --------------------
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.

          All options granted hereunder shall be nonstatutory stock options that
are not intended to meet the requirements of Section 422 of the Code.

     2.   DEFINITIONS.  As used herein, the following definitions shall apply:
          -----------

          (a)  "Board" means the Board of Directors of the Company.
                -----

          (b)  "Code" means the Internal Revenue Code of 1986, as amended.
                ----

          (c)  "Common Stock" means the Common Stock, $0.001 par value, of the
                ------------
Company.

          (d)  "Company" means Digital Generation Systems, Inc., a California
                -------
corporation.

          (e)  "Continuous Status as a Director" means the absence of any
                -------------------------------
interruption or termination of service as a Director.

          (f)  "Director" means a member of the Board.
                --------

          (g)  "Employee" means any person, including officers and Directors,
                --------
employed, within the meaning of Section 3401 of the Code, by the Company or any
Parent or Subsidiary of the Company. The payment of a Director's fee by the
Company shall not be sufficient in and of itself to constitute "employment" by
the Company.

          (h)  "Exchange Act" means the Securities Exchange Act of 1934, as
                ------------
amended.

          (i)  "Fair Market Value" means, as of any date, the value of Common
                -----------------
Stock determined as follows:

               (i)  If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the date of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable;

                              Exhibit 4.2-Page 1
<PAGE>

               (ii)   If the Common Stock is quoted on the NASDAQ System (but
not on the National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the date of determination, as reported in The
Wall Street Journal or such other source as the Board deems reliable, or;

               (iii)  In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.

          (j)  "Option" means a stock option granted pursuant to the Plan.
                ------

          (k)  "Option Agreement" means the written agreement evidencing the
                ----------------
grant of an Option executed by the Company and the Optionee, including any
amendments thereto.

          (l)  "Optioned Stock" means the Common Stock subject to an Option.
                --------------

          (m)  "Optionee" means an Outside Director who receives an Option.
                --------

          (n)  "Outside Director" means a Director who is not an Employee.
                ----------------

          (o)  "Parent" means a "parent corporation," whether now or hereafter
                ------
existing, as defined in Section 424(e) of the Code.

          (p)  "Plan" means this Amended and Restated 1995 Director Option Plan.
                ----

          (q)  "Share" means a share of the Common Stock, as adjusted in
                -----
accordance with Section 10 of the Plan.

          (r)  "Subsidiary" means a "subsidiary corporation," whether now or
                ----------
hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of
1986.

     3.   STOCK SUBJECT TO PLAN.  Subject to the provisions of Section 10 of the
          ---------------------
Plan, the maximum aggregate number of Shares that may be optioned and sold under
the Plan is 800,000 Shares of Common Stock. The Shares may be authorized, but
unissued, or reacquired Common Stock. If an Option expires or becomes
unexercisable without having been exercised in full, the unpurchased Shares
which were subject thereto shall become available for future grant or sale under
the Plan (unless the Plan has terminated); provided, however, that Shares that
have actually been issued under the Plan shall not be returned to the Plan and
shall not become available for future distribution under the Plan.

     4.   ELIGIBILITY.  Options may be granted only to Outside Directors.  The
          -----------
Board in its sole discretion shall select the Outside Directors to whom Options
will be granted under the Plan and all Options shall be granted in accordance
with the provisions of the Plan. An Outside Director may be granted more than
one Option under the Plan, and Options may be granted at any time or times
during the term of the Plan. The grant of an Option to an Outside Director shall
not be deemed either to entitle that individual to, or disqualify that
individual from, participation in any other grant of Options under the Plan. The
Plan shall not confer upon any Optionee any right with respect to continuation
of service as a Director or nomination to serve as

                              Exhibit 4.2-Page 2
<PAGE>

a Director, nor shall it interfere in any way with any rights which the Director
or the Company may have to terminate his or her directorship at any time.

     5.   TERMS AND CONDITIONS OF OPTIONS.  The Board shall determine the
          -------------------------------
provisions, terms and conditions of each Option including, but not limited to,
the vesting schedule, the number of shares of Common Stock subject to the
Option, the exercise price of the Option, the period during which the Option may
be exercised, the methods of payment, and all other terms and conditions of the
Option, subject to the following:

          (a)  Form of Option Grant.  Each Option granted under the Plan shall
               --------------------
be evidenced by a written Option Agreement in such form (which need not be the
same for each Optionee) as the Board, from time to time approves, but which is
not inconsistent with the Plan.

          (b)  Date of Grant.  The date of grant of an Option will be the date
               -------------
on which the Board makes the determination to grant such Option unless otherwise
specified by the Board. The Option Agreement evidencing the Option will be
delivered to the Optionee with a copy of the Plan within a reasonable time after
the date of grant.

          (c)  Exercise Price.  The exercise price of an Option shall be the
               --------------
Fair Market Value of the shares of Common Stock on the date of grant of the
Option.

          (d)  Exercise Period.  Options shall be exercisable within the time
               ---------------
or times or upon the event or events determined by the Committee and set forth
in the Option Agreement; provided, however, that no Option shall be exercisable
after the expiration of ten (10) years from the date of grant of the Option, and
provided further, that an Option shall be exercisable only while the Optionee
remains a Director, except as provided in Section 7 hereof.

          (e)  Transferability of Options.  Except as provided otherwise by the
               --------------------------
Board in an Option Agreement, Options granted under the Plan, and any interest
therein, shall not be transferable or assignable by the Optionee, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution, and shall be exercisable during the
lifetime of the Optionee only by the Optionee; provided, that the Optionee may,
however, designate persons who or which may exercise his Options following his
death.

     6.   EFFECTIVE DATE AND TERM OF PLAN.  The amendment and restatement of
          -------------------------------
Plan as set forth herein shall become effective upon its adoption by the Board.
It shall continue in effect for a term of ten (10) years from September ___,
1995, the original effective date of the Plan, unless sooner terminated by
action of the Board. Subject to the terms and conditions of the Plan, as amended
and restated herein, and applicable laws, Options may be granted under the Plan
upon its adoption.

     7.   EXERCISE OF OPTIONS.
          -------------------

          (a)  Procedure for Exercise; Rights as a Stockholder.  Any Option
               -----------------------------------------------
granted hereunder shall be exercisable at such times as are set forth in Section
5 hereof; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan, if applicable, in accordance with Section 12
hereof has been obtained. An Option may not be

                              Exhibit 4.2-Page 3
<PAGE>

exercised for a fraction of a Share. An Option shall be deemed to be exercised
when written notice of such exercise has been given to the Company in accordance
with the terms of the Option and Section 7(b) hereof by the person entitled to
exercise the Option and full payment for the Shares with respect to which the
Option is exercised has been received by the Company. Full payment may consist
of any consideration and method of payment allowable under Section 7(c) hereof.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No Optionee will
have any of the rights of a shareholder with respect to any Shares of Common
Stock subject to an Option until such Option is properly exercised and the
purchased shares are issued and delivered to the Optionee, as evidenced by an
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company. No adjustment shall be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 8 of the Plan. Exercise of an Option in any manner
shall result in a decrease in the number of Shares which thereafter may be
available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.

          (b)  Notice.  Options may be exercised only by delivery to the Company
               ------
of a written exercise agreement approved by the Board (which need not be the
same for each Optionee), stating the number of shares of Common Stock being
purchased, the restrictions imposed on the shares of Common Stock, if any, and
such representations and agreements regarding the Optionee's investment intent
and access to information and other matters, if any, as may be required by the
Company to comply with applicable securities laws, or as may be deemed
appropriate by the Company in connection with the issuance of shares of Common
Stock upon exercise of the Option, together with payment in full of the exercise
price for the number of shares of Common Stock being purchased. Such exercise
agreement may be part of an Optionee's Option Agreement.

          (c)  Payment.  Payment for the Shares of Common Stock to be purchased
               -------
upon exercise of an Option may be made (i) in cash (by check); (ii) by surrender
for cancellation of other Shares which (A) in the case of Shares acquired upon
exercise of an Option, have been owned by the Optionee for more than six (6)
months on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised (provided that such surrender does not result in an
accounting charge for the Company); (iii) if a public market for the Common
Stock exists, through a "same day sale" commitment from the Optionee and a
broker-dealer that is a member of the National Association of Securities
Dealers, Inc. (an "NASD Dealer") whereby the Optionee irrevocably elects to
                   -----------
exercise the Option and to sell a portion of the Shares of Common Stock so
purchased to pay for the exercise price and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares of Common Stock to forward the exercise
price directly to the Company; (iv) if a public market for the Common Stock
exists, through a "margin" commitment from the Optionee and an NASD Dealer
whereby the Optionee irrevocably elects to exercise the Option and to pledge the
Shares of Common Stock so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the exercise price,
and whereby the NASD Dealer irrevocably commits upon receipt of such shares of
Common Stock to forward the exercise price directly to the Company; (v) by any
combination of the foregoing. No shares of Common Stock may be issued until full
payment of the purchase price therefor has been made.

                              Exhibit 4.2-Page 4
<PAGE>

          (d)  Termination of Continuous Status as a Director.  In the event an
               ----------------------------------------------
Optionee's Continuous Status as a Director terminates (other than upon the
Optionee's death or total and permanent disability (as defined in Section
22(e)(3) of the Code)), the Optionee may exercise his or her Option, but only
within three (3) months following the date of such termination, and only to the
extent that the Optionee was entitled to exercise it on the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option on
the date of such termination, and to the extent that the Optionee does not
exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.

          (e)  Disability of Optionee.  In the event Optionee's Continuous
               ----------------------
Status as a Director terminates as a result of total and permanent disability
(as defined in Section 22(e)(3) of the Code), the Optionee may exercise his or
her Option but only within twelve (12) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of termination, or if he or she does not exercise
such Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.

          (f)  Death of Optionee.  In the event of an Optionee's death, the
               -----------------
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.

     8.   ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER, ASSET
          ----------------------------------------------------------------------
SALE OR CHANGE OF CONTROL.
-------------------------

          (a)  Changes in Capitalization.  Subject to any required action by the
               -------------------------
shareholders of the Company, the number of Shares covered by each outstanding
Option, the number of Shares which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration". Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares
subject to an Option.

                              Exhibit 4.2-Page 5
<PAGE>

          (b)  Dissolution or Liquidation.  In the event of the proposed
               --------------------------
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.

          (c)  Merger or Asset Sale.  In the event of a merger of the Company
               --------------------
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option may be assumed or an equivalent option
may be substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation does not
agree to assume the Option or to substitute an equivalent option, each
outstanding Option shall become fully vested and exercisable, including as to
Shares as to which it would not otherwise be exercisable. If an Option becomes
fully vested and exercisable in the event of a merger or sale of assets, the
Board shall notify the Optionee that the Option shall be fully exercisable for a
period of thirty (30) days from the date of such notice, and the Option shall
terminate upon the expiration of such period. For the purposes of this
paragraph, the Option shall be considered assumed if, following the merger or
sale of assets, the Option confers the right to purchase, for each share of
Optioned Stock subject to the Option immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares).

     9.   AMENDMENT OR TERMINATION OF PLAN.  The Board in its discretion may, at
          --------------------------------
any time or from time to time after the date of adoption of the Plan, terminate
or amend the Plan in any respect, including amendment of any form of Option
Agreement or instrument to be executed pursuant to the Plan; provided, however,
to the extent necessary to comply with the Code, other applicable laws, or the
applicable requirements of any stock exchange or national market system, the
Company shall obtain stockholder approval of any Plan amendment in such manner
and to such a degree as required. No Option may be granted after termination of
the Plan. Any amendment or termination of the Plan shall not affect Options
previously granted, and such Options shall remain in full force and effect as if
the Plan had not been amended or terminated, unless mutually agreed otherwise in
a writing (including an Option Agreement) signed by the Optionee and the
Company.

     10.  CONDITIONS UPON ISSUANCE OF SHARES.  Shares shall not be issued
          ----------------------------------
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. As a
condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares, if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law. Inability of the Company to obtain authority from
any regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary

                              Exhibit 4.2-Page 6
<PAGE>

to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.

     11.  RESERVATION OF SHARES.  The Company, during the term of this Plan,
          ---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     12.  STOCKHOLDER APPROVAL.  The Company shall obtain the approval of the
          --------------------
Plan by the Company's stockholders to the extent required to satisfy or comply
with any applicable laws or the rules of any stock exchange or national market
system on which the Common Stock may be listed or quoted. No Option that is
issued as a result of any increase in the number of shares of Common Stock
authorized to be issued under the Plan may be exercised prior to the time such
increase has been approved by the stockholders of the Company, and all such
Options granted pursuant to such increase will similarly terminate if such
stockholder approval is not obtained.

     13.  ADMINISTRATION.  This Plan shall be administered by the Board.  The
          --------------
Board shall interpret the Plan and any Options granted pursuant to the Plan and
shall prescribe such rules and regulations in connection with the operation of
the Plan as it determines to be advisable for the administration of the Plan.
The Board may rescind and amend its rules and regulations from time to time. The
interpretation by the Board of any of the provisions of this Plan or any Options
granted under this Plan shall be final and binding upon the Company and all
persons having an interest in any Option.

     14.  SEVERABILITY AND REFORMATION.  The Company intends all provisions of
          ----------------------------
the Plan to be enforced to the fullest extent permitted by law. Accordingly,
should a court of competent jurisdiction determine that the scope of any
provision of the Plan is too broad to be enforced as written, the court should
reform the provision to such narrower scope as it determines to be enforceable.
If, however, any provision of the Plan is held to be wholly illegal, invalid, or
unenforceable under present or future law, such provision shall be fully
severable and severed, and the Plan shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof, and the
remaining provisions of the Plan shall remain in full force and effect and shall
not be affected by the illegal, invalid, or unenforceable provision or by its
severance.

     15.  GOVERNING LAW.  The Plan shall be construed and interpreted in
          -------------
accordance with the laws of the State of Texas.

                              Exhibit 4.2-Page 7

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