Document:

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                                                                   EXHIBIT 10.44

                         REGISTRATION RIGHTS AGREEMENT

          THIS REGISTRATION RIGHTS AGREEMENT is made as of the 17th day of
December, 1999, by and between Digital Generation Systems, Inc., a California
corporation (the "Company"), and each of  the persons listed on Schedule A
hereto (collectively, the "Holders").

                                    RECITALS
                                    --------

          WHEREAS, the Company issued 725,199 shares of its Common Stock (the
"Common Shares") to certain of the Holders in a private placement transaction
pursuant to that certain Common Stock Purchase Agreement dated December 17, 1999
(the "Purchase Agreement"); and

          WHEREAS, in order to induce the Holders to invest funds in the Company
and to enter into the Purchase Agreement, the Company and the Holders agreed to
enter into this Agreement and hereby agree that this Agreement shall govern the
rights of the Holders to cause the Company to register the Common Shares and
certain other matters as set forth herein.

          NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

           1.  Registration Rights.  The Company covenants and agrees as
               -------------------
follows:

                1.1 Definitions.  For purposes of this Section 1:
                    -----------

                     (a) The term "Act" means the Securities Act of 1933, as
amended.

                     (b) The term "1934 Act" shall mean the Securities Exchange
Act of 1934, as amended.

                     (c) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or document.

                     (d) The term "Registrable Securities" means the Common
Shares and any Common Stock of the Company issued as a dividend or other
distribution with respect to the Common Shares.

                     (e) The term "Rule 144" shall mean Rule 144 promulgated
under the Act, as amended, or any similar successor rule thereto that may be
promulgated by the SEC.

                     (f) The term "SEC" shall mean the Securities and Exchange
Commission.
<PAGE>

          1.2       S-3 Registration.
                    ----------------

                    (a) The Company shall use diligent efforts to prepare and
file, on or before December 31, 2000, a registration statement on Form S-3 and
any related qualification or compliance with respect to all of the Common Shares
owned by the Holders so as to permit or facilitate the sale and distribution of
the Holders' Common Shares.

                    (b) Notwithstanding the foregoing, the Company shall not be
obligated to effect any such registration, qualification or compliance, pursuant
to this Section 1.2:

                        (i) if Form S-3 is not available for such offering by
the Holders;

                        (ii) if the Company shall furnish to the Holders a
certificate signed by the chief executive officer or the president of the
Company stating that in the good faith judgment of the board of directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for such Form S-3 registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than sixty (60) days after such date,
provided that such right to defer filing shall be exercised by the Company not
more than once in any twelve (12) month period; or

                        (iii) in any jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as may be required by the Act.

                    (c) Subject to the foregoing, the Company shall effect such
registration, qualification, or compliance (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky (except that in no event shall the
Company be required to qualify to do business as a foreign corporation in any
jurisdiction where it would not, but for the requirements of this paragraph (c),
be required to be so qualified, to subject itself to taxation in any such
jurisdiction or to consent to general service of process in any such
jurisdiction) or other state securities laws and appropriate compliance with
applicable regulations issued under the Act and any other governmental
requirements or regulations) covering the Common Shares and other securities so
entitled to be registered as soon as practicable in accordance with the terms
hereof.

          1.3       Obligations of the Company.  When required under Section 1
                    --------------------------
to effect the registration of the Registrable Securities, the Company shall:

                    (a) Prepare and file with the SEC, a registration statement
on Form S-3 with respect to such Registrable Securities and use all commercially
reasonable efforts to cause such registration statement to become effective,
and, subject to the provisions below, use commercially reasonable efforts to
keep such registration statement effective until the earlier of (A) the date on
which all of the Common Shares held by each Holder can be sold without
registration in a single transaction pursuant to Rule 144(k) of the Act, or (B)
the date on which all of the Common Shares have been sold to the public.

                                       2
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                    (b) If at any time after a registration statement becomes
effective, the Company advises the Holders in writing that the registration
statement shall 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 not misleading, or any prospectus comprising a part of such
registration statement shall 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 or the occurrence or existence of any pending corporate
development that, in the reasonable discretion of the Company, makes it
appropriate to suspend the availability of the registration statement and the
related prospectus, the Company shall give notice to the Holders that the
availability of the registration statement is suspended and the Holders shall
suspend any further sale of Registrable Securities pursuant to the registration
statement until the Holders have been informed in writing that the registration
statement is available. The Company shall be entitled to exercise its right to
suspend the availability of the registration statement for a period of not more
than sixty (60) days in any three (3) month period, not to exceed in the
aggregate ninety (90) days in any twelve (12) month period.

                    (c) Subject to subsections 1.3(a) and (b), prepare and file
with the SEC such amendments and supplements to such registration statement and
the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such registration statement.

                    (d) Furnish to the Holders requesting registration such
numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act, and such other documents as they
may reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.

                    (e) Use commercially reasonable efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders; provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Act.

          1.4       Information from Holders.  It shall be a condition precedent
                    ------------------------
to the obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of a Holder that such Holder shall
furnish to the Company the information requested on Appendix 1.4 hereto, which
shall include such information regarding itself, himself or herself, any of the
Registrable Securities held by it, him or her, and the intended method of
disposition of such securities, and such other information as shall be
reasonably requested by the Company and required to effect the registration of
any of the Registrable Securities.

          1.5       Expenses of Registration.  All expenses of the Holders,
                    ------------------------
except underwriting discounts (if any) or commissions, including (without
limitation) all registration, filing and qualification fees, printers' and
accounting fees, and fees and disbursements of counsel for the Company shall be
borne by the Company; provided, however, that the Company shall not be required
to pay any professional fees incurred by any of the Holders.

                                       3
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          1.6       Assignment of Registration Rights.  The registration rights
                    ---------------------------------
provided pursuant to Section 1.2 are not assignable.

          1.7       Indemnification.  With respect to all Registrable Securities
                    ---------------
included in the registration statement referred to in this Section 1:

                    (a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners or officers, directors and
shareholders of each Holder, and each person, if any, who controls such Holder
within the meaning of the Act or the 1934 Act, against any losses, claims,
damages or liabilities (joint or several) to which they may become subject under
the Act, the 1934 Act or any state securities laws, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) any omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities laws or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities laws; and the Company will reimburse each such Holder or controlling
person for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
subsection l.7(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder or controlling person; provided further, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Holder, or any person controlling such Holder,
from whom the person asserting any such losses, claims, damages or liabilities
purchased shares in the offering, if a copy of the prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Holder to
such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the shares to such person, and if the
prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage or liability.

                   (b) To the extent permitted by law, each Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers, each person, if any, who controls the Company within the meaning of
the Act, any other Holder selling securities in such registration statement and
any controlling person of any such other Holder, against any losses, claims,
damages or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the 1934 Act or any state securities laws,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by Holder expressly for use in
connection with such

                                       4
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registration; and Holder will reimburse any person intended to be indemnified
pursuant to this subsection l.7(b), for any legal or other expenses reasonably
incurred by such person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this subsection l.7(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld), provided that in no event shall any indemnity
under this subsection l.7(b) exceed the net proceeds from the offering received
by Holder.

                 (c) Promptly after receipt by an indemnified party under this
Section 1.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding.

                 (d) If the indemnification provided for in this Section 1.7 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.

                 (e) The obligations of each Holder under this Section 1.7 shall
survive the completion of any offering of Registrable Securities in the
registration statement under this Section 1, and otherwise.

                                       5
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          1.8       Termination of Registration Rights.  The registration rights
                    ----------------------------------
provided in this Section 1 shall terminate with respect to a particular Holder
if all Registrable Securities held by such Holder may be sold pursuant to Rule
144 in any three (3) month period.  Upon the termination of registration rights
pursuant to this Section 1.8, the Company shall have the right to withdraw the
registration statement, or any portion thereof, covering Registrable Securities.

     2.  Miscellaneous.
         -------------

          2.1       General.  Nothing in this Agreement, express or implied, is
                    -------
intended to confer upon any party other than the parties hereto any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

          2.2       Governing Law.  This Agreement shall be governed by and
                    -------------
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.

          2.3       Counterparts.  This Agreement may be executed in two or more
                    ------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

          2.4       Titles and Subtitles.  The titles and subtitles used in this
                    --------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

          2.5       Notices.  Unless otherwise provided, any notice required or
                    -------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed facsimile transmission, nationally recognized overnight
courier service, or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.

          2.6       Expenses.  If any action at law or in equity is necessary to
                    --------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.

          2.7       Amendments and Waivers.  Any term of this Agreement may be
                    ----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of  the Company and the Holders
holding a majority of the Registrable Securities.

          2.8       Severability.  If one or more provisions of this Agreement
                    ------------
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.

                                       6
<PAGE>

          2.9       Entire Agreement.  This Agreement constitutes the full and
                    ----------------
entire understanding and agreement between the parties with regard to the
subject matter hereof.

          2.10      Issuance of Common Shares.  The Holders hereby consent
                    -------------------------
to the issuance of the Common Shares pursuant to the terms set forth in the
Purchase Agreement.  The Holders further agree to take any and all actions
reasonably necessary to evidence and effect such consent, including, but not
limited to, executing any necessary shareholder consents or proxies and voting
all voting securities of the Company then held by such Holder at any shareholder
meeting in favor of approving the aforementioned issuances.

                                       7
<PAGE>

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

                       DIGITAL GENERATION SYSTEMS, INC.:

                       By:____________________________________
                                 Matthew E. Devine
                                 Chief Executive Officer

                       Address:
                       Digital Generation Systems, Inc.
                       875 Battery Street
                       San Francisco, CA  94111

                                       8
<PAGE>

                       HOLDERS:

                                 PEQUOT PRIVATE EQUITY FUND, L.P.

                                    By:  Pequot Capital Management, Inc.,
                                         as Investment Manager

                                       By:________________________
                                          David J. Malat,
                                          Chief Financial Officer

                                 Address:
                                 500 Nyala Farm Road
                                 Westport, Connecticut   06880

                                       9
<PAGE>

                                 PEQUOT OFFSHORE PRIVATE EQUITY
                                 FUND, INC.

                                    By:  Pequot Capital Management, Inc.,
                                         as Investment Manager

                                       By:_______________________
                                          David J. Malat
                                          Chief Financial Officer

                                 Address:
                                 500 Nyala Farm Road
                                 Westport, Connecticut   06880

                                       10
<PAGE>

                              TCV II, V.O.F.

                              By:  Technology Crossover Management II, L.L.C.,
                                   Its:  Investment General Partner

                                  By:________________________
                                     Robert C. Bensky
                                     Chief Financial Officer

Address: 56 Main Street, Suite 210    Copy:  Technology Crossover Ventures
         Millburn, New Jersey  07041         575 High Street, Suite 400
         Attention: Robert C. Bensky         Palo Alto, California 94301
         Fax: (973) 467-5323                 Attention: Michael G. Linnert
                                             Fax: (650) 614-8222

                                       11
<PAGE>

                             TECHNOLOGY CROSSOVER VENTURES II,
                                L.P.

                             By:  Technology Crossover Management II, L.L.C.,
                                    Its:  General Partner

                                  By:_______________________
                                     Robert C. Bensky
                                     Chief Financial Officer

Address: 56 Main Street, Suite 210    Copy:  Technology Crossover Ventures
         Millburn, New Jersey  07041         575 High Street, Suite 400
         Attention: Robert C. Bensky         Palo Alto, California 94301
         Fax: (973) 467-5323                 Attention: Michael G. Linnert
                                             Fax: (650) 614-8222

                                       12
<PAGE>

                            TCV II (Q), L.P.

                            By: Technology Crossover Management II, L.L.C.,
                                General Partner

                                  By:___________________________
                                     Robert C. Bensky
                                     Chief Financial Officer

Address: 56 Main Street, Suite 210     Copy: Technology Crossover Ventures
         Millburn, New Jersey  07041         575 High Street, Suite 400
         Attention: Robert C. Bensky         Palo Alto, California 94301
         Fax: (973) 467-5323                 Attention: Michael G. Linnert
                                             Fax: (650) 614-8222

                                       13
<PAGE>

                            TCV II STRATEGIC PARTNERS, L.P.

                            By: Technology Crossover Management II, L.L.C.
                                Its:  General Partner

                                  By:_______________________
                                     Robert C. Bensky
                                     Chief Financial Officer

Address: 56 Main Street, Suite 210     Copy: Technology Crossover Ventures
         Millburn, New Jersey  07041         575 High Street, Suite 400
         Attention: Robert C. Bensky         Palo Alto, California 94301
         Fax: (973) 467-5323                 Attention: Michael G. Linnert
                                             Fax: (650) 614-8222

                                       14
<PAGE>

                         TECHNOLOGY CROSSOVER VENTURES II, C.V.

                         By:  Technology Crossover Management II, L.L.C.,
                              Its:  Investment General Partner

                              By:_________________________
                                  Robert C. Bensky
                                  Chief Financial Officer

Address: 56 Main Street, Suite 210     Copy: Technology Crossover Ventures
         Millburn, New Jersey  07041         575 High Street, Suite 400
         Attention: Robert C. Bensky         Palo Alto, California 94301
         Fax: (973) 467-5323                 Attention: Michael G. Linnert
                                             Fax: (650) 614-8222

                                       15
<PAGE>

                              _______________________________________
                              Scott K. Ginsburg

                              Address:
                              5221 North O'Connor Boulevard, Suite 950
                              Irving, Texas 75039

                                       16
<PAGE>

                              _________________________________________
                              Matthew E. Devine

                              Address:
                              5221 North O'Connor Boulevard, Suite 950
                              Irving, Texas 75039

                                       17
<PAGE>

                                   SCHEDULE A

Pequot Private Equity Fund, L.P.
500 Nyala Farm Road
Westport, Connecticut   06880

Pequot Offshore Private Equity
  Fund, Inc.
500 Nyala Farm Road
Westport, Connecticut   06880

TCV II, V.O.F.
56 Main Street, Suite 210
Millburn, NJ  07041

Technology Crossover Ventures II, L.P.
56 Main Street, Suite 210
Millburn, NJ  07041

TCV II (Q), L.P.
56 Main Street, Suite 210
Millburn, NJ  07041

TCV II Strategic Partners, L.P.
56 Main Street, Suite 210
Millburn, NJ  07041

Technology Crossover Ventures II, C.V.
56 Main Street, Suite 210
Millburn, NJ  07041

Scott K. Ginsburg
5221 North O'Connor Boulevard, Suite 950
Irving, Texas 75039

Matthew E. Devine
5221 North O'Connor Boulevard, Suite 950
Irving, Texas 75039

                                       18
<PAGE>

                                  APPENDIX 1.4
                                  ------------

                     SHAREHOLDER INFORMATION QUESTIONNAIRE:

All information furnished below by the undersigned for use in the Registration
Statement on Form S-3 is, and on the date such shares registered thereunder,
will be true, correct, and complete in all material respects, and does not, and
on the date on which the undersigned sells such shares, will not, contain any
untrue statement of a material fact or omit to state any material fact necessary
to make such information not misleading.  By completing and returning this
information statement, the undersigned hereby consents to the use of his or her
name, address, and share ownership information in the Form S-3 of Digital
Generation Systems, Inc.

Date.
----

     Fill in Date:                       ______________________________

Name.                                         Print:
----

     Print and sign name or names        ______________________________
     exactly as name or names appear
     on share certificate.  If           ______________________________
     certificate is held in more than
     one name, all must sign.

                                         Sign:
                                         ______________________________

                                         ______________________________

Address.
-------

     Fill in your address:               ______________________________

                                         ______________________________

                                         ______________________________

                                       19
<PAGE>

D.   Stock Owned.
     -----------

  Fill in number of shares of             Of Record  Beneficially
  Common Stock owned of record
  and beneficially.
                                           ________   ___________

Aggregate Number of Shares of Common Stock to be Registered on Form S-3:
-----------------------------------------------------------------------

          _____________ Shares

F.   Status.
     ------

     The signatory hereto is an individual ( ), partnership ( ), corporation
( ), or other, as more fully described below ( ). The signatory is not acting
in a fiduciary capacity or as a nominee in selling shares in the public
offering, except as indicated below.

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

                                       20<PAGE>

                                                                   EXHIBIT 10.45

                        DIGITAL GENERATION SYSTEMS, INC.

                        COMMON STOCK PURCHASE AGREEMENT

          THIS COMMON STOCK PURCHASE AGREEMENT is made as of the 17/th/ day of
December, 1999, by and among Digital Generation Systems, Inc., a California
corporation (the "Company"), and the investors, severally and not jointly,
listed on Schedule A hereto, each of which is herein referred to as an
"Investor."

          WHEREAS, the Company desires to sell, and the Investors desire to
purchase, shares of the Company's Common Stock (the "Common Shares") with an
aggregate purchase price of three million seven hundred fifty thousand four
dollars and two cents ($3,750,004.02) and at a price per share equal to five
dollars and seventeen and one-tenth cents ($5.171) (the "Purchase Price").

          NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

      1.  Purchase and Sale of the Common Shares.
          ---------------------------------------

           1.1 Sale and Issuance of the Common Shares.
               ---------------------------------------

          (a) On or prior to the Closing (as defined below), the Company shall
have authorized the sale and issuance to the Investors of the Common Shares.

          (b) Subject to the terms and conditions of this Agreement, each
Investor agrees, severally and not jointly, to purchase at the Closing, and the
Company agrees to sell and issue to each Investor at the Closing, that number of
Common Shares set forth opposite such Investor's name on Schedule A hereto for
the purchase price set forth opposite such Investor's name on Schedule A hereto.

          1.2  Closing.  The purchase and sale of the Common Shares shall take
               -------
place at the offices of the Company at 10:00 A.M., on December 17, 1999, or at
such other time and place as the Company and Investors acquiring in the
aggregate more than half of the Common Shares mutually agree upon orally or in
writing (which time and place are designated as the "Closing").  At the Closing
(or as soon thereafter as is practicable) the Company shall deliver to each
Investor a certificate representing the Common Shares that such Investor is
purchasing, against payment of the purchase price therefor by check or wire
transfer.

      2.  Representations and Warranties of the Company.  The Company hereby
          ---------------------------------------------
represents and warrants to each Investor that:

          2.1  Authorization.  All corporate action on the part of the Company,
               -------------
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the Registration Rights Agreement,
in the form attached hereto as Exhibit A (the "Registration Rights Agreement"),
the performance of all obligations of the Company hereunder and thereunder, and
the authorization, issuance, sale and delivery of the Common Shares being sold
hereunder has been taken or will be taken prior to the Closing, and this
Agreement and the Registration Rights Agreement constitute valid and legally
binding obligations of the Company, enforceable in
<PAGE>

accordance with their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, and (iii) to the extent the indemnification
provisions contained in the Registration Rights Agreement may be limited by
applicable federal or state securities laws.

          2.2  Valid Issuance of Common Shares.  The Common Shares that are
               -------------------------------
being purchased by the Investors hereunder, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and nonassessable, and will
be free of restrictions on transfer other than restrictions on transfer under
this Agreement and the Registration Rights Agreement and under applicable state
and federal securities laws.

          2.3  Offering.  Subject in part to the truth and accuracy of each
               --------
Investor's representations set forth in Section 3 of this Agreement, the offer,
sale and issuance of the Common Shares as contemplated by this Agreement are
exempt from the registration requirements of any applicable state and federal
securities laws, and neither the Company nor any authorized agent acting on its
behalf will take any action hereafter that would cause the loss of such
exemption.

          2.4  Additional Information.  The Company has filed in a timely manner
               ----------------------
all documents that the Company was required to file under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), during the twelve (12)
months preceding the date of this Agreement (the "SEC Filings").  The SEC
Filings complied in all material respects with the requirements of the Exchange
Act or the Securities Act of 1933, as amended (the "Act"), as the case may be,
as of their respective filing or effective dates, and the information contained
therein was true and correct in all material respects as of the date or
effective date of such documents, and each of the SEC Filings, as of such date,
did not contain an untrue statement of 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.

      3.  Representations and Warranties of the Investors.  Each Investor hereby
          -----------------------------------------------
represents and warrants that:

          3.1  Authorization.  Such Investor has full power and authority to
               -------------
enter into this Agreement and the Registration Rights Agreement, and each such
Agreement constitutes its valid and legally binding obligation, enforceable in
accordance with its terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies, and (iii) to the extent the indemnification provisions
contained in the Registration Rights Agreement may be limited by applicable
federal or state securities laws.

          3.2  Purchase Entirely for Own Account.  This Agreement is made with
               ---------------------------------
such Investor in reliance upon such Investor's representation to the Company,
which by such Investor's

                                       2
<PAGE>

execution of this Agreement such Investor hereby confirms, that the Common
Shares to be received by such Investor will be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, such Investor further
represents that such Investor does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to the Common Shares.

          3.3  Disclosure of Information.  Such Investor believes it has
               -------------------------
received all the information it considers necessary or appropriate for deciding
whether to purchase the Common Shares.  Such Investor further represents that it
has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Common Shares and the
business, properties, prospects and financial condition of the Company.

          3.4  Investment Experience.  Such Investor is an investor in
               ---------------------
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Common
Shares. If other than an individual, such Investor also represents it has not
been organized for the purpose of acquiring the Common Shares.

          3.5  Accredited Investor.  Such Investor is an "accredited investor"
               -------------------
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.

          3.6  Restricted Securities.  Such Investor understands that the Common
               ---------------------
Shares are characterized as "restricted securities" under the federal securities
laws inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Act only in certain
limited circumstances.  In this connection, such Investor represents that it is
familiar with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.

          3.7  Further Limitations on Disposition.  Without in any way limiting
               ----------------------------------
the representations set forth above, such Investor further agrees not to make
any disposition of all or any portion of the Common Shares unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and the Registration Rights Agreement provided and to the extent
this Section 3 and such agreement are then applicable, and:

          (a) There is then in effect a Registration Statement under the Act,
covering such proposed disposition and such disposition is made in accordance
with such Registration Statement; or

                                       3
<PAGE>

          (b) (i) Such Investor shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and (ii) if reasonably
requested by the Company, such Investor shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company that such disposition
will not require registration of such shares under the Act.  It is agreed that
the Company will not require opinions of counsel for transactions made pursuant
to SEC Rule 144 except in unusual circumstances.

          (c) Notwithstanding the provisions of Paragraphs (a) and (b) above, no
such registration statement or opinion of counsel shall be necessary for a
transfer by an Investor that is a partnership to a partner of such partnership
or a retired partner of such partnership who retires after the date hereof, or
to the estate of any such partner or retired partner or the transfer by gift,
will or intestate succession of any partner to his or her spouse or to the
siblings, lineal descendants or ancestors of such partner or his or her spouse,
if the transferee agrees in writing to be subject to the terms hereof to the
same extent as if he or she were an original Investor hereunder.

          3.8  Legends.  It is understood that the certificates evidencing the
               -------
Common Shares may bear one or all of the following legends:

          (a) "These securities have not been registered under the Securities
Act of 1933, as amended.  They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with respect
to the securities under such Act or an opinion of counsel satisfactory to the
Company that such registration is not required or unless sold pursuant to Rule
144 of such Act."

          (b) Any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations and
Sections 417 and 418 of the California Corporations Code.

          (c) Any legend required by applicable blue sky law.

      4.  Conditions of Investors' Obligations at Closing.  The obligations of
          -----------------------------------------------
each Investor under Section 1 of this Agreement are subject to the fulfillment
on or before the Closing of each of the following conditions, the waiver of
which shall not be effective against any Investor who does not consent thereto:

          4.1  Representations and Warranties.  The representations and
               ------------------------------
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.

          4.2  Performance.  The Company shall have performed and complied with
               -----------
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.

                                       4
<PAGE>

          4.3  Qualifications.  All authorizations, approvals, or permits, if
               --------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Common Shares pursuant to this Agreement shall be duly obtained and
effective as of the Closing.

          4.4  Proceedings and Documents.  All corporate and other proceedings
               -------------------------
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Investors' special counsel, and they shall have received all such
counterpart original and certified or other copies of such documents as they may
reasonably request.

          4.5  Registration Rights Agreement.  The Company and each Investor
               -----------------------------
shall have entered into the Registration Rights Agreement.

          4.6  Minimum Funding.  The Investors shall collectively deliver to the
               ---------------
Company the aggregate Purchase Price.

          4.7  Lock-Up.  The Directors of the Company who are not parties hereto
               -------
shall have executed and delivered to the Company letters to the effect that they
shall be bound by restrictions substantially similar to the restrictions set
forth in Section 6.1 hereof.

      5.  Conditions of the Company's Obligations at Closing.  The obligations
          --------------------------------------------------
of the Company to each Investor under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by that
Investor:

          5.1  Representations and Warranties.  The representations and
               ------------------------------
warranties of the Investors contained in Section 3 shall be true on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the Closing.

           5.2 Payment of Purchase Price.  The Investor shall have delivered the
               -------------------------
purchase price specified in Section 1.1.

          5.3  Qualifications.  All authorizations, approvals, or permits, if
               --------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Common Shares pursuant to this Agreement shall be duly obtained and
effective as of the Closing.

      6.  Miscellaneous.
          -------------

          6.1  Lock-Up.  Each Investor agrees, severally and not jointly, that
               -------
without the prior written consent of the Board of Directors, the Investor will
not, directly or indirectly, sell, offer to sell, contract to sell, solicit an
offer to buy, grant any option for the purchase or sale of, assign, pledge,
distribute or otherwise transfer, dispose of or encumber any shares of the
Company's

                                       5
<PAGE>

Common Stock, or any options, rights, warrants or other securities convertible
into or exercisable or exchangeable for the Company's Common Stock or evidencing
any right to purchase or subscribe for shares of the Company's Common Stock,
whether or not beneficially owned by the undersigned, for a period of 180 days
after the Closing. Each Investor agrees to cause its Affiliates (as defined
under the Securities Act of 1933) to comply with the foregoing restrictions. To
the extent that any Investor or other person referred to above is subsequently
relieved of the foregoing restrictions, all Investors will be relieved from such
restriction on a pro rata basis.

          In furtherance of the foregoing, the Company and ChaseMellon
Shareholder Services, L.L.C., as Transfer Agent for the Company's Common Stock,
are hereby authorized to decline to make any transfer of securities if such
transfer would constitute a violation or breach of the provisions hereof.  Each
Investor hereby consents to the placing of a stop-transfer order with the
Transfer Agent for such 180-day period with respect to any of the shares of the
Company's Common Stock registered in the name of such Investor or his Affiliates
or beneficially owned by such Investor or his Affiliates.

          6.2  Survival of Warranties.  The warranties, representations and
               ----------------------
covenants of the Company and Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investors or the Company.

          6.3  Successors and Assigns.  Except as otherwise provided herein, the
               ----------------------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Common Shares).  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

          6.4  Governing Law.  This Agreement shall be governed by and construed
               -------------
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.

          6.5  Counterparts.  This Agreement may be executed in two or more
               ------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

          6.6  Titles and Subtitles.  The titles and subtitles used in this
               --------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

          6.7  Notices.  Unless otherwise provided, any notice required or
               -------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified, deposit
with a nationally recognized overnight courier, confirmed facsimile or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address or
addresses indicated for such party

                                       6
<PAGE>

on the signature page hereof, or at such other address as such party may
designate by ten (10) days' advance written notice to the other parties.

          6.8   Finder's Fee.  Each party represents that it neither is nor will
                ------------
be obligated for any finders' fee or commission in connection with this
transaction.  Each Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Investor or any of its officers, partners,
employees, or representatives is responsible.

          The Company agrees to indemnify and hold harmless each Investor from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.

          6.9   Expenses.  Irrespective of whether the Closing is effected, each
                --------
party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement.  If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement or the Registration Rights Agreement, the prevailing party shall
be entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.

          6.10  Amendments and Waivers.  Any term of this Agreement may be
                ----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of (a) the Company and (b) the
holders of two-thirds (2/3) of the Common Shares.  Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.

          6.11  Severability.  If one or more provisions of this Agreement are
                ------------
held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.

          6.12  Corporate Securities Law.  THE SALE OF THE SECURITIES THAT ARE
                ------------------------
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS
EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.

                                       7
<PAGE>

          6.13  Entire Agreement.  This Agreement and the documents referred to
                ----------------
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.

                                       8
<PAGE>

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

                              DIGITAL GENERATION SYSTEMS, INC.

                              By:
                                    -------------------------------
                                    Matthew E. Devine
                                    Chief Executive Officer

                    Address:  875 Battery Street
                              San Francisco, CA  94111

                                       9
<PAGE>

                              INVESTOR:

                              PEQUOT PRIVATE EQUITY FUND, L.P.

                              By:   Pequot Capital Management, Inc.,
                                    as Investment Manager

                                    By:
                                       ---------------------------------------
                                       David J. Malat, Chief Financial Officer

                    Address:  500 Nyala Farm Road
                              Westport, Connecticut   06880

                              PEQUOT OFFSHORE PRIVATE EQUITY
                              FUND, INC.

                              By:   Pequot Capital Management, Inc.,
                                    as Investment Manager

                                    By:
                                       ---------------------------------------
                                       David J. Malat, Chief Financial Officer

                    Address:  500 Nyala Farm Road
                              Westport, Connecticut   06880

                                       10
<PAGE>

                              TCV II, V.O.F.

                              By:  Technology Crossover Management II, L.L.C.,
                                   Its:  Investment General Partner

                                    By:
                                        -------------------------------
                                        Robert C. Bensky
                                        Chief Financial Officer

Address: 56 Main Street, Suite 210     Copy: Technology Crossover Ventures
         Millburn, New Jersey  07041         575 High Street, Suite 400
         Attention: Robert C. Bensky         Palo Alto, California 94301
         Fax: (973) 467-5323                 Attention: Michael G. Linnert
                                             Fax: (650) 614-8222

                             TECHNOLOGY CROSSOVER VENTURES II, L.P.

                             By:  Technology Crossover Management II, L.L.C.,
                                    Its:  General Partner

                                    By:
                                       --------------------------------
                                       Robert C. Bensky
                                       Chief Financial Officer

Address: 56 Main Street, Suite 210     Copy: Technology Crossover Ventures
         Millburn, New Jersey  07041         575 High Street, Suite 400
         Attention: Robert C. Bensky         Palo Alto, California 94301
         Fax: (973) 467-5323                 Attention: Michael G. Linnert
                                             Fax: (650) 614-8222

                                       11
<PAGE>

                            TCV II (Q), L.P.

                            By: Technology Crossover Management II, L.L.C.,
                                General Partner

                                By:
                                   ------------------------------------
                                     Robert C. Bensky
                                     Chief Financial Officer

Address: 56 Main Street, Suite 210     Copy: Technology Crossover Ventures
         Millburn, New Jersey  07041         575 High Street, Suite 400
         Attention: Robert C. Bensky         Palo Alto, California 94301
         Fax: (973) 467-5323                 Attention: Michael G. Linnert
                                             Fax: (650) 614-8222

                         TCV II STRATEGIC PARTNERS, L.P.

                            By: Technology Crossover Management II, L.L.C.
                                Its:  General Partner

                                By:
                                   -------------------------------
                                     Robert C. Bensky
                                     Chief Financial Officer

Address: 56 Main Street, Suite 210     Copy: Technology Crossover Ventures
         Millburn, New Jersey  07041         575 High Street, Suite 400
         Attention: Robert C. Bensky         Palo Alto, California 94301
         Fax: (973) 467-5323                 Attention: Michael G. Linnert
                                             Fax: (650) 614-8222

                                       12
<PAGE>

                         TECHNOLOGY CROSSOVER VENTURES II, C.V.

                         By:  Technology Crossover Management II, L.L.C.,
                              Its:  Investment General Partner

                              By:
                                 ---------------------------------
                                  Robert C. Bensky
                                  Chief Financial Officer

Address: 56 Main Street, Suite 210     Copy: Technology Crossover Ventures
         Millburn, New Jersey  07041         575 High Street, Suite 400
         Attention: Robert C. Bensky         Palo Alto, California 94301
         Fax: (973) 467-5323                 Attention: Michael G. Linnert
                                             Fax: (650) 614-8222

                                       13
<PAGE>

                              ------------------------
                              Scott K. Ginsburg

                    Address:  5221 North O'Connor Boulevard
                              Suite 950
                              Irving, Texas   75039

                                       14
<PAGE>

                              ------------------------
                              Matthew E. Devine

                    Address:  5221 North O'Connor Boulevard
                              Suite 950
                              Irving, Texas   75039

                                       15
<PAGE>

                                   Schedule A

                             Schedule of Investors

<TABLE>
<CAPTION>
                                         Aggregate
                                     Purchase Price of    Number of
         Name and Address              Common Shares    Common Shares
         ----------------            -----------------  -------------
<S>                                  <C>                <C>
Pequot Private Equity Fund, L.P.         $1,109,525.96         214,567
500 Nyala Farm Road
Westport, Connecticut   06880

Pequot Offshore Private Equity           $  140,475.39          27,166
  Fund, Inc.
500 Nyala Farm Road
Westport, Connecticut   06880

TCV II, V.O.F.                           $   11,655.43           2,254
56 Main Street, Suite 210
Millburn, NJ  07041

Technology Crossover Ventures II,        $  358,779.49          69,383
   L.P.
56 Main Street, Suite 210
Millburn, NJ  07041

TCV II (Q), L.P.                         $  275,836.65          53,343
56 Main Street, Suite 210
Millburn, NJ  07041

TCV II Strategic Partners, L.P.          $   48,953.86           9,467
56 Main Street, Suite 210
Millburn, NJ  07041

Technology Crossover Ventures II,        $   54,776.40          10,593
   C.V.
56 Main Street, Suite 210
Millburn, NJ  07041

Scott K. Ginsburg                        $1,250,001.34         241,733
5221 North O'Connor Boulevard
Suite 950
Irving, Texas   75039

Matthew E. Devine                        $  499,999.50          96,693
5221 North O'Connor Boulevard
Suite 950
Irving, Texas   75039

TOTAL                                    $3,750,004.02         725,199
                                         =============         =======
</TABLE>

                                       16

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