Digital Generation Reaches Agreement With Meruelo Stockholders - Quick Facts

(RTTNews) - Digital Generation Inc. (DGIT), an ad management and distribution platform, Monday reached an agreement with Alex Meruelo, Meruelo Investment Partners LLC and the Alex Meruelo Living Trust relating to the earlier announced intention of the Meruelo Stockholders to propose director nominees to the company's Board and to seek certain governance changes.

Under the terms of the agreement, 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.

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 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 Co.") 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 Co. 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 Co.'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.

Should the Meruelo Stockholders reduce their beneficial ownership of The New Online Co.'s common shares to less than 8.5% of the outstanding shares, the director appointed by the Meruelo Stockholders to The New Online Co. board will resign.

The Meruelo Stockholders have agreed to support candidates nominated by The New Online Co. 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 Co. until at least the first quarter of 2015, if ever, subject to certain limitations.