Digital Generation, Inc. Reaches Agreement With Meruelo Stockholders

Digital Generation, Inc. Reaches Agreement With Meruelo Stockholders 
DALLAS, TX -- (Marketwired) -- 10/07/13 --  Digital Generation, Inc.
(NASDAQ: DGIT), the world's leading ad management and distribution
platform, today announced that it has reached an agreement with Alex
Meruelo, Meruelo Investment Partners LLC and the Alex Meruelo Living
Trust (the "Meruelo Stockholders") relating to the previously
announced intention of the Meruelo Stockholders to propose director
nominees to the Company's Board of Directors and to seek certain
governance changes. 
Under the terms of the agreement and subject to the terms thereto,
the Meruelo Stockholders have agreed to vote the shares of Company
common stock beneficially owned by them in favor of the merger of the
Company with Extreme Reach, Inc. announced by the Company on August
13, 2013, including the advisory vote with respect to compensation
payable to Company executives as a result of the merger. In addition,
the Meruelo Stockholders will vote their Company shares in favor of
any candidates nominated by the Company's Board for election to the
Company's Board should any election take place at a stockholders'
meeting held prior to the Company's merger with Extreme Reach. The
merger is expected to close in the first quarter of 2014 following a
special meeting to be called for stockholder approval of the merger,
and is subject to regulatory approval. 
Immediately prior to the merger, the Company intends to distribute
shares pro-rata to all stockholders of a new online subsidiary ("The
New Online Company") in partial redemption of its outstanding common
shares. As part of the agreement with the Meruelo Stockholders, the
Company has agreed that the board of directors for The New Online
Company will have seven seats, and that all directors will be elected
annually. The Meruelo Stockholders will have the right to appoint one
director to The New Online Company's board, and to propose at least
three individuals to be considered for one of the six remaining seats
to The New Online Company's board. The Company has agreed to propose
two additional individuals of its choosing for that one seat and to
provide the Meruelo Stockholders with an opportunity to confer with
those individuals. The Company's CEO will, in consultation with the
Company's Board and in accordance with the Company's nominating and
governance process, select the individual from the nominees under
consideration to fill that one seat on The New Online Company's
board. The individual to be selected is anticipated to serve on the
audit committee for The New Online Company, subject to meeting
independence and other requirements under the rules and regulations
of the Securities and Exchange Commission and NASDAQ. 
Should the Meruelo Stockholders reduce their beneficial ownership of
The New Online Company's common shares to less than 8.5% of the
outstanding shares, the director appointed by the Meruelo
Stockholders to The New Online Company board will resign. The Meruelo
Stockholders have agreed to support candidates nominated by The New
Online Company to its board at its first annual meeting anticipated
to be held in the fourth quarter of 2014, and will not initiate a
proxy contest or participate in any attempt to take control of The
New Online Company until at least the first quarter of 2015, if ever,
subject to certain limitations. Further, the Meruelo Stockholders
have agreed to dismiss with prejudice their lawsuit challenging
certain provisions of the Company's Bylaws with respect to its
classified Board, currently pending in the Delaware Court of
Chancery. The Company has agreed to reimburse the Meruelo
Stockholders up to $119,000 in legal costs relating to the
litigation. 
"We believe this agreement with the Meruelo Stockholders is in the
best interests of the Company and all stockholders," commented Neil
Nguyen, CEO. "This agreement allows management and the DG Board to
focus on completing the merger transaction with Extreme Reach and on
our long-term strategy for The New Online Company. We remain very
enthusiastic regarding The New Online Company's future in the growing
world of digital advertising." 
"As the largest shareholder of DG, we are pleased to announce our
settlement with the Company's Board and management, and to offer our
support for the merger with Extreme Reach," remarked Alex Meruelo.
"With this settlement and the announcement of the merger, we applaud
the Company for addressing our concerns and the concerns of all
shareholders in regards to DG's strategic alternatives process, and
the corporate governance and direction of The New Online Company. The
settlement agreement includes several governance provisions that we
believe should ensure the independence of The New Online Company's
board, and ensure that maximizing shareholder value remains at the
forefront of the Company's actions. We look forward to being a part
of the long-term success of The New Online Company, and to working
with the board and management to maximize value for all
shareholders."  
About DG 
DG connects over 11,000 global advertisers and agencies with their
targeted audiences through an expansive network of over 6,000
television broadcast stations and over 11,500 web publishers in 75
countries. The Company's television division utilizes best-in-class
network and content management technologies, creative and production
resources, digital asset management and syndication services that
enable advertisers and agencies to work faster, smarter and more
competitively. The Company's online division, MediaMind, allows
marketers to benefit from optimized management of online advertising
campaigns while maximizing data driven advertising. For more
information, visit www.DGit.com. 
Forward-Looking Statements 
This press release contains statements that constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements other than
statements of historical facts are forward-looking statements. Such
forward-looking statements are not guarantees of future performance
and involve known and unknown risks, uncertainties, and other
factors, including factors discussed under the heading "Risk Factors"
in DG's Annual Report on Form 10-K filed on March 15, 2013 and
additional reports DG files with the Securities and Exchange
Commission. 
For more information contact: 
JoAnn Horne
Market Street Partners
415/445-3233 
 
 
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