UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.     )

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

Marchex, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

July 10, 2017

Dear Stockholders of Marchex, Inc.,

We cordially invite you to attend our 2017 Annual Meeting of Stockholders. The Annual Meeting will be held on Monday, August 21, 2017, at 10:00 AM Pacific Time at Marchex, Inc., 520 Pike Street, 1211 Building Conference Center, 12^th floor, Seattle Washington.

At this year’s Annual Meeting, the agenda will be as follows:

For our 2017 Annual Meeting, we have elected to use the Internet as our primary means of providing our proxy materials to stockholders. Consequently, most stockholders will not receive paper copies of our proxy materials. We will instead send to our stockholders a Notice of Internet Availability of Proxy Materials. The Notice of Internet Availability of Proxy Materials contains instructions on how to access our proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which contains, among other things, our 2016 audited consolidated financial statements. The Notice of Internet Availability of Proxy Materials also includes instructions on how you can vote using the Internet, and how you can request and receive, free of charge, a printed copy of our proxy materials, including our 2016 Annual Report, the Notice of Annual Meeting, our proxy statement and a proxy card. The electronic delivery of our proxy materials will reduce our printing and mailing costs and minimize the environmental impact of the proxy materials.

The ability to have your vote counted at the Annual Meeting is an important stockholder right. Regardless of the number of shares you hold, and whether or not you plan to attend the Annual Meeting, we hope that you will promptly cast your vote.

Thank you for your ongoing support and continued interest in Marchex, Inc.

Marchex, Inc.

520 Pike Street, Suite 2000

Seattle, Washington 98101

NOTICE OF 2017 ANNUALSPECIAL MEETING OF STOCKHOLDERS

To Be Held at 10:00 a.m. Pacific Time on Monday, August 21, 2017

Dear Stockholders of Marchex, Inc.:

The 2017 AnnualOn behalf of the Board of Directors (the “Board”) of Marchex, Inc. (the “Company”), you are cordially invited to attend a Special Meeting of Stockholders (the “Annual Meeting”“Special Meeting”) of Marchex, Inc., a Delaware corporation (“Marchex”), willto be held exclusively online via live audio webcast on Monday, August 21, 2017,October 1, 2020, at 10:00 AM, Pacific Time,Time. The Company has decided to hold this meeting exclusively online and not in a physical location given the ongoing public health impacts of the COVID-19 pandemic and the importance of the health and safety of the Company’s directors, officers, employees and stockholders. There will not be a physical meeting location, and the Company’s stockholders will not be able to attend the Special Meeting in person. The Special Meeting can be accessed by visiting www.meetingcenter.io/240872478 (the “Meeting Website”), where stockholders will be able to listen to the meeting, submit questions and vote online.

Information Concerning Solicitation and Voting

The Board is soliciting proxies for the Special Meeting to be held on October 1, 2020. The accompanying proxy statement (the “Proxy Statement”) contains information for you to consider when deciding how to vote on the matters brought before the Special Meeting.

Voting materials, which include the Proxy Statement and the Proxy Card, are being mailed to stockholders on or about     , 2020. The executive office of our Company is located atMarchex, Inc., 520 Pike Street, 1211 Building Conference Center, 12^th floor,Suite 2000, Seattle, Washington 98101.

As previously announced, on August 7, 2020, the Company (the “Seller”) and Archenia, Inc. (the “Purchaser”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”), pursuant to which, and upon the terms and subject to the conditions thereof, the Purchaser will acquire the Seller’s (i) advertising network for businesses that drive sales through inbound phone calls (the “Call Marketplace Product”), (ii) advertising solution for small business resellers to sell call advertising, search marketing and other lead generation products through their existing sales channels to their small business advertisers (the “Local Leads Product”), and (iii) related business operations and certain other assets including an equity interest in Uproar.car Corporation (“Uproar,” and together with the Call Marketplace Product and the Local Leads Product, the “Business”), and assume certain liabilities of the Seller (the “Transaction”).  

We do not believe that the sale of the Business, under Delaware law, would be deemed a sale of all, or substantially all, of our assets, to the Purchaser on the terms and subject to the conditions set forth in the Asset Purchase Agreement, but we are seeking stockholder approval regarding the sale of the Business because the special committee of the Board comprised solely of independent directors of the Company (the “Special Committee”), along with the full Board, in conjunction with the Purchaser, considered the action appropriate, and strongly desire the input of the Company’s stockholders, given the historical significance of the Business, and given that Russell C. Horowitz, Co-CEO of the Seller, and Michael Arends, Co-CEO and Chief Financial Officer of the Seller, are the controlling stockholders of the Purchaser.

As consideration for the Business, Purchaser has agreed to pay us (a) $2.25 million in cash; (b) contingent consideration based on revenue from the Call Marketplace Product (once cumulative revenues exceed $140.0 million post transaction, 2.5% of incremental revenues net of direct variable costs for a 24-month period), the Local Leads Product (once cumulative revenues exceed $6.0 million post transaction, 15% of

incremental revenues net of direct variable costs), and the Purchaser’s total business (once annual revenues exceed $53.0 million in any of calendar years 2021, 2022 and 2023, 0.25% of incremental revenues); (c) contingent consideration for any sale of the Purchaser (if sold for greater than $11.1 million within 24-months following purposes as more fully describedclosing, 30% of incremental proceeds); (d) shares of Class B common stock in the accompanying proxy statement:Purchaser equal to a 10% equity interest at closing; and (e) the cancellation of Company stock options for 1.5 million shares currently held by Messrs. Horowitz and Arends. Messrs. Horowitz and Arends will remain in their current executive officer positions with the Company with no change in their roles or duties. While Messrs. Horowitz and Arends are the controlling stockholders of the Purchaser, they have advised the Company that they will not have executive officer positions with Purchaser. Seller and Purchaser have also agreed to enter into a support services agreement pursuant to which Seller, following the closing of the transaction, will provide services to Purchaser on a cost-plus 5% basis, with minimum payments to the Company of $3.5 million in the first year following closing, and $1.5 million in the second year following closing (with the second year minimum payment subject to a minimum revenue threshold of Purchaser for such year).

At the Special Meeting, stockholders will be asked to:

OurStockholders are referred to the Proxy Statement for more detailed information with respect to the matters to be considered at the Special Meeting. After careful consideration, the Board, in reliance on the recommendation from the Special Committee, has unanimously determined that the Transaction, the Asset Purchase Agreement and the Related Agreements are fair, advisable to and in the best interests of Directorsthe Company and its stockholders and recommends a vote FOR items 1, 2, 3, 4that you vote:

All stockholders are invited to join the Special Meeting via the Meeting Website. The Board of Directors of Marchex has fixed the close of business on June 27, 2017 asAugust 10, 2020 is the record date for the Annual Meeting. Onlydetermining stockholders of record on the record date are entitled to notice of, and to vote at, the AnnualSpecial Meeting. Further information regarding voting rightsConsequently, only stockholders whose names appear on our books as owning our Class A common stock and Class B common stock at the mattersclose of business on August 10, 2020 will be entitled to be voted upon is presented innotice of, and to vote at, the accompanying proxy statement.Special Meeting and any adjournment or postponement thereof.

Your vote is important

. YOUR VOTE AND PARTICIPATION IN THE COMPANY’S AFFAIRS ARE IMPORTANT.Whether or not

If your shares are registered in your name, even if you plan to attendjoin the AnnualSpecial Meeting pleasevia the Meeting Website or any adjournment or postponement of the Special Meeting, we request that you vote by telephone or Internet, by following the voting procedures described in the Notice of Internet Availability of Proxy Materials. If you received printed proxy materials and wish to vote by mail,or promptly complete, date and sign the enclosed proxy card and return it in the accompanying envelope.

If your shares are held in the name of a broker, bank or other nominee, and you receive notice of the Special Meeting through your broker, bank or other nominee, please vote or complete and return the materials in accordance with the instructions provided to you by such broker, bank or other nominee or contact your broker, bank or other nominee directly in order to obtain a proxy issued to you by your nominee holder to participate in the Special Meeting and submit your vote through the Meeting Website. Failure to do so may result in your shares not being eligible to be voted by proxy at the Special Meeting.

The Proxy Statement contains important information concerning the Special Meeting, the Transaction, the Asset Purchase Agreement and the Related Agreements, including information as to how to cast your vote. We appreciateencourage you to read the Proxy Statement, the Asset Purchase Agreement and the other annex to the Proxy Statement carefully and in their entirety.

The Asset Sale Proposal must be approved by both (a) stockholders representing a majority of the voting power of all issued and outstanding Class A common stock and Class B common stock entitled to vote at the Special Meeting (treated as a single class) and (b) stockholders representing a majority of the voting power of all issued and outstanding Class A common stock and Class B common stock entitled to vote at the Special Meeting (treated as a single class), disregarding stock owned by Russell C. Horowitz and Michael Arends. Therefore, if you do not vote by proxy or join the Special Meeting and submit a vote via the Meeting Website or, if you hold your continued supportshares in “street name,” properly instruct your broker, bank or other nominee with respect to voting your shares, it will have the same effect as if you voted “AGAINST” the Asset Sale Proposal.

Your vote is important. Please complete, sign, date and promptly return the proxy card in the enclosed envelope, so that your shares will be represented whether or not you join the Special Meeting via the Meeting Website.  Returning a proxy card will not deprive you of Marchex.your right to join the Special Meeting and vote your shares via the Meeting Website.

Seattle, Washington

July 10, 2017

TABLE OF CONTENTS

PROXY STATEMENT

2017 ANNUAL MEETING OF STOCKHOLDERS

AUGUST 21, 2017

GENERAL INFORMATIONSpecial Meeting of Stockholders

This proxy statement (this “Proxy Statement”) is being provided to solicit proxies on behalf of the Board of Directors of Marchex, Inc. for use at the 2017 AnnualSpecial Meeting of Stockholders to be held on August 21, 2017,October 1, 2020, at 10:00 AM Pacific Time, at Marchex, Inc., 520 Pike Street, 1211 Building Conference Center, 12^th Floor, Seattle, Washington,via the Internet, and at any adjournment or postponement thereof. We expect

All references in this Proxy Statement to:

Capitalized terms used but not defined elsewhere in this Proxy Statement shall have the meanings set forth in the Asset Purchase Agreement.

Neither the Securities and Exchange Commission nor any other regulatory agency has approved or disapproved of the Transaction, passed upon the merits or fairness of the Transaction, or passed upon the adequacy or accuracy of this Proxy Statement. Any representation to the contrary is a criminal offense.

The Proxy Statement is dated               , 2020 and is first being mailed to stockholders on approximately July 10, 2017.or about               , 2020.

TABLE OF CONTENTS

SUMMARY TERM SHEET

This summary highlights selected information contained elsewhere in this Proxy Statement and may not contain all the information that is important to you with respect to the Transaction, the Asset Purchase Agreement, the Related Agreements and the other matters being considered at the Special Meeting of the Company’s stockholders to which this Proxy Statement relates. We urge you to read carefully the remainder of this Proxy Statement, including the attached annexes, and the other documents to which we have referred you. For additional information on the Company, see the section entitled “Where You Can Find More Information” beginning on page 56. We have included page references in this summary to direct you to a more complete description of the topics presented below.

Information about the Parties (see page 26)

The Company

We are a call analytics company that helps businesses connect, drive, measure, and convert callers into customers. We provide products and services for businesses of all sizes that depend on consumer phone calls or texts to drive sales. Our principal offices areanalytics technology can facilitate call quality and texting, analyze calls and measure the outcomes of calls. We also deliver performance-based, pay-for-call advertising across numerous mobile and online publishers to connect consumers with businesses over the phone.

We were incorporated in 2003 under the laws of the State of Delaware. Our executive office is located at 520 Pike Street, Suite 2000, Seattle, Washington 98101. Our telephone number is (206) 331-3300. Our website is www.marchex.com. The information contained on our website is not incorporated into this Proxy Statement.

In this proxy statement,Our Class B common stock is listed on The NASDAQ Global Select Market under the ticker symbol “MCHX.”

Purchaser

Archenia, Inc. provides adverting marketing services and lead generation.  It was incorporated in 2020 under the laws of the State of Delaware.

The Asset Purchase Agreement (see page 43 and Annex A)

On August 7, 2020, we referentered into the Asset Purchase Agreement with Purchaser pursuant to Marchex, Inc. as Marchex, we, us or the Company.

Internet Availability of Annual Meeting Materials

Under rules adopted by the Securities and Exchange Commission, or SEC,which we have electedagreed to provide accesssell to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials, orPurchaser the Notice,Business, subject to our stockholders of record. All stockholders will havecertain conditions, including the ability to access the proxy materials on the website referred to in the Notice or to request to receive a printed setapproval of the proxy materials. Instructions on how to accessTransaction by stockholders at the proxy materials over the Internet or to requestSpecial Meeting representing (a) a printed copy may be found in the Notice. You will not receive a printed copymajority of the proxy materials unless you request one in the manner set forth in the Notice. This permits us to conserve natural resourcesvoting power of all issued and reduces our printing costs, while giving stockholders a convenientoutstanding Class A common stock and efficient way to access our proxy materials and vote their shares.

We intend to mail the Notice on or about July 10, 2017 to all stockholders of recordClass B common stock entitled to vote at the Annual Meeting.Special Meeting (treated as a single class) and (b) a majority of the voting power of all issued and outstanding Class A common stock and Class B common stock entitled to vote at the Special Meeting (treated as a single class), disregarding stock owned by Russell C. Horowitz and Michael Arends (the approval in clause (b), the “Majority of the Minority Vote,” and together with the approval in clause (a), “Stockholder Approval”).  We are seeking the Majority of the Minority Vote because a special committee (the “Special Committee”) of our board of directors (the “Board”) comprised solely of independent directors, in conjunction with the Purchaser, determined that doing so was appropriate given that Messrs. Horowitz and Arends are the controlling stockholders of the Purchaser. Under the terms of the Asset Purchase Agreement, we will retain certain specified assets, including all of our cash and cash equivalents, bank accounts (other than the Uproar bank account), certain contracts that are not expressly assumed by Purchaser, all intellectual property owned by us other than intellectual property primarily related to the Business, and certain other assets specified in

the Asset Purchase Agreement, and will also retain certain specified liabilities, including all liabilities with respect to taxes related to the Business arising before the closing of the Transaction, and certain other liabilities specified in the Asset Purchase Agreement.

Who MayA copy of the Asset Purchase Agreement is attached as Annex A to this Proxy Statement. You are encouraged to read the Asset Purchase Agreement carefully and in its entirety.

The Company’s Business Following the Transaction (see page 40)

Following the Transaction, we will continue to operate and manage our call analyticsbusiness, through which we provide various analytics and solutions products (the “Analytics and Solutions Products”) via our platforms to enterprises that depend on inbound phone calls to drive sales, appointments and reservations. Marketers can use these platforms to understand which marketing channels, advertisements, search keywords, or other digital marketing advertising formats are driving calls to their business, allowing them to optimize their advertising expenditures across media channels. The Analytics and Solutions Products also include technology that can extract data and insights about what is happening during a call and measures the outcome of calls and return on investment. The platform also includes technology that can block robocalls, telemarketers and spam calls to help save businesses time and expense. The Analytics and Solutions Products data can integrate directly into third-party marketer workflows such as Salesforce, Eloqua, Adobe, Google Search, Kenshoo, Marin Software, Facebook and Instagram, in addition to other marketing dashboards and tools. Advertisers pay us a fee for each call/text or call/text related data element they receive from calls or texts, including call-based ads we distribute through our sources of call distribution or for each phone number tracked based on pre-negotiated rates.

For further information regarding our platform, including our Analytics and Solutions Products, see “Proposal One: Asset Sale Proposal – The Company’s Business Following the Transaction.”

Consideration for the Business (see page 27)

As consideration for the sale of the Business, Purchaser has agreed to pay us (a) $2.25 million in cash (the “Base Cash Payment Amount”); (b) contingent consideration based on revenue from the Call Marketplace Product (once cumulative revenues exceed $140.0 million post transaction, 2.5% of incremental revenues net of direct variable costs for a 24-month period), the Local Leads Product (once cumulative revenues exceed $6.0 million post transaction, 15% of incremental revenues net of direct variable costs), and the Purchaser’s total business (once annual revenues exceed $53.0 million in any of calendar years 2021, 2022 and 2023, 0.25% of incremental revenues); (c) contingent consideration for any sale of the Purchaser (if sold for greater than $11.1 million within 24-months following closing, 30% of incremental proceeds) ((b) and (c) collectively, the “Contingent Consideration”); (d) shares of Class B common stock in the Purchaser equal to a 10% equity interest at closing (the “Equity Consideration”); and (e) the cancellation of Company stock options for 1.5 million shares currently held by Russell C. Horowitz and Michael Arends.

Special Meeting (see page 21)

Date, Time and Place

The Board is soliciting proxies for the Special Meeting to be held on Thursday, October 1, 2020, at 10:00 AM Pacific Time virtually via the Internet. The Company has decided to hold this meeting exclusively via the Internet and not in a physical location given the ongoing public health impacts of the COVID-19 pandemic and the importance of the health and safety of the Company’s directors, officers, employees and stockholders. There will not be a physical meeting location, and the Company’s stockholders will not be able to attend the Special Meeting in person. The Special Meeting can be accessed by visiting www.meetingcenter.io/240872478 (the “Meeting Website”), where stockholders will be able to listen to the meeting, submit questions and vote online.

Purpose

At our Special Meeting, stockholders will act upon the matters outlined in the notice, including the following:

Obtaining Stockholder Approval is a condition for the Transaction to occur. If the Company does not obtain Stockholder Approval, the Transaction will not occur.

Stockholders Entitled to Notice and to Vote

Only holders of record of our Class A common stock and holders of record of our special votingClass B common stock, at the close of business on June 27, 2017, or the August 10, 2020 (the “Record Date”), will be entitled to notice of, and to vote at, the AnnualSpecial Meeting. On the Record Date, 5,056,1364,660,927 shares of Class A common stock and 38,284,25439,896,634 shares of Class B common stock were issued and outstanding. Each share of Class A common stock is entitled to twenty-five (25) votes at the AnnualSpecial Meeting and each share of Class B common stock is entitled to one (1) vote at the AnnualSpecial Meeting. Holders of Class A common stock and Class B common stock will vote together as a single class on all matters that come before the AnnualSpecial Meeting; accordingly, throughout this proxy statement we refer generally to our outstanding Class A common stock and Class B common stock together as our "Common Stock."“Common Stock.”

What Constitutes a Quorum

Stockholders may not take action at the AnnualSpecial Meeting unless there is a quorum present at the meeting. The presence, in personvia the Meeting Website or by proxy, of a majority of the voting power of the outstanding shares of Common Stock entitled to vote as of the close of business on the Record Date constitutes a quorum. Abstentions and broker non-votes will count toward establishing a quorum. Broker non-votes occur when brokers holding shares in street name for beneficial owners do not receive instructions from the beneficial owners about how to vote the shares. An abstention occurs when a stockholder withholds such stockholder's vote by checking the "abstain"“abstain” box on the proxy card, or similarly elects to abstain via the

Internet voting. Under the rules that govern brokers who are voting with respect to shares held in street name, brokers have the discretion to vote such shares on routine matters, including the ratification of appointment of independent registered accounting firm.

Distinction between Holding Shares as a Stockholder of Record and as a Beneficial Owner

Some of our stockholders hold their shares through a broker, trustee, or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those shares owned beneficially.

Stockholder of Record. If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A. (“Computershare”), then you are considered, with respect to those shares, the “stockholder of record.” As the stockholder of record, you have the right to grant your voting proxy directly to us or to a third party, or to vote while virtually participating in the Special Meeting.

Beneficial Owner. If your shares are held in a brokerage account, by a trustee or by another nominee, then you are considered the “beneficial owner” of those shares. As the beneficial owner of those shares, you have the right to direct your broker, trustee, or nominee how to vote and you also are invited to join the Special Meeting via the Meeting Website. However, because a beneficial owner is not the stockholder of record, you may not vote these shares while participating in the Special Meeting via the Meeting Website unless you obtain a “legal proxy” from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares while participating in Special Meeting via the Meeting Website.

If you are not a stockholder of record, please understand that we do not know that you are a stockholder, or how many shares you own.

Required Vote Required

For Proposal One,: Under applicable law the approval of the Asset Sale Proposal requires the affirmative vote of (a) a majority of the voting power of all issued and our current bylaws,outstanding Class A common stock and Class B common stock entitled to vote at the four (4) director candidates who receiveSpecial Meeting (treated as a single class) and (b) a majority of the greatest numbervoting power of votes cast forall issued and outstanding Class A common stock and Class B common stock entitled to vote at the electionSpecial Meeting (treated as a single class), disregarding stock owned by Russell C. Horowitz and Michael Arends (“the “Majority of directors by sharesthe Minority Vote”) as of the close of business on the Record Date present in personvia the Meeting Website or represented by proxy and entitled to vote shall be elected directors.proxy.

For Proposal Two,: The ratification regardless of whether a quorum is present at the appointment of Moss Adams as our independent registered public accounting firm requiresSpecial Meeting, the affirmative vote of a majority of the votesvoting power cast by stockholders present via the Meeting Website or represented by proxy at the Annual Meeting.Special Meeting constitutes approval.

Proposal Three: The adoption of an amendmentAbstentions and broker non-votes are counted to our amended and restated bylaws to provide that the courts located within the State of Delaware will serve as the exclusive forum for the adjudication of certain legal disputes requires the affirmative vote ofdetermine whether a majority of the votes castquorum is present at the Annual Meeting.

Proposal Four: The advisorySpecial Meeting but are not counted as a vote on the compensation paid to our named executive officers requires the affirmative votein favor of or against a majority of the votes cast at the Annual Meeting.

Proposal Five: The advisory vote on the frequency of the vote on the compensation paid to our named executive officers will be determined by a plurality of the votes cast.

Proposal Six: The reapproval of certain provision of the 2012 Stock Incentive Plan requires the affirmative vote of a majority of the votes cast at the Annual Meeting.

particular matter.

Voting Process

SharesYour vote is very important to us and we hope that are properly votedyou will join the Special Meeting via the Meeting Website. However, whether or for whichnot you plan to join the Special Meeting via the Meeting Website, please vote by proxy cards are properly executed and returned will be voted at the Annual Meeting in accordance with the directions giveninstructions on your proxy card or in the absencevoting instruction card (from your broker, bank or other nominee). Below are descriptions of directions, will be voted "FOR" Proposals No. 1, 2, 3, 4, and 6 and “Three Years” for Proposal 5.

It is not expected that any other matters will be brought before the Annual Meeting. If, however, other matters are properly presented, the persons named as proxies will vote in accordance with their discretion with respect to such matters.

The manner in which your shares may be voted depends on how your shares are held. If you are the record holder of your shares, meaning you appear as the holder of your shares on the records of our stock transfer agent, you may vote thoseyour shares via the Internet,depending on whether or if you request a printed copy of the proxy materials, via a proxy card for voting those shares included with the printed proxy materials. If you own shares in street name, meaningnot you are a stockholder of record or a beneficial owner with your shares held through a bank or brokerage firm, you may instead receive a voting instruction form with this proxy statement that you may use to instruct your bank or brokerage firm how to vote your shares.owner.

Voting on the InternetStockholders of Record

You can vote your shares via the Internet by following the instructions in the Notice.

Beneficial Owners

If your shares are held of record in the name of a bank, broker or other nominee you should follow the separate instructions that the nominee provides to you. Although most banks and brokers now offer Internet and telephone voting, availability and specific processes will depend on their voting arrangements.

If your shares are held of record in the name of your bank, broker or other nominee and you would like to submit a vote during your participation in the Special Meeting, you must you must register in advance to attend the Special Meeting. You also must submit proof of your proxy power (legal proxy) from your bank, broker or other nominee reflecting your Marchex holdings along with your name and email address to Computershare by email at the Annual Meetingemail address legalproxy@computershare.com. Requests for registration must be labeled “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on September 24, 2020. You will receive a confirmation email from Computershare of your registration.

Treatment of Voting Instructions

If you are the record holder ofprovide specific voting instructions, your shares you may attend the Annual Meeting and vote in person. You will be required to present a form of photo identification for admission to the Annual Meeting. voted as instructed.

If you ownhold shares as the stockholder of record and provide a proxy without giving specific voting instructions, then your stockshares will be voted in street name, youaccordance with the recommendation of the Board (in reliance on the recommendation from the Special Committee) set forth below.

You may attend the Annual Meeting in person provided that you present a form of photo identification and confirmation of ownership, such as a recent brokerage statementhave granted to your broker, trustee, or a letter from a bankother nominee discretionary voting authority over your account. Your broker, trustee, or broker, but in orderother nominee may be able to vote your shares atdepending on the Annual Meetingterms of the agreement you must obtain a "legal proxy" fromhave with your broker, trustee, or other nominee.

The persons identified as having the bank or brokerage firm that holds your shares. You should contact your bank or brokerage account representativeauthority to obtain a legal proxy.

Revocation

If you arevote the record holder of your shares, youproxies granted by the proxy card will have discretionary authority to vote, in their discretion, to the extent permitted by applicable law, on such other business as may revoke a previously granted proxy at any timeproperly come before the Annual Meeting by delivering to the Secretary of Marchex, Inc. a written notice of revocation or a duly executed proxy bearing a later date or by attending the AnnualSpecial Meeting and voting in person. Any stockholder owning shares in street name may changeany postponement or revoke previously given voting instructions by contactingadjournment. The Board is not aware of any other matters that are likely to be brought before the bank or brokerage firm holding the shares or by obtaining a legal proxy from such bank or brokerage firm and voting in person at the AnnualSpecial Meeting. Your personal attendance at the Annual Meeting does not revoke your proxy. Your last vote, prior to or at the Annual Meeting, is the vote that will be counted.

Householding

The SEC permits companies to send a single Notice, and for those stockholders that elect to receive a paper copy of proxy materials in the mail one copy of this proxy statement, together with our Annual Report for the fiscal year ended December 31, 2016, to any household at which two or more stockholders reside, unless contrary instructions have been received, but only if we provide advance notice and follow certain procedures. In such cases, each stockholder continues to receive a separate Notice, and for those stockholders that elect to receive a paper copy of proxy materials in the mail, one copy of our fiscal 2016 Annual Report and this proxy statement. This householding process reduces the volume of duplicate information and reduces printing and mailing expenses.

We have not instituted householding for stockholders of record; however, certain brokerage firms may have instituted householding for beneficial owners of our Common Stock held through brokerage firms. If your family has multiple accounts holding our Common Stock, you may have already received householding notification from your broker. Please contact your broker directly if you have any questions or require additional copies of the Notice, our fiscal 2016 Annual Report and this proxy statement. The broker will arrange for delivery of a separate copy of the Notice, and, if so requested, a separate copy of these proxy materials promptly upon your written or oral request. You may decide at any time to revoke your decision to household, and thereby receive multiple copies.

Solicitation of Proxies

We pay the cost of soliciting proxies for the Special Meeting, and we have engaged Georgeson LLC, a proxy solicitation firm, to assist in the solicitation of proxies for the Special Meeting and will pay Georgeson LLC an estimated fee of $8,500, plus reimbursement of reasonable out of pocket expenses. We solicit by mail, telephone, personal contact and electronic means and arrangements are made with brokerage houses and other custodians, nominees and fiduciaries to send notices, and if requested, other proxy materials, to beneficial owners. Upon request, we will reimburse them for their reasonable expenses. In addition, our directors, officers and employees may solicit proxies, either personally or by telephone, facsimile or written or electronic mail. Stockholders are requested to return their proxies without delay.

Recommendation of Our Board (see page 21)

After careful consideration, our Board (in reliance on the recommendation from the Special Committee) unanimously recommends that you vote:

In reaching its decision to approve the Transaction, the Asset Purchase Agreement and the Related Agreements and to recommend that you vote in the manner noted above, our Board considered a wide range of factors relating to the Transaction, the Asset Purchase Agreement and the Related Agreements.  These factors included, among others, the Company’s prior unsuccessful efforts to sell the Call Marketplace Product and the Local Leads Product, the significant customer concentration without long term contracts, the revenue and contribution variability of the Business, the lower margin profile of the Call Marketplace

Product, and the lower trading multiples generally associated with the Business, the Special Committee’s unanimous approval of the Transaction, the value of the consideration to be received, and the financial analysis and fairness opinion of the financial advisor retained by the Special Committee summarized under “Opinion of the Financial Advisor to the Company.  . For more information on these factors, other factors considered, and the Special Committee process, see “Proposal One: Asset Sale Proposal – Reasons for the Transaction and Recommendation of Our Board.”

Opinion of the Financial Advisor to the Company (see page 34)

On August 7, 2020, ROTH Capital Partners, LLC (“ROTH”) rendered its oral opinion to the Special Committee and the full Board (which was subsequently confirmed in writing by delivery of ROTH’s written opinion addressed to the Board dated the same date) as to, as of August 7, 2020, the fairness, from a financial point of view, to the Company of the consideration to be received by Seller in the Transaction pursuant to the Asset Purchase Agreement in exchange for the Business, subject to certain liabilities of Seller as described in the Asset Purchase Agreement to be assumed by Purchaser in the Transaction (the “Assumed Liabilities”).

ROTH’s opinion was directed to the Special Committee and the Board (in its capacity as such), and only addressed the fairness, from a financial point of view, to the Company of the consideration to be received by Seller in exchange for the Business subject to the Assumed Liabilities in the Transaction pursuant to the Asset Purchase Agreement and did not address any other aspect or implication of the Transaction, any Related Agreement or any other agreement, arrangement or understanding entered into in connection therewith or otherwise. The summary of ROTH’s opinion in this Proxy Statement is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex B to this Proxy Statement and describes the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by ROTH in connection with the preparation of its opinion. However, neither ROTH’s written opinion nor the summary of its opinion and the related analyses set forth in this Proxy Statement is intended to be, and they do not constitute, a recommendation to the Board, any security holder of the Company or any other person as to how such person should vote or act with respect to any matter relating to the Transaction or otherwise.

Use of Proceeds and Future Operations (see page 38)

The Company, and not its stockholders, will receive the proceeds from the Transaction. The Company plans to use the proceeds for working capital and general corporate purposes, in connection with its continued business of providing Analytics and Solutions Products. While the Company may possibly use some proceeds to repurchase outstanding shares of its Class B common stock in the Tender Offer (as defined in “Proposal One: Asset Sale Proposal—Background of the Transaction”), the Company does not believe it must consummate the Transaction in order to proceed with the Tender Offer.  Our Board will evaluate alternatives for the use of the cash proceeds to be received at closing to continue to maximize stockholder value with a goal of returning value to our stockholders. The amounts and timing of our actual expenditures, however, will depend upon numerous factors, and we may find it necessary or advisable to use portions of the proceeds from the Transaction for different or presently non-contemplated purposes.

Expected Timing of the Transaction (see page 42)

We expect to complete the Transaction promptly following the Special Meeting if we obtain Stockholder Approval and the various other conditions to closing are satisfied or waived. However, the Transaction may not be completed as currently anticipated. Certain factors, including factors outside of our control and the control of Purchaser, could result in the Transaction being delayed or not occurring at all.

Covenants (see page 47)

Pursuant to the Asset Purchase Agreement, the Company has agreed to certain covenants with respect to, among other things, the following:

Closing Conditions (see page 48)

The completion of the Transaction is dependent upon the satisfaction of a number of conditions, including:

Indemnification (see page 48)

Under certain circumstances specified in the Asset Purchase Agreement, the Company and Purchaser have agreed to indemnify each other for certain losses.

Termination of the Asset Purchase Agreement (see page 49)

The Asset Purchase Agreement may be terminated:

In the event of termination, the Asset Purchase Agreement will become void without liability on the part of any Party or its officers, directors or stockholders (with certain limited exceptions).

No Appraisal or Dissenters’ Rights (see page 38)

No appraisal rights or dissenters’ rights are available to our stockholders under Delaware law or our certificate of incorporation or bylaws, each as amended to date, in connection with the Transaction.

Risk Factors (see page 17)

In evaluating the Asset Sale Proposal, in addition to the other information provided elsewhere in this Proxy Statement and the annexes hereto, you should carefully consider the risk factors relating to the Transaction and our future operations, as well as the risk factors contained in the other filings the Company makes from time to time with the Securities and Exchange Commission (the “SEC”).

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING

The following questions and answers are intended to briefly address commonly asked questions as they pertain to the Special Meeting, the Asset Purchase Agreement and the Transaction. These questions and answers may not address all questions that may be important to you as a stockholder. Please refer to the “Summary Term Sheet” and the more detailed information contained elsewhere in this Proxy Statement and the annexes to this Proxy Statement, each of which you should read carefully.

WHAT IS A PROXY?

A proxy is another person that you legally designate to vote your stock. If you designate someone as your proxy in a written document, that document is also called a “proxy” or a “proxy card.” If you are a street name holder, you must obtain a proxy from your broker, bank or other nominee in order to vote your shares during your virtual participation in the Special Meeting.

WHAT IS A PROXY STATEMENT?

A proxy statement is a document that regulations of the SEC require that we give to you when we ask you to sign a proxy card to vote your stock at the Special Meeting.

WHO IS SOLICITING YOUR VOTE?

The Board is soliciting your vote for the Special Meeting being held on October 1, 2020, at 10:00 AM Pacific Time, virtually via the Internet. The Company has decided to hold this meeting exclusively via the Internet and not in a physical location given the ongoing public health impacts of the COVID-19 pandemic and the importance of the health and safety of the Company’s directors, officers, employees and stockholders. There will not be a physical meeting location, and the Company’s stockholders will not be able to attend the Special Meeting in person. The Special Meeting can be accessed by Meeting Website, where stockholders will be able to listen to the meeting, submit questions and vote online.

WHAT WILL YOU BE VOTING ON?

At the Special Meeting, the Company’s stockholders will consider: (1) approval of the Transaction, the Asset Purchase Agreement and the Related Agreements; (2) approval of a proposal to adjourn or postpone the Special Meeting, if necessary or appropriate, for the purposes of soliciting additional votes for the approval of the Asset Sale Proposal; and (3) any other matters which may properly come before the meeting.

WHAT IS THE ASSET SALE PROPOSAL (PROPOSAL ONE)?

The Asset Sale Proposal is a proposal to sell the Business to Purchaser pursuant to the terms, and subject to certain conditions, of the Asset Purchase Agreement. Following the closing of the Transaction, we will continue to operate and manage our call analytics business, through which we provide the Analytics and Solutions Products.

WILL OUR CLASS B COMMON STOCK STILL BE PUBLICLY TRADED IF THE TRANSACTION IS COMPLETED?

Yes.  Our Class B common stock is currently traded on The NASDAQ Global Select Market under the ticker symbol “MCHX,” which we do not expect to change following the completion of the Transaction. It is not possible to predict the trading price of our Class B common stock following the closing of the Transaction. Accordingly, you may find it more difficult to dispose of your shares of Class B common stock, and you may not be able to sell some or all of your shares of Class B common stock when you desire. See “Risk Factors” for a further discussion of some of these risks.

DID THE SPECIAL COMMITTEE AND THE BOARD APPROVE THE TRANSACTION, ASSET PURCHASE AGREEMENT AND THE RELATED AGREEMENTS?

Yes. The Special Committee and the full Board (a) determined that the Transaction, the Asset Purchase Agreement, the Related Agreements and the other transactions contemplated thereby are fair, advisable to and in the best interests of the Company and its stockholders, and (b) approved the execution and delivery of the Asset Purchase Agreement, the Related Agreements and such other agreements necessary or appropriate to consummate the Transaction.  The full Board has recommended that the Company’s stockholders approve the Transaction, the Asset Purchase Agreement and the Related Agreements.

WHY DID THE SPECIAL COMMITTEE AND THE BOARD APPROVE THE TRANSACTION?

In reaching its decision to approve the Transaction, the Asset Purchase Agreement and the Related Agreements and to recommend that you vote in the manner noted above, our Board considered a wide range of factors relating to the Transaction, the Asset Purchase Agreement and the Related Agreements.  These factors included, among others, the Company’s prior unsuccessful efforts to sell the Call Marketplace Product and the Local Leads Product, the significant customer concentration without long term contracts, the revenue and contribution variability of the Business, the lower margin profile of the Call Marketplace Product, and the lower trading multiples generally associated with the Business, the Special Committee’s unanimous approval of the Transaction, the value of the consideration to be received, and the financial analysis and fairness opinion of the financial advisor retained by the Special Committee summarized under “Opinion of the Financial Advisor to the Company.  For more information on these factors, other factors considered, and the Special Committee process, see “Proposal One: Asset Sale Proposal – Reasons for the Transaction and Recommendation of Our Board.”

WHAT HAPPENS IF THE ASSET SALE PROPOSAL (PROPOSAL ONE) IS NOT APPROVED?

If stockholders do not approve the Asset Sale Proposal, the Transaction will not occur. Instead, the Company will retain the assets and liabilities proposed to be sold in the Transaction and will not receive the Base Cash Payment Amount, the Equity Consideration, or the Contingent Consideration. Further, the options held by Russell C. Horowitz and Michael Arends would not be cancelled.

IF THE ASSET SALE PROPOSAL (PROPOSAL ONE) IS APPROVED, WHEN WILL THE TRANSACTION CLOSE?

We currently anticipate that the Transaction will close promptly after the Special Meeting if the Asset Sale Proposal is approved, subject to the satisfaction or waiver of the closing conditions discussed elsewhere in this Proxy Statement.

WHAT IS THE ADJOURNMENT PROPOSAL (PROPOSAL TWO)?

The Adjournment Proposal is a proposal to adjourn or postpone the Special Meeting, if necessary or appropriate, to allow us to solicit additional votes for the approval of the Asset Sale Proposal.

WHAT ARE THE BOARD’S RECOMMENDATIONS ON HOW I SHOULD VOTE MY SHARES?

The Board (in reliance on the recommendation from the Special Committee) unanimously recommends that you vote your shares as follows:

WHAT IS THE RECORD DATE AND WHAT DOES IT MEAN?

The Record Date to determine the stockholders entitled to notice of and to vote at the Special Meeting is the close of business on August 10, 2020. The Record Date was established by the Board as required by Delaware law. On the Record Date, 4,660,927 shares of Class A common stock and 39,896,634 shares of Class B common stock were issued and outstanding.

HOW MANY VOTES DO STOCKHOLDERS HAVE?

Each share of Class A common stock is entitled to twenty-five (25) votes at the Special Meeting and each share of Class B common stock is entitled to one (1) vote at the Special Meeting. Holders of Class A common stock and Class B common stock will vote together as a single class on all matters that come before the Special Meeting.  There is no cumulative voting.

HOW MANY VOTES MUST BE PRESENT TO HOLD THE MEETING?

The presence, via the Meeting Website or by proxy, of a majority of the voting power of the outstanding shares of Common Stock entitled to vote as of the close of business on the Record Date constitutes a quorum. Abstentions and broker non-votes will count toward establishing a quorum. Broker non-votes occur when brokers holding shares in street name for beneficial owners do not receive instructions from the beneficial owners about how to vote the shares.

HOW MAY I VOTE MY SHARES?

You can vote either during virtual participation in the Special Meeting or by proxy without joining the Special Meeting via the Meeting Website. We urge you to vote by proxy even if you plan to join the Special Meeting via the Meeting Website so that we will know as soon as possible that enough votes will be present for us to hold the meeting.

(a) How may I vote my shares while virtually participating in the meeting?

If your shares are registered directly in your name with our transfer agent, Computershare, on the Record Date, you are considered, with respect to those shares, the stockholder of record, and the proxy materials and proxy card are being sent directly to you by the Company. As the stockholder of record, you may participate virtually in the Special Meeting and submit a vote through the Meeting Website by visiting the Meeting Website, joining as a “Stockholder” by entering the control number found on your proxy card or notice, or email you previously received and following the instructions on the Meeting Website. The password for the meeting is MCHX2020.

If your shares are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in street name, and the proxy materials are being forwarded to you together with a voting instruction card. If you own your stock in street name, you may attend the Special Meeting and vote your shares via the Meeting Website, but you must obtain a legal proxy from the bank or brokerage firm that holds your shares. You should contact your bank or brokerage account representative to obtain a legal proxy. Once you have the legal proxy, you must register to attend the Special Meeting by providing a copy of that legal proxy to Computershare along with your name and email address. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Pacific Time, on September 24, 2020. You will receive a confirmation email from Computershare of your registration. Requests for registration should be directed to Computershare by email at the following address: legalproxy@computershare.com.

(b) How can I vote my shares without virtually participating in the meeting?

Whether you hold shares directly as a registered stockholder of record or beneficially in street name, you may vote without participating in the Special Meeting. You may vote by granting a proxy or, for shares held in street name, by submitting voting instructions to your broker or nominee. In most cases, you will be able to do this by telephone, by using the Internet or by mail. Please refer to the summary instructions included with proxy materials and on your proxy card. For shares held in street name, the voting instruction card will be included in the materials forwarded by the broker or nominee. If you have telephone or Internet access, you may submit your proxy by following the instructions with your proxy materials and on your proxy card. You may submit your proxy by mail by signing your proxy card or, for shares held in street name, by following the voting instructions with your proxy materials and on your proxy card. You may submit your proxy by mail by signing your proxy card or, for shares held in street name, by following the voting instruction card included in the materials forwarded by your stockbroker or nominee and mailing it in the enclosed, postage paid envelope. If you provide specific voting instructions, your shares will be voted as you have instructed.

WHAT IF I DO NOT SPECIFY HOW I WANT MY SHARES VOTED?

If you are a record holder who returns a completed proxy card that does not specify how you want to vote your shares on one or more proposals, the designated proxies will vote your shares for each proposal as to which you provide no voting instructions, and such shares will be voted in the following manner:

If you are a “street name” holder and do not provide voting instructions on one or more proposals, your bank, broker or other nominee may be able to vote those shares.

HOW MANY VOTES ARE NEEDED TO APPROVE EACH PROPOSAL?

WHAT IS THE QUORUM REQUIREMENT?

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if a majority of the voting power of the outstanding shares of Common Stock entitled to vote as of the close of business on the Record Date is present at the Special Meeting via the Meeting Website or represented by proxy. On the Record Date, 4,660,927 shares of Class A common stock and 39,896,634 shares of Class B common stock were issued and outstanding. Thus, 78,209,905 votes must be present via the Meeting Website or represented by proxy at the Special Meeting to have a quorum.

Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you participate virtually in the Special Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, the holders of a majority of shares of Common Stock present via the Meeting Website or represented by proxy may adjourn the Special Meeting to another date.

CAN I CHANGE MY VOTE?

If you are the record holder of your shares, you may revoke a previously granted proxy at any time before the Special Meeting by delivering to the Secretary of Marchex, Inc. a written notice of revocation or a duly executed proxy bearing a later date or by virtually participating in Special Meeting and submitting  your votes through the Meeting Website. Any stockholder owning shares in street name may change or revoke previously given voting instructions by contacting the bank or brokerage firm holding the shares or by obtaining a legal proxy from such bank or brokerage firm and voting in person at the Special Meeting. Your presence at the Special Meeting via the Meeting Website does not revoke your proxy. Your last vote, prior to or at the Special Meeting, is the vote that will be counted.

WHAT IF I VOTE “ABSTAIN”?

A vote to “abstain” on any matter indicates that your shares will not be voted for such matter and will have the effect of a vote against the proposal. Abstentions are considered as being present for quorum purposes.

IF I HOLD SHARES THROUGH A BROKER OR OTHER NOMINEE, CAN MY SHARES BE VOTED IF I DO NOT INSTRUCT MY BROKER OR OTHER NOMINEE OR MAKE ARRANGEMENTS TO ATTEND THE SPECIAL MEETING?

No.  If you hold your shares through a broker or other nominee, you must instruct it how to vote those shares at the Special Meeting, or else make arrangement to with your broker or other nominee to attend the Special Meeting.  A “broker non-vote” occur when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Broker non-votes count for quorum purposes but not for voting purposes. If you have neither instructed your broker or other nominee, nor made arrangements with your broker or other nominee to virtually participate in the Special Meeting and virtually vote your shares, your shares will not be voted.

WHAT HAPPENS IF THE MEETING IS POSTPONED OR ADJOURNED?

Your proxy will still be valid and may be voted at the postponed or adjourned meeting. You will still be able to change or revoke your proxy until it is actually voted.

WHAT IS HOUSEHOLDING OF SPECIAL MEETING MATERIALS?

The SEC permits companies to send a single copy of proxy materials to any household at which two or more stockholders reside, unless contrary instructions have been received, but only if we provide advance notice and follow certain procedures. This householding process reduces the volume of duplicate information and reduces printing and mailing expenses.

We have not instituted householding for stockholders of record; however, certain brokerage firms may have instituted householding for beneficial owners of our Common Stock held through brokerage firms. If your family has multiple accounts holding our Common Stock, you may have already received householding notification from your broker. Please contact your broker directly if you have any questions or require additional copies of our fiscal 2019 Annual Meeting.Report or this proxy statement. The broker will arrange for delivery of separate copies of these proxy materials promptly upon your written or oral request. You may decide at any time to revoke your decision to household, and thereby receive multiple copies.

WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?

You may receive more than one set of voting materials, including multiple copies of the Notice of Special Meeting or this Proxy Statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. Similarly, if you are a stockholder of record and hold shares in a brokerage account, you will receive a notice for shares held in your name and a notice or voting instruction card for shares held in street name. Please follow the directions provided in the notice and each additional notice or voting instruction card you receive to ensure that all your shares are voted.

DO STOCKHOLDERS HAVE DISSENTER’S RIGHTS?

Stockholders do not have dissenter’s rights with respect to any of the proposals being voted on.

WILL I RECEIVE ANY PROCEEDS FROM THE TRANSACTION?

No. The Company, and not its stockholders, will receive the proceeds from the Transaction.

HOW WILL THE COMPANY USE THE PROCEEDS FROM THE TRANSACTION?

The Company plans to use the proceeds for working capital and general corporate purposes, in connection with its continued business of providing Analytics and Solutions Products. While the Company may possibly use some proceeds to repurchase outstanding shares of its Class B common stock in the Tender Offer, the Company does not believe it must consummate the Transaction in order to proceed with the Tender Offer.  Our Board will evaluate alternatives for the use of the cash proceeds to be received at closing to commercialize the foregoing business segments and to continue to maximize stockholder value with a goal of returning value to our stockholders. The amounts and timing of our actual expenditures, however, will depend upon numerous factors, and we may find it necessary or advisable to use portions of the proceeds from the Transaction for different or presently non-contemplated purposes.

WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTION TO U.S. STOCKHOLDERS?

The Transaction is a corporate action. Our stockholders will not realize any gain or loss for U.S. federal income tax purposes as a result of the Transaction. See “Proposal One: Asset Sale Proposal – Material U.S. Federal Income Tax Consequences.”

WHAT ARE THE SOLICITATION EXPENSES AND WHO PAYS THE COST OF THIS PROXY SOLICITATION?

We pay the cost of soliciting proxies for the Special Meeting, and we have engaged Georgeson LLC, a proxy solicitation firm, to assist in the solicitation of proxies for the Special Meeting and will pay Georgeson LLC an estimated fee of $8,500, plus reimbursement of reasonable out of pocket. We solicit by mail, telephone, personal contact and electronic means and arrangements are made with brokerage houses and other custodians, nominees and fiduciaries to send Notices, and if requested, other proxy materials, to beneficial owners. Upon request, we will reimburse them for their reasonable expenses. In addition, our directors, officers and employees may solicit proxies, either personally or by telephone, facsimile or written or electronic mail. Stockholders are requested to return their proxies without delay.

WHERE CAN I FIND VOTING RESULTS?

The Company expects to publish the voting results in a Current Report on Form 8‑K, which it expects to file with the SEC within four business days following the Special Meeting.

WHO CAN HELP ANSWER MY QUESTIONS?

The information provided above in this “Question and Answer” format is for your convenience only and is merely a summary of the information contained in this Proxy Statement. We urge you to carefully read this entire Proxy Statement, including the documents we refer to herein. If you have any questions, need additional material, or require assistance in voting your shares, please feel free to contact Computershare. Stockholders may call Computershare toll-free at 1-800-368-5948.

RISK FACTORS

Risks Related to the Transaction

The announcement and pendency of the Transaction, whether or not consummated, may adversely affect our business.

The announcement and pendency of the Transaction, whether or not consummated, may adversely affect the trading price of our Class B common stock, our business or our relationships with customers, suppliers and employees. In addition, pending the completion of the Transaction, we may be unable to attract and retain key personnel and the focus and attention of our management and employee resources may be diverted from operational matters during the pendency of the Transaction.

We cannot be sure if or when the Transaction will be completed.

The closing of the Transaction is subject to the satisfaction or waiver of various conditions, including Stockholder Approval. The closing conditions set forth in the Asset Purchase Agreement may not be satisfied. If we are unable to satisfy the closing conditions in Purchaser’s favor or if other mutual closing conditions are not satisfied, Purchaser will not be obligated to complete the Transaction. In the event that the Transaction is not completed, the announcement of the termination of the Asset Purchase Agreement may adversely affect the trading price of our Class B common stock, our business and operations or our relationships with customers, suppliers and employees.  Any delay in completing the Transaction may significantly reduce the benefits that the Company expects to achieve if it successfully completes the Transaction within the expected timeframe.

In addition, if the Transaction is not completed, our Board, in discharging its fiduciary obligations to our stockholders, may evaluate other strategic alternatives that may be available, which alternatives may not be as favorable to the Company and our stockholders as the Transaction. We may be unable to locate credible purchasers, resulting in our continuing to offer and sell our Call Marketplace Product and the Local Leads Product, which face significant customer concentration without long term contracts, and revenue and contribution variability of the Business.  Continuing to offer and sell the Call Marketplace Product, which has a lower margin profile than our Analytics and Solutions Products, may also result in lower trading multiples than we might achieve if we only offered and sold Analytics and Solutions Products.

The Asset Purchase Agreement limits our ability to pursue alternatives to the Transaction.

The Asset Purchase Agreement contains provisions that make it more difficult for us to sell our assets or engage in another type of acquisition transaction with a party other than Purchaser, even if that party were prepared to pay consideration with a higher value than the consideration to be paid by Purchaser. These provisions could also discourage a third party that might have an interest in acquiring all of, or substantially all of, our assets or our Class B common stock from considering or proposing such an acquisition.

Our stockholders should assume that they will not receive any of the proceeds of the Transaction.

The proceeds from the Transaction will be paid directly to the Company and not our stockholders. As discussed elsewhere in this Proxy Statement, our Board will evaluate different alternatives for the use of the proceeds from the Transaction. The Company intends to use substantially all of the proceeds for working capital and general corporate purposes in connection its continued business of providing Analytics and Solutions Products.  The Board does not currently expect to declare a special dividend of any such proceeds to our stockholders.  While the Company may possibly use some proceeds to repurchase outstanding shares of its Class B common stock in the Tender Offer, the Company does not believe it must consummate the

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement contains “forward-looking statements” withinTransaction in order to proceed with the meaningTender Offer.  The Tender Offer may not proceed, and no stockholder should approve the Transaction with any expectation that so voting will increase the likelihood of the U.S. Private Securities Litigation Reform Actstockholder being able to receive any consideration in the Tender Offer.

We will incur significant expenses in connection with the Transaction, regardless of 1995,whether the Transaction is completed.

We expect to incur significant expenses related to the Transaction. These expenses include, but are not limited to, financial advisory and opinion fees and expenses, legal fees, accounting fees and expenses, certain employee expenses, filing fees, printing expenses and other related fees and expenses. Many of these expenses will be payable by us regardless of whether the Transaction is completed.

The opinion obtained by the Company from its financial advisor does not and will not reflect changes in circumstances subsequent to the date of the Asset Purchase Agreement.

On August 7, 2020, ROTH rendered its oral opinion to the Special Committee and the full Board (which was subsequently confirmed in writing by delivery of ROTH’s written opinion addressed to the Board dated the same date) as to, as of August 7, 2020, the fairness, from a financial point of view, to the Company of the consideration to be received by Seller in the Transaction pursuant to the Asset Purchase Agreement in exchange for the Business, subject to the Assumed Liabilities.

Although the Company believes there have been no material changes in the matters and conditions considered by ROTH in rendering its fairness opinion and no material changes are anticipated to occur prior to the Special Meeting, changes in the operations and prospects of the Company, general market and economic conditions and other factors that may be beyond the control of the Company, and on which the opinion was based, may alter the value of assets by the time the Transaction is completed. The opinion rendered by ROTH does not speak to the time when the Transaction will be completed. For a more complete description of the opinion rendered by ROTH, see “Opinion of the Financial Advisor to the Company” and the full text of the opinion contained in Annex B to this Proxy Statement.

Our Executive Chairman and certain executive officers may have interests in the Transaction other than, or in addition to, the interests of our stockholders generally.

Our Executive Chairman and certain executive officers may have interests in the Transaction that are different from, or are in addition to, the interests of our stockholders generally.  The Company entered into the Asset Purchase Agreement with Archenia, Inc., of which Russell C. Horowitz, our Executive Chairman and Co-CEO of the Company, and Michael Arends, Co-CEO and Chief Financial Officer of the Company, are the controlling stockholders. Accordingly, all of the rights and obligations of Purchaser under the Asset Purchase Agreement indirectly affect the interests of Messrs. Horowitz and Arends, including the obligations to the pay the consideration to the Company.  In addition to paying the Base Cash Payment Amount at closing, Purchaser has agreed to pay the Company the Contingent Consideration based on revenues from the Call Marketplace Product, from the Local Leads Product and of Purchaser, in each case assuming certain thresholds are met.  Pursuant to the Support Services Agreement to be entered at closing, Purchaser will agree to pay the Company for certain services we provide to Purchaser at the Company’s cost plus 5%, with a minimum of $3.5 million in the first year following closing and $1.5 million in the second year following closing (with the second year minimum payment subject to a numberminimum revenue threshold of Purchaser for such year).  Whether and to what extent the payments in connection with the Contingent Consideration and the Support Services Agreement are made to the Company may be influenced by the future business performance, accounting decisions and reporting of Purchaser.  In addition, Messrs Horowitz and Arends enjoy certain rights to indemnification from the Company in the event it breaches the Asset Purchase Agreement.

Risks Related to Our Future Operations

Our operations will be less diversified and we will have reduced sources of revenue following the Transaction, which may negatively impact the value and liquidity of our Class B common stock.

Upon the closing of the Transaction, the scope of our operations will be reduced in that our sources of revenue will be limited to our Analytics and Solutions Products, without our Call Marketplace Product, Local Leads Product or other assets and operations comprising the Business. We may not be able to secure additional sources of revenue or to grow our remaining business following the closing of the Transaction, which could negatively impact the value and liquidity of our Class B common stock.

We have discretion in the use of the proceeds from the Transaction and may not use them effectively.

If the Transaction is consummated, the Company will receive the proceeds from the Transaction. The Company plans to use the proceeds for working capital and other general corporate purposes in connection with its continued business of providing Analytics and Solutions Products. Our management will have broad discretion in the application of the proceeds from the Transaction and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our Class B common stock. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business and cause the price of our Class B common stock to decline. Pending their use, we may invest the proceeds in a manner that does not produce income or that loses value. Although our Board will evaluate various alternatives regarding the use of the proceeds from the Transaction, it has made no decision with respect to the specific use of proceeds other than as described above and has not committed to making any such decision by a particular date. This uncertainty may negatively impact the value and liquidity of our Class B common stock.

We may be subject to securities litigation, which is expensive and could divert our attention.

We may be subject to securities litigation in connection with the Transaction, including possible regulatory action or class action lawsuits. Litigation is frequently initiated in connection with merger and acquisition transactions, particularly those involving insiders. Regulatory inquiries and litigation are complex and could result in substantial costs, divert our management's attention and resources, and harm our business, financial condition and results of operations.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements included in this proxy statement contain forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this proxy statement, including, but not limited to, statementsincluded herein regarding ourthe consummation of the Transaction, the satisfaction of the revenue thresholds for the Contingent Consideration, and the Company’s strategy, future operating results,operations, future financial position, prospects,future revenues, other financial guidance (including the financial projections provided to Roth in connection with its fairness opinion), acquisitions, and business strategy, expectations regarding our growth and the growth of the industry in which we operate, anddispositions, projected costs, prospects, plans and objectives of management for future operations are forward-looking statements. Without limitingThe Company may not actually achieve the foregoing, the words “anticipates”, “believes”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”, “seeks” and other similar language, whetherplans, intentions, or expectations disclosed in the negative or affirmative, are intended to identifyits forward-looking statements althoughand you should not allplace undue reliance on the Company’s forward-looking statements contain these identifying words. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actualstatements. Actual results or events could differ materially from those anticipatedthe plans, intentions and expectations disclosed in thesethe forward-looking statements the Company makes due to a number of important factors including but not limited to:

Most of these factors are beyond our ability to predict or control. Any of these factors, or a resultcombination of various factors. Importantthese factors, could materially affect our future financial condition or results of operations and the ultimate accuracy of our forward-looking statements. There also are other factors that we may not describe (generally because we currently do not perceive them to be material) that could cause actual results to differ materially from those in theseour expectations.

We expressly disclaim any obligation to update or revise any forward-looking statements, are discussed in the “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and “Quantitative and Qualitative Disclosures About Market Risk” sections in our filings with the Securities and Exchange Commission. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We therefore caution you against relying on any of these forward-looking statements. Also, any forward-looking statement made by us in this proxy statement speaks only as of the date of this proxy statement. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developmentsevents or otherwise, except as may be required by law.

THE SPECIAL MEETING

Time, Date and Place

The Special Meeting is scheduled to be held on Thursday, October 1, 2020, at 10:00 AM Pacific Time virtually via the Internet. The Company has decided to hold this meeting exclusively via the Internet and not in a physical location given the ongoing public health impacts of the COVID-19 pandemic and the importance of the health and safety of the Company’s directors, officers, employees and stockholders. There will not be a physical meeting location, and the Company’s stockholders will not be able to attend the Special Meeting in person. The Special Meeting can be accessed by visiting MeetingWebsite, where stockholders will be able to listen to the meeting, submit questions and vote online.

Purpose of the Special Meeting

At our Special Meeting, stockholders will act upon the matters outlined in the notice, including the following:

Other than the proposals noted above, we do not expect a vote to be taken on any other matters at the Special Meeting or any adjournment or postponement thereof. However, if any other matters are properly presented at the Special Meeting or any adjournment or postponement thereof for consideration, the holders of the proxies solicited by this Proxy Statement will have discretion to vote on such matters in accordance with applicable law and their judgment.

Recommendation of Our Board

After careful consideration, our Board (in reliance on the recommendation from the Special Committee) unanimously recommends that you vote:

In reaching its decision to recommend that you vote in the manner noted above, our Board considered a wide range of factors relating to the Transaction, the Asset Purchase Agreement and the Related Agreements. These factors included, among others, the Company’s prior unsuccessful efforts to sell the Call Marketplace Product and the Local Leads Product, the significant customer concentration without long term contracts, the revenue and contribution variability of the Business, the lower margin profile of the Call Marketplace Product, and the lower trading multiples generally associated with the Business, the Special Committee’s unanimous approval of the Transaction, the value of the consideration to be received, and the fairness opinion of the financial advisor retained by the Special Committee summarized under “Opinion of the Financial Advisor to the Company.” For more information on these factors (including the Special Committee process), see “Proposal One: Asset Sale Proposal – Reasons for the Transaction and Recommendation of Our Board.”

Record Date and Voting Power

Only holders of record of our Class A common stock and Class B common stock, at the close of business on August 10, 2020, or the Record Date, will be entitled to notice of, and to vote at, the Special Meeting. On the Record Date, 4,660,927 shares of Class A common stock and 39,896,634 shares of Class B common stock were issued and outstanding. Each share of Class A common stock is entitled to twenty-five (25) votes at the Special Meeting and each share of Class B common stock is entitled to one (1) vote at the Special Meeting. Holders of Class A common stock and Class B common stock will vote together as a single class on all matters that come before the Special Meeting. No other shares of Common Stock were outstanding on the Record Date.

Quorum

The presence, via the Meeting Website or by proxy, of a majority of the voting power of the outstanding shares of Common Stock entitled to vote as of the close of business on the Record Date constitutes a quorum. Abstentions and broker non-votes will count toward establishing a quorum. Broker non-votes occur when brokers holding shares in street name for beneficial owners do not receive instructions from the beneficial owners about how to vote the shares. An abstention occurs when a stockholder withholds such stockholder's vote by checking the "abstain" box on the proxy card, or similarly elects to abstain via the Internet voting. Under the rules that govern brokers who are voting with respect to shares held in street name, brokers have the discretion to vote such shares on routine matters, including the ratification of appointment of independent registered accounting firm. However, even if a quorum does not exist, pursuant to the Adjournment Proposal, a majority of the shares on Common Stock present, in person or by proxy, at the Special Meeting may act to postpone or adjourn the Special Meeting to another place, date and time.

Once a share of Common Stock is represented by presence via the Meeting Website or by proxy at the Special Meeting, it will be counted for purposes of determining whether a quorum exists at the Special Meeting and any adjournment or postponement of the Special Meeting. However, if a new record date is set for the adjourned or postponed Special Meeting, a new quorum will have to be established. For purposes of determining the presence of a quorum, abstentions will be counted as present at the Special Meeting.

Required Vote

Proposal One: Asset Sale Proposal

The approval of the Asset Sale Proposal requires the affirmative vote of (a) a majority of the voting power of all issued and outstanding Class A common stock and Class B common stock entitled to vote at the Special Meeting (treated as a single class) and (b) a majority of the voting power of all issued and outstanding Class A common stock and Class B common stock entitled to vote at the Special Meeting (treated as a single class), disregarding stock owned by Russell C. Horowitz and Michael Arends (“the “Majority of the Minority Vote”), as of the close of business on the Record Date present via the Meeting Website or represented by proxy. Stockholders may vote “for”, “against” or “abstain” for the Asset Sale Proposal. If you “abstain” from voting on the Asset Sale Proposal, your abstention will have the same effect as a vote “against” the Asset Sale Proposal.

Proposal Two: Adjournment Proposal

The Adjournment Proposal will be approved, regardless of whether a quorum is present at the Special Meeting, by the affirmative vote of a majority of the voting power cast by stockholders present via the Meeting Website or represented by proxy at the Special Meeting.

Holders of our Common Stock may vote “FOR,” “AGAINST” or “ABSTAIN” with respect to the Adjournment Proposal.

Abstentions and broker non-votes are counted to determine whether a quorum is present at the Special Meeting but are not counted as a vote in favor of or against a particular matter.

Voting by Stockholders

Your vote is very important to us and we hope that you will participate in the Special Meeting virtually. However, whether or not you plan to participate in the Special Meeting virtually, please vote by proxy in accordance with the instructions on your proxy card or voting instruction card (from your broker, bank or other nominee). Below are descriptions of how you may vote your shares depending on whether or not you are a stockholder of record or a beneficial owner.

Stockholders of Record

Beneficial Owners

If your shares are held of record in the name of a bank, broker or other nominee you should follow the separate instructions that the nominee provides to you. Although most banks and brokers now offer Internet and telephone voting, availability and specific processes will depend on their voting arrangements.

If your shares are held of record in the name of your bank, broker or other nominee and you would like to submit a vote during your participation in the Special Meeting, you must you must register in advance to attend the Special Meeting. You also must submit proof of your proxy power (legal proxy) from your bank, broker or other nominee reflecting your Marchex holdings along with your name and email address to Computershare by email at the email address legalproxy@computershare.com. Requests for registration must be labeled “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on September 24, 2020. You will receive a confirmation email from Computershare of your registration.

Abstentions

Abstentions will have the same effect as a vote “AGAINST” the Asset Sale Proposal.

Abstentions will have no effect on the outcome of the Adjournment Proposal.

For purposes of determining the presence of a quorum, abstentions will be counted as present at the Special Meeting.

Broker Non-Votes

Brokers, banks or other nominees who hold shares in “street name” for their customers have authority to vote those shares on “routine” proposals when they have not received instructions from the beneficial owners of such shares. However, brokers, banks or other nominees do not have the authority to vote shares they hold for their customers on “non-routine” proposals when they have not received instructions from the beneficial owners of such shares.

Broker non-votes occur when shares are held in “street name” through a broker, bank or other intermediary on behalf of a beneficial owner, and the broker submits a proxy but does not vote for a matter because the broker has not received voting instructions from the beneficial owner and (i) the broker does not have discretionary voting authority on the matter or (ii) the broker chooses not to vote on a matter for which it has discretionary voting authority. The Asset Sale Proposal and the Adjournment Proposal are considered “non-routine” matters. Therefore, if you do not provide voting instructions to your broker regarding the Asset Sale Proposal or the Adjournment Proposal, your broker will not be permitted to exercise voting authority to vote your shares on such proposals and will result in a broker non-vote.

Failure to Vote

If you are a stockholder of record and you do not vote at the Special Meeting by submitting a vote through the Meeting Website or properly return your proxy card or vote over the Internet or by phone, your shares will not be voted at the Special Meeting, will not be counted as present via the Meeting Website or by proxy at the Special Meeting and will not be counted for purposes of determining whether a quorum exists.

As discussed above, brokers, banks and other nominees do not have discretionary voting authority with respect the Asset Sale Proposal. Accordingly, if you are the beneficial owner of shares held in “street name” and you do not issue voting instructions to your broker, bank or other nominee with respect to the Asset Sale Proposal, your shares will not be voted at the Special Meeting and will not be deemed present for any purpose at the Special Meeting related to such proposals, including for purposes of determining whether a quorum exists.

A failure to vote will have the same effect as a vote “AGAINST” the approval of the Asset Sale Proposal but will have no effect on the outcome of the Adjournment Proposal.

Revocability of Proxies

A stockholder of record who has given a proxy may revoke it at any time prior to its exercise at the Special Meeting by (i) giving written notice of revocation to our Secretary, (ii) properly submitting a duly executed proxy bearing a later date, or (iii) appearing in person at the Special Meeting and voting in person.

If you are the beneficial owner of shares held through a broker, trustee, or other nominee, you must follow the specific instructions provided to you by your broker, trustee, or other nominee to change or revoke any instructions you already have provided to your broker, trustee, or other nominee.

Attendance at the Special Meeting via the Meeting Website, in and of itself, will not constitute a revocation of a proxy.

Adjournments

The Special Meeting may be adjourned for any purpose, including for the purpose of obtaining a quorum or soliciting additional votes if there are insufficient votes to authorize the Asset Sale Proposal. Any adjournment may be made without notice (if the adjournment is not for more than 30 days and a new record date is not fixed for the adjourned meeting), by an announcement made at the Special Meeting of the time, date and place of the adjourned meeting. Any adjournment will allow stockholders of record who have already sent in proxies to revoke them at any time prior to their use at the Special Meeting, as adjourned.

Solicitation of Proxies

Our Board is soliciting proxies for the Special Meeting to be held on October 1, 2020, at 10:00 AM Pacific Time, virtually via the Internet. The Company has decided to hold this meeting exclusively via the Internet and not in a physical location given the ongoing public health impacts of the COVID-19 pandemic and the importance of the health and safety of the Company’s directors, officers, employees and stockholders. There will not be a physical meeting location, and the Company’s stockholders will not be able to attend the Special Meeting in person. The Special Meeting can be accessed by visiting Meeting Website, where stockholders will be able to listen to the meeting, submit questions and vote online. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Special Meeting.

We will bear the expense of soliciting proxies and we have engaged Georgeson LLC, a proxy solicitation firm, to assist in the solicitation of proxies for the Special Meeting and will pay Georgeson LLC an estimated fee of $8,500, plus reimbursement of reasonable out of pocket expenses. We will reimburse banks, brokers and other custodians, nominees and fiduciaries for reasonable charges and expenses incurred in forwarding soliciting materials to their clients. We may conduct further solicitation personally or telephonically through our directors, officers, and employees, none of whom will receive additional compensation for assisting with the solicitation.

Questions and Additional Information

If you have any questions, need additional material, or require assistance in voting your shares, please feel free to contact Computershare. Stockholders may call Computershare toll-free at 1-800-368-5948.

PROPOSAL ONE: ASSET SALE PROPOSAL

Information about the Parties

The Company

We are a call analytics company that helps businesses connect, drive, measure, and convert callers into customers. We provide products and services for businesses of all sizes that depend on consumer phone calls or texts to drive sales. Our analytics technology can facilitate call quality and texting, analyze calls and measure the outcomes of calls. We also deliver performance-based, pay-for-call advertising across numerous mobile and online publishers to connect consumers with businesses over the phone.

We were incorporated in 2003 under the laws of the State of Delaware. Our executive office is located at 520 Pike Street, Suite 2000, Seattle, Washington 98101. Our telephone number is (206) 331-3300. Our website is www.marchex.com.

Our Class B common stock is listed on The NASDAQ Global Select Market under the ticker symbol “MCHX.”

Purchaser

Archenia, Inc. provides adverting marketing services and lead generation.  It was incorporated in 2020 under the laws of the State of Delaware.

General Description of the Transaction

On August 7, 2020, we entered into an Asset Purchase Agreement with Purchaser pursuant to which, and upon the terms and subject to the conditions thereof, the Purchaser will acquire our (i) advertising network for businesses that drive sales through inbound phone calls (the “Call Marketplace Product”), (ii) advertising solution for small business resellers to sell call advertising, search marketing and other lead generation products through their existing sales channels to their small business advertisers (the “Local Leads Product”), and (iii) related business operations and certain other assets including an equity interest in Uproar.car Corporation (“Uproar,” and together with the Call Marketplace Product and the Local Leads Product, the “Business”), and will assume certain liabilities of the Company. We also agreed to enter into a support services agreement pursuant to which we, following the closing of the transaction, will provide services to Purchaser on a cost-plus 5% basis, with minimum payments to the Company of $3.5 million in the first year following closing, and $1.5 million in the second year following closing (with the second year minimum payment subject to a minimum revenue threshold of Purchaser for such year).

We do not believe that the sale of the Business, under Delaware law, would be deemed a sale of all, or substantially all, of our assets, to the Purchaser on the terms and subject to the conditions set forth in the Asset Purchase Agreement, but we are seeking stockholder approval regarding the sale of the Business because the special committee of the Board comprised solely of independent directors of the Company (the “Special Committee”), along with the full Board, in conjunction with the Purchaser, considered the action appropriate, and strongly desire the input of the Company’s stockholders, given the historical significance of the various lines of business that comprise the Business, and given that Russell C. Horowitz, Co-CEO of the Seller, and Michael Arends, Co-CEO and Chief Financial Officer of the Seller, are the controlling stockholders of the Purchaser.

We are retaining and will continue to operate and manage our business through which we provide Analytics and Solutions Products following the closing of the Transaction.

For more information on the above, please see “—Asset Purchase Agreement – Purchase and Sale of Assets” and “—Asset Purchase Agreement – Assumption and Transfer of Liabilities.”

A copy of the Asset Purchase Agreement is attached as Annex A to this Proxy Statement. You are encouraged to read the Asset Purchase Agreement carefully and in its entirety.

Consideration for the Transaction

As consideration for the Transaction, Purchaser has agreed to pay us (a) the Base Cash Payment Amount plus (b) the Equity Consideration plus (c) the Contingent Consideration plus (d) the cancellation of Company stock options for 1.5 million shares currently held by Russell C. Horowitz and Michael Arends.

Background of the Transaction

The Board and senior management of the Company, with the assistance of the Company’s outside legal and financial advisors, regularly review the Company’s long-term strategic plan with the goal of maximizing stockholder value. From time to time, the Board has explored the disposition of some of the Company’s product lines to focus on its Analytics and Solutions Products, which it views as its core operations with the greatest long-term market potential, as well as other strategic transactions.

In 2018, the Board determined it was in the best interest of the Company and its stockholders to attempt to sell the Call Marketplace Product given its significant customer concentration without long term contracts and revenue and contribution variability, to streamline the Company’s operations, improve efficiency in its other product lines and focus on its Analytics and Solutions Products as its core operations with the greater long-term market potential. However, the Company was unable to identify any credible buyer, and the planned disposition was abandoned.

In May 2020, preliminary discussions among members of the Board, including Co-CEO Russell C. Horowitz, resumed about the potential sale of the Business, with the prospect of a potential offer from certain members of the management team. In addition to allowing the Company to focus on its Analytics and Solutions Products, a potential sale of the Business could inject cash to support operations and enable the Company to defray certain costs amid the significant economic uncertainty associated with COVID-19, which had created financial distress for certain of the Company’s distribution partners, reseller partners and agencies, service providers and suppliers.  Preliminary discussions about a potential sale of the Business continued into June 2020.

On June 5, 2020, the Board formed the Special Committee to consider any offer received from certain members of the management team for a potential transaction, including to negotiate its terms and to make a recommendation to the Board regarding it.  Such members of the management team continued to preliminarily consider whether to move forward with making an offer, the relevant assets, accounting and tax issues, and related matters.  

On June 11, 2020, at a meeting of the Board, management reviewed high level strategic considerations regarding the potential divestiture by the Company of the Business.

On June 12, 2020, to assist in considering a potential transaction, the Special Committee retained DLA Piper LLP (US) (“DLA Piper”) as its independent legal counsel and ROTH as its financial advisor.

In addition, in connection with its ongoing consideration of strategic transactions, the Board and management began to preliminarily consider the possibility of a tender offer pursuant to which the Company would repurchase shares of its Class B common stock. On July 8, 2020, at a meeting of the Board,

management updated the directors (including each member of the Special Committee) on the anticipated timing for any potential offer and related transaction, including a discussion of the performance of the Business, customer concentration and volatility considerations.  The discussion also included the general economic framework for a potential transaction, including management’s initial thoughts regarding potential elements to provide for shared opportunity and risk and an ongoing support services agreement which would enable the Company to defray certain costs.

On July 23, 2020, the Special Committee met to discuss the status of management’s consideration of a potential transaction, including the role of the Special Committee, the expected structure of any offer from the management team, the desired assets and liabilities of the Business, and related accounting considerations.

Later that day, Purchaser provided to the Special Committee a preliminary non-binding proposal to acquire the Business, including Jingle Networks, Inc. and a portion of the Company’s equity ownership interest in Uproar.car Corporation such that the Company would retain 19.9% ownership of Uproar for a purchase price of (i) $2.0 million in net cash, (ii) the cancellation of options to purchase 1.5 million shares of Class B common stock held by the Messrs. Horowitz and Arends, (iii) contingent consideration in the form of 15% of Purchaser’s net revenue from local leads products in excess of $7.0 million, 2.5% of Purchaser’s net revenue from call marketplace products in excess of $140.0 million, and a royalty of 0.25% of Purchaser’s annual revenues in excess of $55.0 million in the three years after closing; and (iv) if Purchaser is sold in the 24-months following closing for at least $11.1 million, contingent consideration in the form of 10% of incremental proceeds above such amount.  The proposal also contemplated the Company owning 19.9% of the equity in Purchaser, an escrow of the consideration Purchaser would pay to the Company, a support services agreement by which the Company would provide certain services to Purchaser at cost plus five percent, and a binding customary exclusivity period.

On July 24, 2020, the Special Committee and its advisors at DLA Piper and ROTH met to discuss the proposal received on July 23, 2020.  The Special Committee discussed the cash consideration and the need for additional detail regarding the Business proposed to be purchased, the model and calculations regarding the contingent consideration, and the options to be cancelled as part of the consideration. On July 25, 2020, the Special Committee responded through counsel to Purchaser by requesting additional information regarding these matters.  The Special Committee also noted that it may not be willing to grant the Purchaser exclusivity for a sale of the Business and will require that the closing of any transaction be contingent upon approval of a majority of the Company’s disinterested stockholders which counsel to Purchaser indicated was also an important factor to the Purchaser.

On July 28, 2020, Purchaser provided to the Special Committee additional detail regarding the Business proposed to be purchased, the contingent consideration (indicating it would supplementally provide certain financial information and calculations), and the options to be cancelled as part of the consideration.  Purchaser also indicated its willingness to agree to exclusivity in these circumstances with a provision that the parties would work together in good faith to determine an appropriate response to any third party inquiry or proposal regarding the Business, and confirmed that Purchaser was in agreement that closing of any transaction would be contingent upon approval of a majority of the Company’s disinterested stockholders.

On July 29, 2020, Purchaser provided to the Special Committee certain financial information and calculations to clarify the contingent consideration payable under the proposed net revenue sharing arrangements and royalty.  Through telephone calls with counsel, Purchaser also communicated certain flexibility in the consideration structure to address accounting considerations.

On July 30, 2020, the Special Committee and its advisors at DLA Piper and ROTH met to discuss the additional financial information and calculations related to the contingent consideration.  The Special Committee also discussed how to respond to Purchaser’s offer, focusing on the importance of the cash consideration and ensuring minimum service amounts under the Support Services Agreement.  The Special Committee instructed its counsel to prepare a draft response to Purchaser for the Special Committee’s further consideration.

On July 31, 2020, the Special Committee and its advisors at DLA Piper met to discuss the draft response.  Following the meeting, the Special Committee responded through counsel to Purchaser’s offer that the Special Committee was willing to move forward with the transaction, provided that the cash component of the consideration increase to $2.25 million, the Company’s equity interest in Purchaser decrease to 10%, Purchaser commits to minimum services of at least $4.0 million in the first year and $2.0 million in the second year, and the contingent consideration to the Company in the event of a sale of Purchaser increase to 40%. Through counsel, the parties also discussed the nature of the escrow referenced in the original offer.

On August 1, 2020, Purchaser submitted a revised offer letter, retaining the terms of its original offer except that Purchaser would increase the net cash consideration to $2.25 million, decrease the Company’s equity ownership in Purchaser to 10%, commit to minimum services of at least $3.5 million in the first year and (if Purchaser has at least $38 million in revenue in the second year) $1.5 million in the second year, reduce the thresholds for the Company to receive contingent consideration to $6.0 million in revenue from local leads products and to $53.0 million in Purchaser’s revenue, and increase the contingent consideration in the event of the sale of Purchaser to 30% of the proceeds above $11.1 million. The revised offer also eliminated the requirement to escrow any of the consideration Purchaser would pay to the Company, added the condition that a majority of the Company’s disinterested stockholders approve the transaction and retained the provision for binding exclusivity.

On August 1, 2020, the Special Committee met to consider the revised offer.  Following discussion, including the feedback of its financial advisor regarding the economic terms, the Special Committee determined to accept the general terms of the offer.  The Special Committee instructed its counsel to communicate the same to Purchaser and to move forward with the preparation of a definitive asset purchase agreement.

Over the course of the week, the Special Committee and Purchaser exchanged drafts of the Asset Purchase Agreement, the schedules thereto, the Support Services Agreement and other ancillary agreements (collectively, “Transaction Documents”). Substantially all correspondence, telephone calls and other interactions regarding the Transaction Documents and transactions contemplated thereby were conducted through counsel.  Although such interactions occurred multiple times each day, the most notable interactions consisted of the following:

On August 7, 2020, the Special Committee and then the Board met to consider and approve the Transaction Documents and the Transaction.  Supporting materials were circulated prior to the meetings, including the substantially final version of the Transaction Documents and ROTH’s financial analyses relating to Business and a draft of its opinion as to the fairness, from a financial point of view, to the Company of the consideration to be received by the Company for the Business.

At the Special Committee meeting, representatives of DLA Piper summarized the terms of the Transaction Documents.  ROTH then confirmed to the Special Committee that it was prepared to deliver a fairness opinion to the Board.  Following discussion, the Special Committee approved the Transaction and the Transaction Documents, and it recommended that the Board do the same.  The Special Committee directed counsel to circulate a written consent of the Special Committee to formalize such approvals.  

A meeting of the Board was then convened.  Following a summary of the Transaction and the Transaction Documents by representatives of DLA Piper, the Board requested that ROTH review and discuss its financial analyses with respect to the Business and the proposed Transaction. Thereafter, at the request of the Board, ROTH orally delivered its opinion to the Board (which was subsequently confirmed in writing by delivery of ROTH’s written opinion addressed to the Board, dated August 7, 2020), as to the fairness, from a financial point of view, to the Company of the consideration to be received by the Company for the Business.  Following discussion, the Board approved the Transaction and the Transaction Documents.  The Board directed counsel to circulate a written consent of the Board to formalize such approvals.

Later that day, the Company and Purchaser finalized and then executed the Asset Purchase Agreement.

Also on August 7, 2020, the Audit Committee of the Board met to consider the financial results for the second quarter of 2020.  The Board and management also discussed the possibility of a joint tender offer with Edenbrook Capital, LLC, a large stockholder of the Company, and a consensus regarding the basic economic terms and timeline for a potential joint tender offer was reached on August 8, 2020 (the “Tender Offer”).

On August 10, 2020, the Company announced the Transaction and the execution of the Transaction Documents, its financial results for the second quarter of 2020, and the intent to conduct the Tender Offer.

Reasons for the Transaction and Recommendation of Our Board

In reaching its decision to approve the Asset Purchase Agreement and the Transaction, and to recommend that our stockholders vote to approve the Asset Sale Proposal, the Board consulted with management and outside financial and legal advisors. The Board considered a wide range of factors relating to the Asset Purchase Agreement and the proposed Transaction, many of which the Board believed supported its decision, including the following:

Our Board also considered and balanced against the potential benefits of the Transaction a number of potentially adverse factors concerning the Transaction, including the following:

The foregoing discussion of the factors considered by our Board is not intended to be exhaustive, but it does set forth the principal factors considered by the Board. The Board collectively reached the conclusion to approve the Transaction and the Transaction Documents in light of the various factors described above, as well as other factors that the Board felt were appropriate. In view of the wide variety of factors considered by the Board in connection with its evaluation of the Transaction and the complexity of these matters, the Board did not consider it practical, and did not attempt, to quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision. Rather, the Board made its recommendation based on the totality of the information presented to, and the investigation conducted by, the Board. In considering the factors discussed above, individual directors may have given different weights to different factors.

After evaluating these factors and consulting with its outside legal counsel and financial advisor, all members of the Board approved Transaction and the Transaction Documents and determined that the Transaction is advisable, fair to and in the best interests of the Company and our stockholders.

Accordingly, our Board (in reliance on the recommendation from the Special Committee) recommends that stockholders vote “FOR” the Asset Sale Proposal.

Opinion of the Financial Advisor to the Company

Pursuant to an engagement letter, dated June 10, 2020, the Special Committee retained ROTH to render an opinion to the Special Committee as to the fairness, from a financial point of view, of the aggregate amount to be paid for the Assets (the “Purchase Price”) to be received by the Company.

On August 7, 2020, ROTH rendered its oral opinion, subsequently confirmed in writing, to the Special Committee that, as of such date, and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations set forth in the opinion, the Purchase Price to be received by the Company in the Transaction is fair, from a financial point of view, to the Company.

The full text of ROTH’s written opinion, dated August 7, 2020, is attached to this proxy statement as Annex B and is incorporated by reference herein. Stockholders of the Company are urged to read

the entire opinion carefully and in its entirety to learn about the assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken by ROTH in rendering its opinion. The analysis performed by ROTH should be viewed in its entirety; none of the methods of analysis should be viewed in isolation when reaching a conclusion on whether the consideration was fair. The opinion addresses only the fairness of the Transaction consideration, from a financial point of view, to the Company, as of the date of the opinion, and does not address the merits of the Company’s underlying business decision to proceed with or effect the Transaction or the likelihood of consummation of the Transaction. ROTH expressed no opinion or recommendation to the Special Committee whether the Company should proceed with the Transaction.  ROTH’s opinion was directed to the Special Committee in connection with its consideration of the Transaction and was not intended to be, and does not constitute, a recommendation to any stockholder as to how such stockholder should vote with respect to the Transaction or any other matter.

In arriving at its opinion, ROTH:

For purposes of rendering its opinion, ROTH relied upon and assumed, without assuming liability or responsibility for independent verification, the accuracy and completeness of all information that was publicly available or was furnished, or otherwise made available, to ROTH or discussed with or reviewed by or for ROTH. ROTH further assumed that the forecasted financial information provided, including the Financial Projections, was prepared on a reasonable basis in accordance with industry practice, and that management of the Company was not aware of any information or facts that would make any information provided to ROTH incomplete or misleading. Without limiting the generality of the foregoing, for the purpose of the opinion, ROTH assumed that with respect to financial forecasts, estimates and other forward-looking information reviewed by ROTH, that such information was reasonably prepared based on assumptions reflecting the best currently available estimates and judgments of the management of the Company as to the expected future results of operations and financial condition of the Business. ROTH expressed no opinion as to any such financial forecasts, estimates or forward-looking information or the assumptions on which they were based.  With respect to the financial forecasts provided to and examined

by ROTH, ROTH noted that projecting future results of any company, partnership, venture, or asset is inherently subject to uncertainty.

In connection with its opinion, ROTH assumed and relied upon, without independent verification, the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by ROTH.  ROTH’s opinion did not address any legal, regulatory, tax or accounting issues.  

In arriving at its opinion, ROTH assumed that the executed Asset Purchase Agreement and Support Services Agreement (collectively, the “Agreements”) would be in all material respects identical to the Agreements reviewed by ROTH. ROTH relied upon and assumed, without independent verification, that (i) the representations and warranties of all parties set forth in the Agreements and all related documents and instruments that are referred to therein are true and correct in all material respects, (ii) each party to the Agreements will fully and timely perform, in all material respects, all of the covenants and agreements required to be performed by such party, (iii) the Transaction will be consummated pursuant to the terms of the Agreements without amendments thereto, and (iv) all conditions to the consummation of the Transaction will be satisfied without waiver by any party of any conditions or obligations thereunder. Additionally, ROTH assumed that all the necessary regulatory approvals and consents required for the Transaction, including the approval of the stockholders of the Company, would be obtained in a manner that would not adversely affect the Company or the contemplated benefits of the Transaction.

In arriving at its opinion, ROTH did not perform any appraisals or valuations of any specific assets or liabilities (fixed, contingent or other) of the Company or the Business, and were not furnished or provided with any such appraisals or valuations.  Without limiting the generality of the foregoing, ROTH did not undertake any independent analysis of any pending or threatened litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which the Company or any of its affiliates was a party or may be subject, and at the direction of the Special Committee of the Board of Directors of the Company and with its consent, ROTH’s opinion made no assumption concerning, and therefore did not consider, the possible assertion of claims, outcomes or damages arising out of any such matters.

ROTH’s opinion was necessarily based upon the information available to ROTH and facts and circumstances as they existed and were subject to evaluation on the date thereof; events occurring after the date thereof could materially affect the assumptions used in preparing the opinion. ROTH did not undertake to reaffirm or revise the opinion or otherwise comment upon any events occurring after the date thereof and ROTH expressly disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting its opinion of which it become aware after the date thereof.

Summary of Material Financial Analysis

The following is a summary of the material financial analysis performed by ROTH and reviewed by the Special Committee in connection with ROTH’s opinion relating to the Transaction and does not purport to be a complete description of the financial analyses performed by ROTH. The rendering of an opinion is a complex analytic process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, this summary does not purport to be a complete description of the analyses performed by ROTH or of its presentation to the Special Committee on August 7, 2020. Some of the summaries of the financial analyses include information presented in tabular format. In order to fully understand ROTH’s financial analysis, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analysis. Considering the data below without considering the full narrative description of the financial analysis, including the methodology and assumptions underlying the analysis, could create a misleading or incomplete view of ROTH’s financial analysis.

In performing its analysis, ROTH made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of the Company or any other parties to the Asset Purchase Agreement. ROTH does not assume any responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below.

Due to the declining revenue and profitability of the Business and an indication from management of the Company that the Company would likely close the Business when it no longer has a positive cash contribution, ROTH did not believe that standard operating valuation and going concern methodologies were applicable.  ROTH therefore applied a net present value analysis to determine an implied equity value for the Business.

ROTH also analyzed the revenue related contingent considerations in the Transaction and, based on discussions with management, ROTH did not believe it was likely that any of such contingent consideration triggers would be achieved in the necessary timeframes to generate additional consideration, including the consideration related to the Call Marketplace Threshold Amount, Local Leads Threshold Amount or Aggregate Revenue Threshold Amount. ROTH therefore did not ascribe any value to any revenue related contingent consideration.  In addition, given the uncertainty of any future sale of the Business by Purchaser or the timing or amount that may be received therefor, ROTH did not ascribe any value to the Sale Transaction Contingent Consideration.

Present Value of Cash Flow Analysis. ROTH performed an analysis of the net present value of cash flows of the Business by calculating ranges of the estimated net present value of the unlevered, after-tax free cash flows attributable to the Company that the Company is forecasted to generate from July 1, 2020 through fiscal year 2022. All of the information used in ROTH’s analysis was based on publicly available sources and the financial projections provided by the Company’s management, which are summarized in the tables

below. The following tables set forth the free cash flows and calculations used in ROTH’s analysis.  Management of the Company indicated that EBITDA was equal to cash flow.

Notes:

In performing its net present value of cash flow analysis, ROTH calculated ranges of the estimated present values of the Company’s unlevered, after-tax free cash flows attributable to the Company that the Company forecasted to generate from July 1, 2020 through fiscal year 2022 by applying discount rates ranging from 12.2% to 22.2%, reflecting ROTH’s estimates of the Company’s cost of capital.  

ROTH then deducted the present value of the shut down costs for the Business to determine a range of implied equity values of the Company. The net present value of cash flow analysis implied a range of equity values for the Business of $1.8 million to $1.9 million.  

ROTH noted that the Transaction implied equity value of the Business of $2.5 million was above the high end of the range of the implied equity value of the Business based on the net present value cash flow analysis.

General 

The summary set forth above does not contain a complete description of the analysis performed by ROTH, but it does summarize the material analysis performed by ROTH in rendering its opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. ROTH believes that its analysis and the summary set forth above must be considered as a whole and that selecting portions of its analysis or of the summary, without considering the analysis as a whole or all of the factors included in its analysis, would create an incomplete view of the processes underlying the analyses set forth in the ROTH opinion. In arriving at its opinion, ROTH considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis. Instead, ROTH made its determination as to fairness on the basis of its experience and financial judgment after considering the results of all of its analyses. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that this analysis was given greater weight than any other analysis. In addition, the range of valuations described above should not be taken to be ROTH’s view of the actual value of the Company.

As described above, ROTH’s opinion was only one of many factors considered by the Special Committee and the Board in making its determination to approve the Transaction. ROTH was not requested to and did not solicit any expressions of interest from any other parties with respect to the Business.

ROTH is a full-service securities firm engaged in securities trading and brokerage activities, as well as providing investment banking and other financial services.  In the past two years, no material relationship existed between the Company and/or its affiliates and ROTH and/or its affiliates pursuant to which compensation was received by ROTH or its affiliates as a result of such relationship.  In the ordinary course of business, ROTH and its affiliates may acquire, hold or sell, for it and its affiliates’ own accounts and for the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of the Company and the other parties to the Transaction, and, accordingly, may at any time hold a long or a short position in such securities.  In addition, ROTH and its affiliates may in the future provide investment banking and other financial services to the parties of the Transaction for which ROTH would expect to receive compensation.

ROTH is acting as financial advisor to the Special Committee in connection with the Transaction. Pursuant to its engagement letter with ROTH, the Company has agreed to pay ROTH a fixed fee upon the delivery of its fairness opinion to the Special Committee. The fairness opinion fee is not contingent upon the Transaction closing. The fee was determined by ROTH and proposed to the Special Committee. In addition, the Company has agreed to indemnify ROTH for certain liabilities that may arise out of its engagement by the Special Committee and the rendering of ROTH’s opinion.

Use of Proceeds and Future Operations

The Company, and not its stockholders, will receive the proceeds from the Transaction. The Company plans to use the proceeds for working capital and general corporate purposes, in connection with its continued business of providing Analytics and Solutions Products. While the Company may possibly use some proceeds to repurchase outstanding shares of its Class B common stock in the Tender Offer, the Company does not believe it must consummate the Transaction in order to proceed with the Tender Offer. Our Board will evaluate alternatives for the use of the cash proceeds to be received at closing to continue to maximize stockholder value with a goal of returning value to our stockholders. The amounts and timing of our actual expenditures, however, will depend upon numerous factors, and we may find it necessary or advisable to use portions of the proceeds from the Transaction for different or presently non-contemplated purposes.

No Appraisal or Dissenters’ Rights

No appraisal or dissenters’ rights are available to our stockholders under Delaware law or under our certificate of incorporation or bylaws in connection with the Transaction.

Regulatory Matters

We are unaware of any material federal, state or foreign regulatory requirements or approvals required for the execution of the Asset Purchase Agreement or completion of the Transaction.

Material U.S. Federal Income Tax Consequences

The following discussion is a general summary of the anticipated material U.S. federal income tax consequences of the Transaction. The following discussion is based upon the Internal Revenue Code (the “Code”), its legislative history, currently applicable and proposed Treasury Regulations under the Code and published rulings and decisions, all as currently in effect as of the date of this Proxy Statement, and all of which are subject to change, possibly with retroactive effect. Tax consequences under state, local and non-U.S. laws, or federal laws other than those pertaining to income tax, are not addressed in this Proxy Statement. No rulings have been requested or received from the Internal Revenue Service (the “IRS”) as to the tax consequences of the Transaction and there is no intent to seek any such ruling. Accordingly, the IRS may challenge the tax treatment of the Transaction discussed below and, if it does challenge the tax treatment, it may be successful.

Purchaser is a corporation newly formed for purposes of acquiring the Assets.  In connection with the transfer of the Assets, Purchaser will be issuing shares of Class B Common Stock of Purchaser, in addition to the Base Cash Payment Amount, the contingent consideration (if any), and the assumption of the Assumed Liabilities.  The Transaction will be treated for U.S. federal income tax purposes as a transaction described in Section 351 of the Code upon which we will not recognize loss, but we will recognize gain, but not in excess of the amount of money received plus the fair market value of other property, if any, received. Under applicable IRS guidance, the amount of gain we recognize with respect to each particular Asset is determined by allocating the aggregate consideration among the transferred Assets in proportion to the relative fair market values of the Assets, and the amount of gain realized with respect to each Asset will be measured by the difference between the consideration allocable to such Asset and our tax basis in that Asset, without netting of losses against gain. Unrecognized loss would generally be preserved in the tax basis of the Equity Consideration.  Our basis in our Assets is generally equal to their cost, as adjusted for certain items, such as depreciation. The gain will be ordinary income or capital gain depending on the nature of the transferred Assets.  Because the contingent consideration may be received after the close of the taxable year in which the Transaction occurs, we may choose to report eligible gain using the installment method of accounting. We do not expect any additional gain under Section 357(c) of the Code because the

amount of Assumed Liabilities are not expected to exceed the tax basis in the Assets.  To the extent the Transaction results in us recognizing gain for U.S. federal income tax purposes, our available net operating loss carryforwards are expected to offset the majority of the gain. It is anticipated that we will pay an immaterial amount of tax on the gain recognized from the Transaction.  Our tax basis in the Equity Consideration will generally equal the tax basis of the transferred Assets, decreased by the amount of money and fair market value of any property received and increased by any gain recognized.

Anticipated Accounting Treatment

Marchex prepares its financial statements in accordance with accounting principles generally accepted in the United States of America, which is referred to as GAAP. Marchex expects to deconsolidate the Marchex Carve Out (as further defined) upon closing of the Transaction and record the equity interest in the Purchaser, received as part of the Transaction consideration, as an equity method investment on its consolidated balance sheet. Contingent consideration that meets the definition of a derivative and does not qualify for a scope exception for derivative accounting treatment will be measured at fair value on Marchex’s consolidated balance sheet.  Other contingent consideration will be recognized, if appropriate, when the contingency is resolved.  Stock option awards cancelled as part of the Transaction currently have an unamortized expense balance.  Marchex is evaluating the accounting treatment for these cancellations and expects stock-based compensation expense to increase upon closing of the Transaction.

The Company’s Business following the Transaction

If the Transaction is completed, we will no longer operate and manage the Call Marketplace Product or the Local Leads Product. However, we will continue to operate and manage our call analytics business, through which we provide various Analytics and Solutions Products via our platforms to enterprises that depend on inbound phone calls to drive sales, appointments and reservations. Marketers can use these platforms to understand which marketing channels, advertisements, search keywords, or other digital marketing advertising formats are driving calls to their business, allowing them to optimize their advertising expenditures across media channels. The Analytics and Solutions Products also include technology that can extract data and insights about what is happening during a call and measures the outcome of calls and return on investment. The platform also includes technology that can block robocalls, telemarketers and spam calls to help save businesses time and expense. The Analytics and Solutions Products data can integrate directly into third-party marketer workflows such as Salesforce, Eloqua, Adobe, Google Search, Kenshoo, Marin Software, Facebook and Instagram, in addition to other marketing dashboards and tools. Advertisers pay us a fee for each call/text or call/text related data element they receive from calls or texts, including call-based ads we distribute through our sources of call distribution or for each phone number tracked based on pre-negotiated rates.

Our primary product offerings are:

SEC Reporting

Our SEC reporting obligations as a public company will not be affected as a result of the closing of the Transaction.

Expected Timing of the Transaction

We expect to complete the Transaction promptly following the Special Meeting if we obtain Stockholder Approval and the various other conditions to closing are satisfied or waived. However, the Transaction may not be completed as currently anticipated. Certain factors, including factors outside of our control and the control of Purchaser, could result in the Transaction being delayed or not occurring at all.

ASSET PURCHASE AGREEMENT

The following discussion sets forth the principal terms of the Asset Purchase Agreement, a copy of which is attached as Annex A to this Proxy Statement and is incorporated herein by reference. The rights and obligations of the parties are governed by the express terms and conditions of the Asset Purchase Agreement and not by this discussion, which is summary in nature. This discussion is not complete and is qualified in its entirety by reference to the complete text of the Asset Purchase Agreement. All capitalized terms used but not defined herein shall have the meanings set forth in the Asset Purchase Agreement. You are encouraged to read the Asset Purchase Agreement carefully and in its entirety, as well as this Proxy Statement and any documents included herewith, before making any decisions regarding the proposals being brought before the Special Meeting.

Purchase and Sale of Assets

Purchased Assets

Upon the terms and subject to the conditions of the Asset Purchase Agreement, Seller has agreed to sell to Purchaser, and Purchaser has agreed to purchase from Seller (i) the following assets, properties and rights of Seller, to the extent that such assets, properties and rights exist as of the Closing Date and primarily relate to the Business, and (ii) 3,500,000 shares of Series A Preferred Stock held by Seller in Uproar (the “Uproar Shares”), with Seller retaining an equity interest in Uproar equal to 10% of Uproar’s outstanding capital stock (the “Retained Uproar Equity”) (collectively, the “Assets”), free and clear of all liens, claims, pledges, mortgages, restrictions, security interests and encumbrances of any kind, nature and description (“Liens”):

Excluded Assets

Under the terms of the Asset Purchase Agreement, other than the Assets mentioned above, all other assets or properties of Seller will be excluded from the Assets (the “Excluded Assets”). This includes:

Assumption of Liabilities

Assumed Liabilities

Upon the terms and subject to the conditions of the Asset Purchase Agreement, Purchaser has agreed to assume any and all liabilities and obligations of Seller arising out of or relating to the Business or the Assets on or after the Closing, other than the Excluded Liabilities (referred to in this discussion as the “Assumed Liabilities”), including, without limitation, the following:

Excluded Liabilities

Under the terms of the Asset Purchase Agreement, Purchaser will not assume and will not be responsible to pay, perform or discharge any of the following liabilities or obligations of Seller (referred to in this discussion as the “Excluded Liabilities”):

Consideration

As consideration for the sale of the Business, Purchaser has agreed to pay us (a) $2.25 million in cash (the “Base Cash Payment Amount”); (b) the Contingent Consideration (as further described below); (c) shares of Class B common stock in the Purchaser equal to a 10% equity interest at closing (the “Equity Consideration”); and (d) the cancellation of Company stock options for 1.5 million shares currently held by Russell C. Horowitz and Michael Arends.

Contingent Consideration

Call Marketplace Revenue. If, at any time following the Closing Date, Purchaser’s cumulative Revenue from the Call Marketplace Product exceeds One Hundred and Forty Million Dollars ($140,000,000) (the “Call Marketplace Threshold Amount”), then Purchaser will pay us an amount equal to 2.5% of all of Purchaser’s Net Revenue generated from such Revenue exceeding the Call Marketplace Threshold Amount beginning on the date the Call Marketplace Threshold Amount is achieved and ending on the date that is two years following such date (the “Call Marketplace Contingent Consideration”).

Local Leads Revenue. If, at any time following the Closing Date, Purchaser’s cumulative Revenue of the Local Leads Product exceeds Six Million Dollars ($6,000,000) (the “Local Leads Threshold Amount”), then Purchaser will pay us 15% of all of Purchaser’s Net Revenue generated from such Revenue exceeding the Local Leads Threshold Amount beginning on the date the Local Leads Threshold Amount is achieved and continuing for so long as the Local Leads Product may be sold (the “Local Leads Contingent Consideration”).

Purchaser’s Aggregate Revenue.  If Purchaser’s aggregate Revenue exceeds Fifty-Three Million Dollars ($53,000,000) (the “Aggregate Revenue Threshold Amount”) in any of the calendar years 2021, 2022, or 2023, then Purchaser will pay us an amount equal to 0.25% of all of Purchaser’s Revenue exceeding the Aggregate Revenue Threshold Amount for such calendar year (the “Aggregate Revenue Contingent Consideration”).

Sale Transaction Contingent Consideration. If (i) Purchaser undergoes a Sale Transaction within twenty-four (24) months following the Closing Date, and (ii) the purchase price for the Sale Transaction is in excess of Eleven Million One Hundred Eleven Thousand One Hundred Eleven Dollars ($11,111,111) (the “Sale Transaction Contingent Consideration Threshold Amount”), then, in addition to our pro rata share of the consideration paid pursuant to such Sale Transaction, Purchaser will pay us an additional amount equal to 30% of the distributable proceeds exceeding the Sale Transaction Contingent Consideration Threshold Amount pursuant to the Sale Transaction (the “Sale Transaction Contingent Consideration”). Purchaser will pay us the Sale Transaction Consideration at the time the consideration paid pursuant to such Sale Transaction is distributed.  

Representations and Warranties

The Agreement contains a number of representations and warranties made by the Seller and Purchaser. The statements embodied in those representations and warranties were made for purposes of the Agreement between the parties and are subject to qualifications and limitations agreed to by the parties in connection with negotiating the terms of the Agreement. Certain representations and warranties were made as of August 7, 2020, may be subject to contractual standards of materiality different from those generally applicable to stockholders or which may have been used for the purpose of allocating risk between the parties rather than establishing matters of fact. Accordingly, you should not rely on the representations and warranties as characterizations of the actual state of facts because they are qualified as described above. Moreover, information concerning the subject matter of the representations and warranties may have changed since August 7, 2020, and these changes may or may not be fully reflected in the Seller’s or Purchaser’s public disclosures. The Agreement should not be read alone, but should instead be read in conjunction with the other information regarding the Seller and Purchaser that is contained in this Proxy Statement, as well as in the filings that the Seller will make and has made with the SEC. The representations and warranties contained in the Agreement may or may not have been accurate as of the date they were made, and we make no assertion herein that they are accurate as of the date of this Proxy Statement.

Seller Representations and Warranties

In the Agreement, the Seller has made a number of representations and warranties that are subject, in some cases, to specified exceptions and qualifications contained in the Agreement. These representations and warranties relate to, among other things:

Purchaser Representations and Warranties

Purchaser’s representations and warranties relate to, among other things:

Covenants

No Solicitation of Transactions

As part of the Transaction, we agreed that we will not directly or indirectly, through any officer, director, stockholder or agent, initiate, solicit or encourage (including by way of furnishing non-public information or assistance), or enter into negotiations of any type, directly or indirectly, or enter into a confidentiality agreement, letter of intent or purchase agreement, merger agreement or other similar agreement with any Person other than Purchaser with respect to a sale of all or any substantial portion of the Assets, or a merger,

consolidation, business combination, sale of all or any substantial portion of the capital stock of Seller or the liquidation or similar extraordinary transaction with respect to Seller. We also agreed that we will notify Purchaser orally (within one Business Day) and in writing (as promptly as practicable) of all relevant terms of any inquiry or proposal by a third party to do any of the foregoing that we may receive relating to any of such matters, and that notwithstanding anything to the contrary the Parties will work together in good faith to determine an appropriate response to any such inquiry or proposal.

Transfer Taxes

We will pay any Transfer Taxes incurred as a result of the Transaction.

Restrictive Covenants

Confidentiality. We agreed to hold in confidence at all times following signing the Agreement all Confidential Information and to not disclose, publish or make use of Confidential Information at any time following signing without the prior written consent of Purchaser.

Non-Competition. We agreed that we will not, during the Restricted Period, in any manner, directly or indirectly or by assisting any other Person, engage in or assist others in engaging in any business or activity that competes with the Business or the Purchaser Business in the Territory.

Non-Disparagement.  Each party agreed that, during the Restricted Period, neither it nor its affiliates will, directly or indirectly, make any derogatory or disparaging statement or communication regarding the other Party or any of the other Party’s affiliates or the Business or any of their respective employees.

Stockholders Meeting

We are required, as promptly as reasonably practicable to (i) file this Proxy Statement with the SEC, and (ii) hold a meeting of stockholders for the purposes of obtaining the requisite stockholder approval and the Majority of the Minority Vote following the effectiveness of this Proxy Statement. We are required to cooperate and consult with Purchaser in connection with the preparation of this Proxy Statement.

Closing Conditions

The respective obligations of the Parties to effect the Transaction are subject to satisfaction (or waiver by Purchaser and the Seller, if permitted by law) at or prior to the closing of the following conditions:

Indemnification

Each Party will indemnify, defend, and hold the other party harmless from, against, and in respect of, and will compensate and reimburse the other party for, any and all losses (“Losses”) incurred, arising out of or relating to (i) any breach or inaccuracy of any representation or warranty made by such Party in the Asset Purchase Agreement, or (ii) any breach of any covenant, agreement or undertaking made by such Party in the Asset Purchase Agreement. Claims for indemnification may be made through the date 12 months following the closing of the Transaction. Losses in respect of a claim for indemnification shall be reduced by the amount of any insurance proceeds actually received by the indemnified party with respect to such matter, and an indemnified party shall act in good faith and in a commercially reasonable manner to mitigate any Losses they may suffer as a result of an allowable claim for indemnification. Neither Party shall be required to pay an aggregate amount in excess of the Base Cash Payment Amount in respect of any Losses suffered by the other Party. The foregoing indemnification provision is the sole and exclusive remedy with respect to any and all claims under the Asset Purchase Agreement (except for fraudulent, criminal or intentional misconduct).

Termination of the Asset Purchase Agreement

The Asset Purchase Agreement may be terminated:

In the event of termination of the Asset Purchase Agreement, the Asset Purchase Agreement will become void without liability on the part of any Party or its officers, directors or stockholders (with certain limited exceptions).

Transaction Costs

Except as otherwise provided in the Agreement, all fees and expenses incurred in connection with the Agreement and the transactions contemplated thereby will be paid by the party incurring such fees or expenses, whether or not the Transaction is consummated.

Governing Law

The Asset Purchase Agreement is governed by Delaware law.

Support Services Agreement

At the closing of the Transaction, the Parties have agreed to enter into the Support Services Agreement, pursuant to which Purchaser will agree to pay the Company for certain services we provide to Purchaser.  These services may include information technology, human resources, accounting, legal, technology operations (comprising physical and logical monitoring and maintenance of data centers), contracts administration, and other general and administrative services.  Purchaser will pay the Company its cost plus 5%, with a minimum of $3.5 million in the first year following closing and $1.5 million in the second year following closing (with the second year minimum payment subject to a minimum revenue threshold of Purchaser for such year).

INTERESTS OF RELATED PARTIES IN THE TRANSACTION

As previously described in this Proxy Statement, the Company entered into the Asset Purchase Agreement with Archenia, Inc., of which Russell C. Horowitz, Co-CEO of the Company, and Michael Arends, Co-CEO and Chief Financial Officer of the Company, are the controlling stockholders. Accordingly, all of the rights and obligations of Purchaser under the Asset Purchase Agreement indirectly affect the interests of Messrs. Horowitz and Arends, including the obligations to the pay the consideration to the Company.  In addition to paying the Base Cash Payment Amount at closing, Purchaser has agreed to pay the Company the Contingent Consideration based on revenues from the Call Marketplace Product, from the Local Leads Product and of Purchaser, in each case assuming certain thresholds are met.  Pursuant to the Support Services Agreement to be entered at closing, Purchaser will agree to pay the Company for certain services we provide to Purchaser at the Company’s cost plus 5%, with a minimum of $3.5 million in the first year following closing and $1.5 million in the second year following closing (with the second year minimum payment subject to a minimum revenue threshold of Purchaser for such year).  Whether and to what extent the payments in connection with the Contingent Consideration and the Support Services Agreement are made to the Company may be influenced by the future business performance, accounting decisions and reporting of Purchaser.  In addition, Messrs Horowitz and Arends enjoy certain rights to indemnification from the Company in the event it breaches the Asset Purchase Agreement.

In light of these different or additional interests, the Board formed the Special Committee, comprised solely of independent directors of the Company, to consider and negotiate the terms of the Transaction and to ensure the terms were fair, advisable to and in the best interests of the Company and its stockholders. On August 7, 2020, the Special Committee approved the Transaction and recommended that the Board do the same.

FINANCIAL INFORMATION

Consolidated Financial Statements of Marchex

Marchex’s audited consolidated financial statements as of and for the fiscal years ended December 31, 2019 and 2018, and the notes thereto, are contained in our annual report on Form 10-K that is incorporated by reference into this Proxy Statement.  Marchex’s unaudited condensed consolidated financial statements as of and for the fiscal quarters ended March 31, 2020 and June 30, 2020, and the notes thereto, are contained in our quarterly reports on Form 10-Q that are incorporated by reference into this Proxy Statement.  

Unaudited Pro Forma Consolidated Financial Information

Marchex has prepared unaudited pro forma consolidated financial information and notes thereto for Marchex, which begin on page F-2. The unaudited pro forma consolidated financial information has been prepared from Marchex’s historical consolidated financial statements and give effect to the Transactions. There can be no assurance that the Transaction will be consummated. The unaudited pro forma consolidated financial statements should be read in conjunction with the historical financial statements of Marchex and the notes thereto.

The definitive proxy statement will be updated with unaudited pro forma balance sheet information as of June 30, 2020 and unaudited pro forma statement of operations information for the 6-month period ended June 30, 2020.

Unaudited Special Purpose Combined Financial Statements for Marchex Carve Out

Unaudited special purpose combined financial statements and notes thereto for Marchex Carve Out are provided beginning on page F-8. The unaudited special purpose combined balance sheets were prepared as of December 31, 2018, December 31, 2019, and March 31, 2020. Unaudited special purpose combined statements of operation and cash flows were prepared for the years ended December 31, 2018 and 2019, and for the three-month periods ended March 31, 2020.

The definitive proxy statement will be updated for an unaudited special purpose combined balance sheet as of June 30, 2020, and unaudited special purpose combined statements of operations and cash flows for the 6-month period ended June 30, 2019 and 2020.

SECURITY OWNERSHIP OF CERTAIN BENEFICIALBENEFICIAL OWNERS AND MANAGEMENT

To the Company’s knowledge, the following table sets forth information regarding the beneficial ownership of our Class A common stock and Class B common stock as of June 27, 2017August 10, 2020 by:

Percentage of beneficial ownership is based on 5,056,1364,660,927 shares of our Class A common stock and 38,284,25439,896,634 shares of our Class B common stock outstanding as of June 27, 2017.August 10, 2020. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options or restricted stock units held by that person that are currently exercisable or exercisable or issuable upon vesting within 60 days of June 27, 2017,August 10, 2020, are deemed outstanding. These shares are not, however, deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as otherwise noted below, the address for each beneficial owner listed below is c/o Marchex, Inc., 520 Pike Street, Suite 2000, Seattle, Washington 98101.

Except as indicated in the footnotes below and except as subject to community property laws where applicable, the persons named in the table abovebelow have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.

PROPOSAL ONE—ELECTION OF DIRECTORS

(Item 1 on Proxy Card)

The Board of Directors currently consists of five (5) individuals, three (3) of whom have been nominated for election at the Annual Meeting along with Russell C. Horowitz, who previously served as a director of the Company. Directors are elected to hold office until the next annual meeting of stockholders and until their respective successors have been elected and qualified. The names and the respective ages of the four (4) nominees as of June 27, 2017 are set forth below:

Set forth below is a description of the business experience of each current director, including a discussion of the specific experience, qualifications, attributes and skills that led our Board of Directors to conclude that those individuals should serve as our directors.

Dennis Cline. Mr. Cline has served as a member of our Board of Directors since May 2003. Since 2013, Mr. Cline has served on the board of advisors of Blackstratus, a provider of security information event management products and services. Previously, Mr. Cline served on the board of directors of TraceSecurity, a provider of cloud-based security solutions, from 2003 to 2015. From 2004 to 2006, Mr. Cline served as Chief Executive Officer and Executive Chairman of netForensics, a provider of security event information management. Prior to joining netForensics as its Chief Executive Officer, Mr. Cline was Managing Partner of DMC Investments, a firm he founded in 2000, which provides capital and consulting services to technology companies. From 1988 to 2000, Mr. Cline was the CEO of DirectWeb, a provider of computer hardware and Internet access for consumers. Prior to DirectWeb, Mr. Cline was a senior executive at Network Associates, a provider of computer security solutions. Mr. Cline received his J.D. from Rutgers School of Law and his B.A. from Rutgers University. Mr. Cline brings extensive governance, marketing, sales and broad management expertise to the board.

Anne Devereux-Mills. Ms. Devereux-Mills has served as a member of our Board of Directors since October 2006 and as Chairman of our Board Directors since October 2016. With over 25 years of experience in the marketing and advertising industries. Ms. Devereux-Mills now serves as the Chief Strategy Officer and a member of the Board of Directors of Lantern, a mobile technology provider for mental health and wellness programs. Prior to these current roles, Ms. Devereux-Mills served as Chairman of LLNS, a division of Omnicom Group Inc. (NYSE: OMC) from May 2006 to April 2012 and served as Chief Executive Officer of LLNS from May 2006 to September 2010. LLNS is a leading healthcare communications agency. Prior to joining LLNS, from February 2003 to May 2006, Ms. Devereux-Mills was the Chief Integration Officer as well as Managing Director of all health-related assignments within BBDO New York, an advertising agency. Before joining BBDO New York, from April 2002 to February 2003, Ms. Devereux-Mills was President of Dugan Valva Contess, an independent communications agency. From January 1996 to April 2002, Ms. Devereux-Mills was President and Founder of Consumer Healthworks which then became Merkley Newman Harty Healthworks, one of the first agencies to specialize in direct-to-consumer advertising for healthcare brands. Ms. Devereux-Mills received a B.A. degree from Wellesley College. Ms. Devereux-Mills brings extensive marketing and advertising expertise to the board.

Russell C. Horowitz. Mr. Horowitz is a founder of our Company and has served as a consultant to the Company since May of 2016 and as a member of the office of the CEO since October 2016.  Prior to these roles, Mr. Horowitz served as Executive Director from February 2015 to May 2016 and as CEO, Treasurer and Chairman of the Board from inception to February 2015.   Mr. Horowitz was previously a founder of Go2Net, a provider of online services to merchants and consumers, including merchant Web hosting, online payment authorization technology, and Web search and directory services. He served as its Chairman and Chief Executive Officer from its inception in February 1996 until its merger with InfoSpace in October 2000, at which time Mr. Horowitz served as the Vice Chairman and President of the combined company through the merger integration process. Additionally, Mr. Horowitz served as the Chief Financial Officer of Go2Net from its inception until May 2000. Prior to Go2Net, Mr. Horowitz served as the Chief Executive Officer and a director of Xanthus Management, LLC, the general partner of Xanthus Capital, a merchant bank focused on investments in early-stage companies, and was a founder and Chief Financial Officer of Active Apparel Group, now Everlast Worldwide. Mr. Horowitz received a B.A. in Economics from Columbia College of Columbia University. Mr. Horowitz brings historic knowledge and continuity together with extensive operational and industry expertise to the board.

M. Wayne Wisehart. Mr. Wisehart has served as a member of our Board of Directors since November 2008. From February 2010 to November 2010, Mr. Wisehart served as interim Chief Financial Officer for All Star Directories, a publisher of online and career school directories. Mr. Wisehart previously served as the Chief Financial Officer of aQuantive, Inc. (formerly Avenue A Media, Inc.), a leading global digital marketing company, which was acquired by Microsoft in August 2007. Prior to aQuantive, Mr. Wisehart served as Chief Financial Officer of Western Wireless Corporation, a cellular phone service provider, which was acquired by Alltel in August 2005. Mr. Wisehart also served as the Chief Financial Officer from 2000 to 2002 of iNNERHOST, Inc., a Web hosting service’s company, as President and Chief Executive Officer from 1999 to 2000 of TeleDirect International Inc., a company that provide customer interaction systems, and as the President and Chief Executive Officer from 1997 to 1998 of Price Communications Wireless. Mr. Wisehart also serves on the Board of Directors of Centri Technology, Inc. Mr. Wisehart received a B.S. degree in Business from the University of Missouri-St. Louis. Mr. Wisehart brings extensive financial and accounting expertise to the board.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF THE NOMINEES LISTED ABOVE TO THE BOARD OF DIRECTORS.

CORPORATE GOVERNANCE

Board Independence

The Board of Directors determined that each of the members of the board is an independent director in accordance with NASDAQ listing standards.

Committees and Meeting Attendance

The Board of Directors has an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. Each of these committees operates under a written charter adopted by the board. Copies of these charters are available on our website at www.marchex.com. The Board of Directors held nine meetings and took action by written consent on five occasions during the fiscal year ended December 31, 2016. Each of the standing committees of the board held the number of meetings indicated below. During the last fiscal year, each of our directors attended at least 75% of the total number of meetings of the board and committees of the board on which such director served during that period. We encourage director representation at our annual meetings of stockholders. Our former Executive Chairman, current Chairman and Chair of our Audit Committee attended last year’s annual meeting.

The following table sets forth the three standing committees of the board, the members of each committee, the number of meetings held by each committee, and the number of committee actions taken by written consent during the 2016 fiscal period:

During 2016, the following directors served on committees for portions of the year: Mr. Hanauer served on the Nominating and Governance Committee through May 12, 2016. Effective May 13, 2016, Mr. Morris was appointed to serve as a member of the Nominating and Governance Committee.

Audit Committee

The Audit Committee is currently comprised of Messrs. Cline, Morris and Wisehart (Chair). Each of the members of the Audit Committee is independent for purposes of the NASDAQ listing standards as they apply to Audit Committee members. Messrs. Cline and Wisehart are Audit Committee financial experts, as defined in the rules of the Securities and Exchange Commission. The Audit Committee operates under a charter that is available on our website at www.marchex.com. The functions of the Audit Committee include reviewing, with the Company’s independent registered public accounting firm, the scope and timing of the independent registered public accounting firm’s services, the independent registered public accounting firm’s report on the Company’s consolidated financial statements and internal control over financial reporting following completion of the Company’s audits, and the Company’s internal accounting and financial control policies and procedures, and making annual recommendations to the Board of Directors for the appointment of independent registered public accounting firm for the ensuing year. The Audit Committee held eight meetings and took action by written consent on two occasions during the fiscal year ended December 31, 2016. Additional information regarding the Audit Committee is set forth in the Audit Committee Report below.

Compensation Committee

The Compensation Committee is currently comprised of Messrs. Morris (Chair) and Wisehart and Ms. Devereux-Mills. Each of the members of the Compensation Committee is independent for purposes of the NASDAQ listing standards. The Compensation Committee operates under a charter that is available on our website at www.marchex.com. The Compensation Committee held seven meetings and took action by written consent on seven occasions during the fiscal year ended December 31, 2016.

The purpose of the Compensation Committee is to assist the Board of Directors in carrying out its responsibilities with respect to: (i) overseeing the Company’s compensation policies and practices; (ii) reviewing and approving annual compensation and compensation procedures for the Company’s executive officers; and (iii) overseeing and recommending director compensation to the Board of Directors. More specifically, the Compensation Committee’s responsibilities include overseeing the Company’s general compensation structure, policies and programs, and assessing whether the Company’s compensation structure establishes appropriate incentives for management and employees; making recommendations to the Board of Directors with respect to, and administering, the Company’s incentive compensation and equity-based compensation plans, including the Company’s stock option plan and employee stock purchase plan; reviewing and approving compensation procedures for the Company’s executive officers; recommending to the independent directors for approval the compensation of the Chief Executive Officer based on relevant corporate goals and objectives and the Board of Directors’ performance evaluation of the Chief Executive Officer; and reviewing and recommending to the Board of Directors for approval the compensation of executive officers other than the Chief Executive Officer; reviewing and recommending to the Board of Directors employment, retention, restricted stock and severance agreements for executive officers, including change in control provisions, plans or agreements; reviewing the compensation of directors for service on the Board of Directors and its committees. Regarding most compensation matters, including executive and director compensation, the Company’s management provides recommendations to the Compensation Committee. The Compensation Committee has delegated its authority to grant equity and other awards under the Company’s stock incentive plan to eligible employees who are not executive officers to the Stock Option Grant Subcommittee within certain pre-approved limits. The Stock Option Grant Subcommittee currently consists of Messrs. Arends, and Caldwell and such committee regularly reports any grants made to the Compensation Committee.

Nominating and Governance Committee

The Nominating and Governance Committee is currently comprised of Messrs. Cline and Morris and Ms. Devereux-Mills (Chair). Each of the members of the Nominating and Governance Committee is independent for purposes of the NASDAQ listing standards. The Nominating and Governance Committee operates under a charter that is available on our website at www.marchex.com. The Nominating and Governance Committee identifies individuals qualified to become board members, recommends to the board those persons to be nominated for election to our board at the annual meeting of stockholders, develops and recommends to the board a set of corporate governance principles applicable to the Company and oversees the annual evaluation of the board. The Nominating and Governance Committee held four meetings during the fiscal year ended December 31, 2016.

Nomination of Directors

The Nominating and Governance Committee may use third party executive search firms to help identify prospective director nominees. The Nominating and Governance Committee has not established specific minimum age, education, experience, or skill requirements for potential members, but, in general, expects that qualified candidates will have high-level managerial experience in a relatively complex organization or be accustomed to dealing with complex problems, and will be able to represent the interests of the stockholders as a whole rather than special interest groups or constituencies. The Nominating and Governance Committee considers each candidate’s character, integrity, judgment, skills, background, experience of particular relevance to the Company, ability to work well with others and time available to devote to board activities, among other factors. The Nominating and Governance Committee also considers the interplay of a candidate’s background and expertise with that of other board members, and the extent to which a candidate may be a desirable addition to any committee of the board. The Nominating and Governance Committee uses the same process for evaluating all nominees, regardless of the original source of the nomination.

The Nominating and Governance Committee also focuses on issues of diversity, such as diversity of gender, race and national origin, education, professional experience and differences in viewpoints and skills. The Nominating and Governance Committee does not assign specific weights to particular criteria. Rather, the Board of Directors believes that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the board to fulfill its responsibilities. The Nominating and Governance Committee believes that it is essential that the board members represent diverse viewpoints. The Nominating and Governance Committee’s goal is to assemble a board that brings to the Company a variety of perspectives and skills derived from high quality business and professional experience.

Our evaluations of potential directors include, among other things, an assessment of a candidate’s background and credentials, personal interviews, and discussions with appropriate references. Once we have selected appropriate candidates, we present them to the full board for election if a vacancy occurs or is created by an increase in the size of the board during the course of the year, or for nomination if the director is to be first elected by stockholders.

Marchex stockholders may recommend individuals to the Nominating and Governance Committee for consideration as potential director candidates by submitting their names and appropriate supporting background and biographical information to: Marchex, Inc., 520 Pike Street, Suite 2000, Seattle, Washington 98101, Attention: General Counsel. The recommendation must include any relevant information, including the candidate’s name, home and business contact information, detailed biographical data and qualifications, and information regarding any relationships between the candidate and the Company within the last three years. Acceptance of a recommendation does not mean that the committee will ultimately nominate the recommended candidate.

Code of Conduct and Code of Ethics

The Company has adopted a code of conduct applicable to each of the Company’s officers, directors and employees, and a code of ethics applicable to the Company’s Chief Executive Officer, Chief Financial Officer and the Company’s senior financial officers, as contemplated by Section 406 of the Sarbanes-Oxley Act of 2002 and both codes are available on our website at www.marchex.com.

Corporate Governance Guidelines

The Board of Directors has adopted corporate governance guidelines to ensure effective corporate governance which are available on our website at www.marchex.com.

Board Leadership Structure

The Board of Directors does not have a specific policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board as the board believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and the membership of the board. The Board of Directors is responsible for the control and direction of the Company.

The Board of Directors is currently comprised of independent members, as independence is defined under the NASDAQ Listing Standards. The leadership structure of the Company has varied over time as the demands of the business, the composition of the Board, and the ranks of our senior executives have changed, and the Board has utilized this flexibility to establish the most appropriate structure at any given time. From our inception, until February of 2015, we combined the roles of Chairman of the Board and Chief Executive Officer, but in February of 2015 we began to operate with an Executive Chairman of the Board separate from the Chief Executive Officer. In October 2016, Anne Devereux-Mills was appointed Chairman of the Board of Directors and an office of the CEO was established subject to oversight by Ms. Devereux-Mills following the resignation of our then Chief Executive Officer.

We have experienced recent turnover in certain senior executives, and currently the duties and responsibilities of the chief executive officer are performed by the Office of the CEO consisting of Michael Arends (Chief Financial Officer), Ethan Caldwell (Chief Administrative Officer, General Counsel and Secretary), and Russell C. Horowitz (currently a consultant to the Company and previously Chief Executive Officer and Chairman of the Board) and subject to oversight by our Chairman, Anne Devereux-Mills. We are assessing our current and future senior leadership needs, although we may not be successful in finding or hiring suitable additional senior leadership.

Board’s Role in Risk Management

The Board of Directors, as a whole and also at the committee level, is responsible for oversight of our risk assessment and management process. Management is responsible for the Company’s day-to-day risk management activities. The Audit Committee periodically reviews risks and exposures associated with financial matters and financial reporting, the Compensation Committee oversees risks relating to compensation programs and policies, and the Nominating and Governance Committee oversees risks associated with Board and corporate governance matters. Furthermore, the Board of Directors periodically reviews risk management matters, including as part of its ongoing corporate strategy review, and is apprised of particular risk management matters in connection with its general oversight and approval of corporate matters.

Board Effectiveness

The Board of Directors performs an annual self-assessment to evaluate its effectiveness in fulfilling its obligations.

Executive Session

The corporate governance guidelines provide that the Company’s independent directors shall meet regularly (not less than two times per year) in executive session at which only the Company’s independent directors shall be present. The independent directors met in executive session four times during the fiscal year ended December 31, 2016.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee during 2016, are or have been an officer or employee of the Company. No member of the Compensation Committee had any relationship with the Company requiring disclosure under Item 404 of Regulation S-K. During fiscal year 2016, none of the Company’s executive officers served on the Compensation Committee (or its equivalent) or Board of Directors of another entity any of whose executive officers served on the Company’s Compensation Committee or Board of Directors.

Communications with Directors

The Board of Directors provides a process for Marchex stockholders to send communications to the Board of Directors. Any stockholder who desires to contact the Board of Directors may do so by writing to: Marchex, Inc., 520 Pike Street, Suite 2000, Seattle, Washington 98101, Attention: Ethan Caldwell, Secretary. Communications received by mail will be screened by the Secretary for appropriateness before either forwarding to or notifying the members of the Board of Directors of receipt of a communication.

PROPOSAL TWO—RATIFICATION OF APPOINTMENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

(Item 3 on Proxy Card)

KPMG LLP (“KPMG”) served as our independent registered public accounting firm for the fiscal year ended December 31, 2016 (“fiscal 2016”) and audited our consolidated financial statements for fiscal 2016 and prior years. On June 23, 2017, following a review process undertaken by the Audit Committee, the Audit Committee approved the selection of Moss Adams to serve as our independent registered public accounting firm for the fiscal year ended December 31, 2017. At the same time, the Audit Committee approved the dismissal of KPMG, effective as of June 23, 2017. Stockholder ratification of the selection of Moss Adams as Marchex’s independent registered public accounting firm is not required by Marchex’s bylaws, Delaware corporate law or otherwise. Notwithstanding the foregoing, the Board of Directors has elected to seek such ratification as a matter of good corporate practice. Should the stockholders fail to ratify the selection of Moss Adams as our independent registered public accounting firm, the Board of Directors will consider whether to retain Moss Adams for the year ended December 31, 2017 and will consider the appointment of another independent registered public accounting firm.  

KPMG's reports on the Company’s financial statements for the fiscal years ended December 31, 2015 and 2016 did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. During the Company’s two most recent fiscal years ended 2015 and  2016 and through June 23, 2017, the date of KPMG's dismissal, we had no disagreements (as defined in Item 304 of Regulation S-K) with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to KPMG's satisfaction, would have caused it to make reference to the subject matter of the disagreements in connection with any opinion to the subject matter of the disagreement. Furthermore, during the period of KPMG’s retention, there were no reportable events of the type described in Item 304(a)(1)(v) of Regulation S-K.

The change in independent registered accounting firm was disclosed in the Company's Current Report on Form 8-K filed with the SEC on June 28, 2017. A copy of KPMG’s letter, dated June 28, 2017, stating its agreement with the statements made therein as it pertains to KPMG in the Form 8-K was included as an exhibit to such Form 8-K filing.

During the two most recent fiscal years ended December 31, 2015 and 2016, and through June 23, 2017, neither the Company nor anyone on the Company’s behalf consulted Moss Adams regarding either (i) the application of accounting principles to a specified transaction regarding the Company, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a disagreement (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).

Representatives of KPMG and Moss Adams are expected to be present at the Annual Meeting in order to respond to appropriate questions and to make any other statement deemed appropriate.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF MOSS ADAMS LLP.

INDEPENDENT REGISTERED ACCOUNTING FIRM FEES

Accounting Fees and Services

During fiscal years 2015 and 2016, we retained KPMG to provide professional services in the following categories and amounts: