| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
United States
Securities and Exchange Commission
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)
Digital Generation, Inc.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
25400B108
(CUSIP Number)
Mario A. Tapanes
Meruelo Investment Partners LLC
9550 Firestone Blvd., Suite 105
Downey, California 90241
(562) 745-2355
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
July 16, 2013
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
| Page 1 of 8 Pages |
| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
|
CUSIP No. 25400B108
| |
|
1. Names of Reporting Persons.
Alex Meruelo Living Trust
| |
|
2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) o (b) ý
| |
|
3. SEC Use Only
| |
|
4. Source of Funds (See Instructions)
WC
| |
|
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o
| |
|
6. Citizenship or Place of Organization
California
| |
| Number of Shares Beneficially Owned by Each Reporting Person With |
7. Sole Voting Power
0
|
|
8. Shared Voting Power
0
| |
|
9. Sole Dispositive Power
0
| |
|
10. Shared Dispositive Power
0
| |
|
11. Aggregate Amount Beneficially Owned by Each Reporting Person
2,547,476
| |
|
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o
| |
|
13. Percent of Class Represented by Amount in Row (11)
9.2%
| |
|
14. Type of Reporting Person (See Instructions)
OO
| |
| Page 2 of 8 Pages |
| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
|
CUSIP No. 25400B108
| |
|
1. Names of Reporting Persons.
Meruelo Investment Partners LLC
| |
|
2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) o (b) ý
| |
|
3. SEC Use Only
| |
|
4. Source of Funds (See Instructions)
AF
| |
|
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o
| |
|
6. Citizenship or Place of Organization
Delaware
| |
| Number of Shares Beneficially Owned by Each Reporting Person With |
7. Sole Voting Power
4,023,570
|
|
8. Shared Voting Power
0
| |
|
9. Sole Dispositive Power
4,023,570
| |
|
10. Shared Dispositive Power
0
| |
|
11. Aggregate Amount Beneficially Owned by Each Reporting Person
4,023,570
| |
|
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o
| |
|
13. Percent of Class Represented by Amount in Row (11)
14.5%
| |
|
14. Type of Reporting Person (See Instructions)
OO
| |
| Page 3 of 8 Pages |
| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
|
CUSIP No. 25400B108
| |
|
1. Names of Reporting Persons.
Alex Meruelo
| |
|
2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) o (b) ý
| |
|
3. SEC Use Only
| |
|
4. Source of Funds (See Instructions)
AF
| |
|
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o
| |
|
6. Citizenship or Place of Organization
United States
| |
| Number of Shares Beneficially Owned by Each Reporting Person With |
7. Sole Voting Power
4,023,570
|
|
8. Shared Voting Power
0
| |
|
9. Sole Dispositive Power
4,023,570
| |
|
10. Shared Dispositive Power
0
| |
|
11. Aggregate Amount Beneficially Owned by Each Reporting Person
4,023,570
| |
|
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o
| |
|
13. Percent of Class Represented by Amount in Row (11)
14.5%
| |
|
14. Type of Reporting Person (See Instructions)
IN/HC
| |
| Page 4 of 8 Pages |
| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
Introduction
This Amendment No. 3 (“Amendment No. 3”) is jointly filed by and on behalf of Alex Meruelo Living Trust (“Meruelo Trust”), Meruelo Investment Partners LLC (“Meruelo Partners”), and Alex Meruelo to amend the Schedule 13D filed with the Securities and Exchange Commission (“Commission”) on August 20, 2012 (“Original Schedule 13D”) as amended by Amendment No. 1 to the Original Schedule 13D filed with the Commission on December 6, 2012 (“Amendment No. 1”) and Amendment No. 2 to the Original Schedule 13D filed with the Commission on July 1, 2013 (“Amendment No. 2” and together with the Original Schedule 13D and Amendment No. 1, the “Existing Schedule 13D”, and collectively with this Amendment No. 3, the “Schedule 13D” or “statement”) with respect to the subject class of securities. Each term used and not otherwise defined in this Amendment No. 3 shall have the meaning assigned to such term in the Existing Schedule 13D. Except as otherwise provided hereby, each Item of the Existing Schedule 13D remains unchanged.
Item 4. Purpose of Transaction.
Item 4 of the Existing Schedule 13D is hereby amended and restated in its entirety as follows:
“The securities covered by this statement were acquired for investment purposes. Each reporting person believes that the subject class of securities is undervalued and represents an attractive investment opportunity.
The reporting persons have engaged in discussions with the issuer, security holders of the issuer, and other persons with respect to the subject class of securities, the issuer, the issuer's industry, business, condition, operations, structure, governance, management, capitalization, policies, plans, and prospects and related and other matters.
On November 8, 2012, Meruelo Partners issued a press release related to the issuer, a copy of which is included as Exhibit 99.2 hereto and hereby incorporated herein by reference.
On December 6, 2012, Mr. Meruelo delivered a letter to the issuer, a copy of which is included as Exhibit 99.3 hereto and hereby incorporated herein by reference.
On December 6, 2012, Meruelo Partners issued a press release related to the issuer, a copy of which is included as Exhibit 99.4 hereto and hereby incorporated herein by reference.
On July 8, 2013, Meruelo Partners delivered a letter to the issuer, a copy of which is included as Exhibit 99.5 hereto and hereby incorporated herein by reference.
On July 11, 2013, the issuer delivered a letter to Meruelo Partners in response to the letter dated July 8, 2013, a copy of which is included as Exhibit 99.6 hereto and hereby incorporated herein by reference.
On July 16, 2013, Meruelo Partners issued a press release related to the issuer, a copy of which is included in Exhibit 99.7 hereto and hereby incorporated herein by reference.
On July 16, 2013, the Meruelo Trust delivered a letter to the issuer, a copy of which is included in Exhibit 99.8 hereto and hereby incorporated herein by reference.
Each reporting person plans and proposes to review and analyze such reporting person's interest in the issuer on a continuing basis and continue to engage in such discussions, as well as discussions with the issuer, the issuer's directors and officers and other persons related to the issuer, as such reporting person deems necessary or appropriate in connection with such reporting person's interest in the issuer.
| Page 5 of 8 Pages |
| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
Depending upon the factors described below and any other factor that is or becomes relevant, each reporting person plans and proposes to: (a) acquire additional amounts of the subject class of securities or different equity, debt, or other securities of the issuer, derivative securities related to securities of the issuer or other securities related to the issuer (collectively, “Issuer-Related Securities”) or a combination or combinations of Issuer-Related Securities, including by purchase or other method, pursuant to open market, private, tender offer, or other transactions, using borrowed or other funds or consideration of or from any source described herein or other source or via a combination or combinations of such methods, transactions, consideration, and sources; (b) dispose of all or part of the securities covered by this statement and any other Issuer-Related Securities, including by sale or other method, pursuant to open market, private, or other transactions or via a combination or combinations of such methods and transactions; (c) engage in financing, lending, hedging, pledging, or similar transactions involving the securities covered by this statement or other Issuer-Related Securities or a combination or combinations of such transactions; (d) engage in discussions and otherwise communicate with the issuer, officers, directors, and security holders of the issuer and other persons related to the issuer with respect to Issuer-Related Securities, the issuer, the issuer's industry, business, condition, operations, structure, governance, management, capitalization, dividend policy, other policies, plans, and prospects and related and other matters; (e) suggest or recommend a transaction or transactions involving the acquisition, sale, or exchange of all or part of the Issuer-Related Securities or assets of the issuer, other actions or a combination or combinations of such actions, in any case, which relates or relate to (or could result in) a change or changes to the issuer's business, condition, operations, structure, governance, management, capitalization, policies, plans, and prospects and similar and other actions and changes; (f) make a proposal or proposals involving the acquisition or sale of all or part of the Issuer-Related Securities or assets of the issuer; (g) make a proposal or proposals to request that the issuer and/or the security holders of the issuer consider an extraordinary or other transaction, such as a merger or reorganization, or a combination or combinations of such transactions; and (h) engage in a combination or combinations of the foregoing plans and/or proposals.
Each such plan or proposal may be subject to, and depend upon, a variety of factors, including (i) current and anticipated trading prices and the expected value of applicable Issuer-Related Securities, (ii) the issuer's financial condition and position, results of operations, plans, prospects and strategies, (iii) general industry conditions, (iv) the availability, form and terms of financing and other investment and business opportunities, (v) general stock market and economic conditions, (vi) tax considerations and (vii) other factors. Each acquisition, disposition, transaction, discussion, communication, suggestion, recommendation, proposal and other action described herein may be effected, made or taken, as applicable, at any time and/or from time to time without prior notice. Although the plans and proposals described herein reflect the plans and proposals presently contemplated by the reporting persons with respect to the issuer and the Issuer-Related Securities, as applicable, each such plan and proposal is subject to change at any time and from time to time dependent upon contingencies and assumed and speculative conditions and other factors, including actions taken by the issuer, the issuer's board of directors, other security holders of the issuer and other parties and the outcome of the discussions, communications, transactions and other actions described herein. There can be no assurance that any such plan or proposal will be consummated or pursued or result in any transaction described herein or other transaction or that any action contemplated by any such plan or proposal (or any similar action) will be taken.
Except as otherwise described herein, no reporting person currently has any plan or proposal that relates to or would result in any of the actions specified in clause (a) through (j) of Item 4 of Schedule 13D. However, each reporting person may, at any time and from time to time, plan or propose to effect or cause an action or actions relating to or resulting in one or more of the actions specified in clause (a) through (j) of Item 4 of Schedule 13D.”
Remainder of Page Intentionally Left Blank. Signature Page(s) to Follow.
| Page 6 of 8 Pages |
| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
| Alex Meruelo Living Trust | ||
| Date: July 16, 2013 | By: | /s/ Alex Meruelo |
| Name: | Alex Meruelo | |
| Title: | Trustee | |
| Meruelo Investment Partners LLC | ||
| Date: July 16, 2013 | By: | /s/ Alex Meruelo |
| Name: | Alex Meruelo | |
| Title: | Chief Executive Officer | |
| Alex Meruelo | ||
| Date: July 16, 2013 | By: | /s/ Alex Meruelo |
| Name: | Alex Meruelo | |
Remainder of Page Intentionally Left Blank. Exhibit Index to Follow.
| Page 7 of 8 Pages |
| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
Exhibit Index
| Exhibit | |
| Reference | Description |
| 99.2 | Press Release dated November 8, 2012 (incorporated by reference to Exhibit 1 to the Schedule 14A filed by Alex Meruelo on November 8, 2012) |
| 99.3 | Letter dated December 6, 2012 (incorporated by reference to Exhibit 2 to the Schedule 14A filed by Alex Meruelo on December 7, 2012) |
| 99.4 | Press Release dated December 6, 2012 (incorporated by reference to Exhibit 3 to the Schedule 14A filed by Alex Meruelo on December 7, 2012) |
| 99.5 | Letter dated July 8, 2013 (furnished herewith) |
| 99.6 | Letter dated July 11, 2013 (furnished herewith) |
| 99.7 | Press Release dated July 16, 2013 (furnished herewith) |
| 99.8 | Letter dated July 16, 2013 (furnished herewith) |
Remainder of Page Intentionally Left Blank. Exhibit(s) to Follow.
| Page 8 of 8 Pages |
| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
Exhibit 99.5
Meruelo Investment Partners LLC
9550 Firestone Blvd
Suite 105
Downey, CA 90241
July 8, 2013
VIA EMAIL
Mr. Peter Markham
Board of Directors
Digital Generation, Inc
750 West John Carpenter Freeway
Suite 700
Irving, TX 75039
RE: Meruelo Request for Waiver of DGCL Section 203
Dear Peter:
While I believe we have made significant progress in our discussion over the past several weeks, I understand that the Board of Directors (the “Board”) of Digital Generation (“DGIT” or the “Company”) refuses to accept our request for approval to allow Alex Meruelo and Meruelo Investment Partners (together “Meruelo”) to acquire up to a 25% ownership interest in the Company. As described below, we think this is simply shortsighted, unfair and not good for the Company and its shareholders.
Before getting into the reasons why we think the Board should accept our request, it might be useful to note the progress we have made in our recent talks. We understand from our discussions with you that the Board is amenable to (i) appointing a new and independent Chair, (ii) negotiating termination of the current Executive Chairman’s employment with the Company (although he may remain a director), (iii) expanding the Board by one, (iv) nominating two Meruelo designees with relevant industry expertise at the next annual meeting, and (v) amending the bylaws to eliminate board classification. As you know this is a significant compromise by Meruelo from our initial desire to call a special meeting to nominate a new slate of directors.
Our major remaining controversy is the Board’s refusal to accommodate our request to approve, pursuant to Section 203 of the General Corporation Law of the State of Delaware (“Section 203’), an increase in our investment in the Company. This refusal to offer us a level playing field is simply inexplicable to us. We are asking only to preserve the rights available to every other stockholder in the Company. However, I understand that the Board, with the advice of its counsel, is of the view that the Section 203 limitations do not affect our flexibility to act as such an investor. This is not true.
Quite to the contrary, Section 203 would unfairly discriminate against us in our efforts to further stockholder and Company interests. For instance, the Section 203 limitations could prevent us from taking steps to protect our investment if difficult times arose for the Company. They may stop us (or at the very least delay us) from helping to “backstop” a rights offering for all stockholders, loaning funds on an arms-length basis, purchasing non-core assets on an arms-length basis or otherwise acting to enter into arm-length transactions helpful to the Company (even with the unanimous consent of the independent members of the Board).
The Section 203 limitations also inhibit our ability to help stockholders achieve a fully fair price in major transactions. For instance, in the event of a third party hostile tender for the Company our hands would be tied. We would be unable to effectively compete with that offer because any “back-end” merger would still require the onerous vote of unaffiliated holders (who could include the hostile bidder itself). Even if we received 90% of the outstanding shares in a competing tender, a mere 4% of the shares (which could include the hostile bidder) could prevent a merger. This uncertainty inhibits our ability to fund and complete a deal otherwise available to everyone on earth but us.
| Exhibit 99.5 | Page 1 of 2 Pages |
| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
Similarly, we would be unable to effectively set a floor price if the Company undertook a process to explore strategic alternatives. Only our proposal would be subject to the higher (and unpredictable) stockholder vote required by Section 203, and only our proposal would be denied the benefit of break-up fees or other similar protections intended to elicit the higher prices available.
This is both short-sighted and unfair, particularly when we are offering to enter into a support and standstill arrangement with the Company whereby we would agree to the following:
| · | To vote our shares in support of the Company’s nominees at the next annual meeting (end of 2013); |
| · | To refrain for a one year period from selling any shares below a certain threshold in order to support the stock; and |
| · | To refrain from initiating or joining any proxy contests or groups or acquiring more than a 25% ownership interest in the Company, other than with the consent of the independent members of the board or as a result of our consummation of a competing offer. |
Indeed, we strongly believe that approving our purchase of a limited number of additional shares under Section 203 as we have proposed is in the best interest of the Company and its stockholders. The Company has much to gain and nothing to lose. Meruelo merely gains the right to acquire only 10% more than it currently holds. This is no detriment to the Company. A 25% interest does not provide Meruelo with any significant increase in control or influence and the Section 203 limitations still apply to Meruelo purchases above 25%.
We continue to believe that the Company’s stock is undervalued. Meruelo has already increased is position to more than 14%. This has unequivocally helped stabilize the share price. It has signaled to the market that a significant stockholder believes in the Company and its future. This is good for all stockholders. We think the Board should welcome further support for the Company’s stock price by a stockholder who has already demonstrated a willingness to work continuously with the Board.
Given the current situation with the Company, there is no reasonable business justification to hold Meruelo below 15%. By entering into a support agreement with us, as we have proposed, the Company obtains more power over our purchases and actions than it currently has, yet still retains the Section 203 limitations above 25%. This is a good deal for the Company and its stockholders.
The restrictions imposed by Section 203 on our investment activities, as noted in the examples above, are not exhaustive. The point is simply that it prevents you and us from acting reasonably together in the future to protect the best interests of the Company and its stockholders. We strongly urge independent directors of the board to carefully consider this request and take into full account the benefits to be received by the Company.
Please note that this letter is not a binding agreement and we reserve all of our rights. I hope this letter helps you and the Board in your consideration of our request. Please do not hesitate to give me a call with any questions and/or comments. As per our last conversation, we look forward to a prompt response from the Board on our request.
Best regards,
Xavier A. Gutierrez
President and Chief Investment Officer
Meruelo Investment Partners LLC
| Exhibit 99.5 | Page 2 of 2 Pages |
| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
Exhibit 99.6
July 11, 2013
Confidential
Xavier A. Gutierrez
President and Chief Investment Officer
Meruelo Investment Partners LLC
9550 Firestone Boulevard
Suite 105
Downey, CA 90241
Dear Xavier:
I am writing in response to your letter dated July 8, 2013 regarding the request for a waiver under Section 203 of the Delaware General Corporation Law ("Section 203") to allow Alex Meruelo and Meruelo Investment Partners LLC (collectively "Meruelo") to acquire up to 25% of the outstanding shares of Digital Generation, Inc. ("DG" or the "Company") without the provisions of Section 203 applying to Meruelo.
First, I want to convey the Board's and management's appreciation of Meruelo's investment in DG and the interest you and Alex have in the Company's success. As you note in your letter, we have had constructive discussions on possible changes to Board structure and other governance matters, and the Board remains open to continued feedback and recommendations from Meruelo as well as other investors. While the status of our conversations was not characterized entirely accurately and we have not reached agreement on the parameters of any proposed changes (including Board representation), I completely agree that we have made progress.
As you know, we have recently undertaken significant governance reforms which have been publicly disclosed – appointment of an independent Chairman following our Annual Meeting later this year and de-classification of the Directors for election to one-year terms starting with the 2013 Annual Meeting. The Board is continuing to examine other possible improvements to governance as well.
With respect to your request for the Section 203 waiver, we acknowledge that any decision on Meruelo's part to increase its ownership to 15% or more of the outstanding shares will subject Meruelo to the requirements of that Section with respect to certain future transactions involving Meruelo and the Company. However, the law does not prohibit such transactions nor does it necessarily make it impractical for Meruelo to consummate any transaction.
Section 203 was adopted some 30 years ago by the Delaware legislature as a means to provide a level playing field for all stockholders of a public company, large and small. The legislature and the Courts have seen no reason to change the law, and Section 203 is a well-accepted, well-understood feature of Delaware corporate governance. Its goal is simply to protect all stockholders from a single large investor holding something well less than 50% of a public company's shares from either extracting a control premium in a transaction or attempting to block a transaction that would otherwise be in a majority of all stockholders' interests.
The Board has carefully considered your request over the past several weeks and the points raised in your July 8 letter. Notwithstanding Section 203, Meruelo will be able to acquire 15% or more of the outstanding shares and engage in the types of transactions you cite, including back-stopping rights offerings, making loans to the Company, or acquiring a disproportionate number of newly issued shares from the Company should the Board and two-thirds of the disinterested outstanding shares agree. More fundamentally, Meruelo can still make a cash tender offer to buy the Company, and still complete a back-end merger to freeze out any untendered shares with a two-thirds disinterested vote and the Board's consent. In short, Section 203 insures that the economics of a transaction with a large stockholder will be fair so long as two-thirds of the disinterested shares and the Board agree.
| Exhibit 99.6 | Page 1 of 2 Pages |
| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
As we have expressed to you, the Board is amenable to continued discussions to provide Meruelo with Board representation and to address any governance concerns that you have in addition to the changes we have already made. For the reasons outlined above, the Board has determined in good faith that the interests of all DG stockholders is best served by leaving Section 203 in place with respect to Meruelo at this time, as it would for any other large stockholder. Should circumstances change, we will remain open minded. We greatly appreciate your support of the Company and look forward to continued dialogue.
With best personal regards,
Peter Markham
Director
Digital Generation, Inc.
cc: DG Board of Directors
| Exhibit 99.6 | Page 2 of 2 Pages |
| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
Exhibit 99.7
| FOR IMMEDIATE RELEASE | PRESS RELEASE |
ALEX MERUELO RESPONDS TO RECENT ANNOUNCEMENTS BY DIGITAL GENERATION, INC.
Pushes for Further Changes to the Board of Directors
LOS ANGELES, July 16, 2013 (PNR NEWSWIRE) -- Alex Meruelo and Meruelo Investment Partners LLC today issued the following statement regarding Digital Generation, Inc. (Nasdaq: DGIT) (“DG,” “Company”):
Alex Meruelo, Meruelo Investment Partners LLC together with related entities (“Meruelo”) are the largest stockholders of DG with beneficial ownership exceeding 14%. Recently, the DG board of directors (the “Board”) announced certain corporate governance changes along with the date of the Company’s 2013 annual stockholder meeting. With a strong commitment to DG, and an unwavering focus on maximizing value for all stockholders, Meruelo strongly urges the Board to take further actions to improve the performance of the Company through changes to the composition of the Board, and to implement further corporate governance changes.
Pushed by our previous actions, two independent directors were added at the 2012 annual stockholders meeting. And, as a result of our continued pressure, the Board now proposes to institute an independent chair, and a delayed process to declassify the Board over a two year period following the 2013 annual meeting.
However, Meruelo does not believe that these steps are enough to address the urgent problems which significantly disadvantage DG’s performance.
As Meruelo has shared in numerous discussions with the Board and management in the last several months, Meruelo believes that the composition of the Board continues to be a primary cause of DG’s underperformance. Certain members of the Board were responsible for approving excessive compensation for DG’s executive chair, and adopting a poorly run (and ultimately failed) strategic review process that disrupted DG’s business and operations.
The Board continues to represent a reputational hazard for the Company, continues to take actions that undermine the operational and strategic plans that management seeks to implement, and has failed to address the significant short position in this stock.
In the face of further downward pressures on the stock price, Meruelo recently increased its ownership to help support the stock, and requested that the Board enable it to increase ownership by another 10%, while maintaining full rights as a stockholder. Despite Meruelo’s willingness to agree to a support agreement that would have protected stockholders, the Board rejected this request.
Ultimately, Meruelo strongly urges the Board to take further action in regards to the Board composition, and to implement further corporate governance changes. Furthermore, Meruelo supports the Board in pushing the executive chair to voluntarily resign in all employment capacities, effective immediately. Finally, Meruelo fully supports the chief executive officer and the management team as they execute on strategies that will significantly improve DG and stockholder value.
With further changes to the Board, Meruelo is confident that DG’s performance will improve significantly. DG’s management can then be free to take appropriate actions to improve DG’s performance and position DG to maximize value for all stockholders whether through organic growth, a sale of the Company or other strategic alternatives.
Meruelo is considering all of its options to ensure that the actions it suggests are taken, including but not limited to nominating independent directors for election to the Board, and other corporate governance changes.
| Exhibit 99.7 | Page 1 of 2 Pages |
| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
About the Meruelo Parties
Meruelo Investment Partners LLC acts as an investment adviser or manager to other persons and accounts and may be deemed to beneficially own securities owned or held by or for the account or benefit of such persons and accounts. The principal business of Meruelo Investment Partners is serving as an investment adviser or manager to other persons and accounts.
Alex Meruelo is the Chief Executive Officer of Meruelo Investment Partners and may be deemed to control, and beneficially own securities owned or held by, Meruelo Investment Partners. The present principal occupation of Mr. Meruelo is serving as the principal of the Meruelo Group, which includes affiliated companies with significant interests in real estate management and development, utility construction, hospitality and gaming, food services (manufacturing, distribution and restaurant operations), banking and other financial services, and television broadcast media.
About any Possible Proxy Solicitation
Although Meruelo is not currently soliciting proxies for any annual or special meeting of stockholders of the Company, Meruelo reserve the right to do so. If Meruelo elects to solicit proxies in the future, Meruelo will file a proxy statement and other soliciting materials with the SEC and advise security holders to read the materials (when they become available) because they will contain important information. Security holders will be able to obtain any such materials (when they become available) for free at the SEC's web site at http://www.sec.gov or from us using the contact information provided herein or in such materials.
Forward-Looking Statements
This press release contains forward-looking statements that are subject to factors that could cause actual results to differ materially from expected results, including assumptions that may not be correct or accurate due to risks related to the Company and other parties, circumstances, and conditions Meruelo cannot control or predict, the inherent uncertainty of future events, and other factors that may cause Meruelo to change its plans.
| Exhibit 99.7 | Page 2 of 2 Pages |
| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
Exhibit 99.8
July 16, 2013
Digital Generation, Inc.
750 West John Carpenter Freeway
Suite 700
Irving, TX 75039
Attn: Sean Markowitz, General Counsel and Corporate Secretary
Re: Written Request pursuant to Article II, Section 13(f) of Digital Generation, Inc.’s Bylaws
Dear Mr. Markowitz:
This written request is made by the undersigned beneficial owner of shares of common stock, no par value per share (the “Shares”) of Digital Generation, Inc., a Delaware corporation (the “Company”) pursuant to Article II, Section 13(f) of the Amended and Restated Bylaws of the Company, as amended (the “Bylaws”) to deliver to the undersigned the following form documents as required by the Bylaws:
| · | the written questionnaire with respect to the background and qualification of any proposed nominee for election to the Board; and |
| · | the written representation and agreement that such proposed nominee (i) is not and will not become a party to (a) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such proposed nominee, if elected as a director of the Company, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Company or (b) any Voting Commitment that could limit or interfere with such proposed nominee’s ability to comply, if elected as a director of the Company, with such proposed nominee’s fiduciary duties under applicable law, (ii) is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than the Company with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the Company and (iii) in such proposed nominee’s individual capacity and on behalf of the stockholder (or the beneficial owner, if different) on whose behalf the nomination is made, would be in compliance, if elected as a director of the Company, and will comply with applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Company. |
In addition, please provide the following documents identified in the news release issued by the Company on July 11, 2013:
| · | A copy of the amendment(s) to the Company’s Corporate Governance Guidelines that provide that (i) the chairman of the Company will qualify as an independent, non-executive Director under the rules and regulations of the NASDAQ Global Market and the United States Securities and Exchange Commission and (ii) following the 2013 annual meeting of the stockholders of the Company (the “2013 Annual Meeting”), the Board will be led by an independent chairman; and |
| · | A copy of the amendment(s) to the Bylaws that provide that (i) directors of the Company to be elected at the 2013 Annual Meeting will be elected for one-year terms, (ii) directors not up for re-election at the 2013 Annual Meeting will serve out their remaining terms and (iii) all directors to be elected at future meetings will be elected for one-year terms. |
| Exhibit 99.8 | Page 1 of 3 Pages |
| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
Please deliver the documents requested above as soon as possible, but in no event later than July 19, 2013, to my representatives listed below:
|
Electronic Copy to:
|
Bvega@meruelogroup.com
Jlevin@winston.com
|
|
Hard Copy to:
|
Benjamin A. Vega General Counsel Meruelo Investment Partners LLC 9550 Firestone Boulevard, Suite 105 Downey, California 90241
|
|
C. James Levin Partner Winston & Strawn LLP 333 S. Grand Avenue, 38th Fl. Los Angeles, California 90071 |
Please note that time is of the essence given the annual shareholders meeting date announced by the Company on July 11, 2013.
[Remainder of Page Intentionally Left Blank]
| Exhibit 99.8 | Page 2 of 3 Pages |
| Filing - Filing Date: | Schedule 13D/A-3 – July 16, 2013 |
| Reporting Persons: | Alex Meruelo Living Trust, Meruelo Investment Partners LLC, and Alex Meruelo |
| Issuer - Securities: | Digital Generation, Inc. - Common Stock |
The undersigned represents and warrants that it is the beneficial owner of 2,547,476 Shares and has caused this written request to be duly executed on the date first written above.
| ALEX MERUELO LIVING TRUST DATED 8/6/1996 | ||
| By: | /s/ Alex Meruelo | |
| Alex Meruelo | ||
| Trustee | ||
| Exhibit 99.8 | Page 3 of 3 Pages |