10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number: 001-36219

Sizmek Inc.

(Exact name of registrant as specified in its charter)

Delaware	37-1744624
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

500 West 5th Street, Suite 900

Austin, Texas 78701

 (Address of principal executive offices) (Zip Code)

(512) 469-5900

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 

Yes xNo o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 

Yes xNo o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer x	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

Yes oNo x

As of November 11, 2015, the registrant had 29,584,359 shares of Common Stock, par value $0.001, outstanding.

SIZMEK INC.

Cautionary Note Regarding Forward-Looking Statements

        The Securities and Exchange Commission ("SEC") encourages companies to disclose forward-looking information so that investors can better understand a company's future prospects and make informed investment decisions. Certain statements contained herein may be deemed to constitute "forward-looking statements."

        Words such as "believe," "expect," "anticipate," "project," "estimate," "budget," "continue," "could," "intend," "may," "plan," "potential," "predict," "seek," "should," "will," "would," "objective," "forecast," "goal," "guidance," "outlook," "effort," "target" and similar expressions, among others, generally identify forward-looking statements, which speak only as of the date the statements were made. All forward-looking statements are management's present expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, among other things:

· our ability to further identify, develop and achieve commercial success for new online products and services including mobile, video and programmatic managed services;

· our ability to replace our existing Sizmek MDX platform with a new platform that is currently in development without experiencing service disruptions;

· continued or accelerating decline in our rich-media business;

· delays in product offerings;

· the development and pricing of competing online services and products;

· consolidation of the digital industry and of digital advertising networks;

· slower than expected development of the digital advertising market;

· our ability to protect our proprietary technologies;

· identifying acquisition and disposition opportunities and integrating our acquisitions with our operations, systems, personnel and technologies;

· security threats to our computer networks;

· operating in a variety of foreign jurisdictions;

· fluctuations in currency exchange rates;

· adaption to new, changing, and competitive technologies;

· potential additional impairment of our goodwill and potential impairment of our other long-lived assets;

· our ability to achieve some or all of the expected benefits of the spin-off and merger transaction; and

· other risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2014.

        In particular, information included under the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" contains forward-looking statements.

        In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained herein might not occur. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this filing. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. All subsequent forward-looking statements attributable to management or to any person authorized to act on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

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PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

SIZMEK INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)

	September 30, 2015			December 31, 2014
	(unaudited)
Assets
CURRENT ASSETS:
Cash and cash equivalents	$	64,865		$	90,672
Accounts receivable (less allowances of $978 and $813 as of September 30, 2015 and December 31, 2014, respectively)	43,835			51,125
Deferred income taxes	620			636
Restricted cash	1,524			1,538
Other current assets	7,501			5,254
Current assets of TV business	957			2,470
Total current assets	119,302			151,695
Property and equipment, net	39,637			34,036
Goodwill	51,288			40,154
Intangible assets, net	65,293			71,306
Deferred income taxes	358			387
Restricted cash	4,625			3,941
Other non-current assets	3,231			3,393
Total assets	$	283,734		$	304,912
Liabilities and Stockholders’ Equity
CURRENT LIABILITIES:
Accounts payable	$	4,177		$	3,976
Accrued liabilities	24,167			19,171
Current liabilities of TV business	420			395
Total current liabilities	28,764			23,542
Deferred income taxes	7,299			8,242
Other non-current liabilities	7,494			6,433
Non-current liabilities of TV business	273			260
Total liabilities	43,830			38,477
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.001 par value—Authorized 15,000 shares; issued and outstanding—none	—			—
Common stock, $0.001 par value—Authorized 200,000 shares; 29,584 issued and outstanding at September 30, 2015; 30,399 issued and 30,071 outstanding at December 31, 2014	30			30
Treasury stock, at cost (328 shares at December 31, 2014)	—			(2,000		)
Additional capital	367,566			371,261
Accumulated deficit	(124,731		)	(101,341		)
Accumulated other comprehensive loss	(2,961		)	(1,515		)
Total stockholders’ equity	239,904			266,435
Total liabilities and stockholders’ equity	$	283,734		$	304,912

The accompanying notes are an integral part of these financial statements.

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SIZMEK INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Revenues:
Platform related	$	32,869		$	35,380		$	101,406		$	109,646
Programmatic managed services	7,397			4,133			15,835			12,247
Total	40,266			39,513			117,241			121,893
Cost of revenues (excluding depreciation and amortization):
Platform related	11,029			11,708			33,039			35,739
Programmatic managed services	6,002			2,566			12,144			8,289
Total	17,031			14,274			45,183			44,028
Selling and marketing	15,597			14,082			45,233			44,184
Research and development	3,816			3,300			10,393			10,041
General and administrative	5,005			4,276			14,298			17,464
Merger, integration and other	1,447			221			3,451			6,510
Depreciation and amortization	7,524			6,280			22,734			19,257
Goodwill impairment	—			98,196			—			98,196
Loss from operations	(10,154		)	(101,116		)	(24,051		)	(117,787		)
Other (income) expense, net	(58		)	479			1,287			687
Loss before income taxes	(10,096		)	(101,595		)	(25,338		)	(118,474		)
Benefit for income taxes	(2,548		)	(213		)	(1,948		)	(1,032		)
Net loss	$	(7,548	)	$	(101,382	)	$	(23,390	)	$	(117,442	)
Basic and diluted loss per common share	$	(0.26	)	$	(3.34	)	$	(0.79	)	$	(3.86	)
Weighted average common shares outstanding:
Basic and diluted	29,567			30,399			29,633			30,399

The accompanying notes are an integral part of these financial statements.

4

SIZMEK INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net loss	$	(7,548	)	$	(101,382	)	$	(23,390	)	$	(117,442	)
Other comprehensive loss:
Unrealized loss on derivatives, net of tax		(381	)		(24	)		(7	)		(116	)
Unrealized loss on available for sale securities, net of tax		(176	)		(157	)		(410	)		(121	)
Foreign currency translation adjustment		(805	)		(989	)		(1,029	)		(517	)
Total other comprehensive loss		(1,362	)		(1,170	)		(1,446	)		(754	)
Total comprehensive loss	$	(8,910	)	$	(102,552	)	$	(24,836	)	$	(118,196	)

The accompanying notes are an integral part of these financial statements.

5

SIZMEK INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(In thousands)

	Common Stock (Shares / Amount)					Treasury Stock (Shares / Amount)						Additional Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance at December 31, 2014		30,399		$	30		(328	)	$	(2,000	)	$	371,261		$	(101,341	)	$	(1,515	)	$	266,435
Net loss		—			—		—			—			—			(23,390	)		—			(23,390	)
Share-based compensation		—			—		—			—			3,141			—			—			3,141
Common stock issued pursuant to RSU agreements, net of shares tendered to satisfy required tax withholding		131			—		—			—			(336	)		—			—			(336	)
Purchase of treasury stock		—			—		(618	)		(4,500	)		—			—			—			(4,500	)
Retirement of treasury stock		(946	)		—		946			6,500			(6,500	)		—			—			—
Other comprehensive loss		—			—		—			—			—			—			(1,446	)		(1,446	)
Balance at September 30, 2015		29,584		$	30		—		$	—		$	367,566		$	(124,731	)	$	(2,961	)	$	239,904

The accompanying notes are an integral part of these financial statements.

6

SIZMEK INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(In thousands)

	Nine Months Ended September 30,
	2015			2014
Cash flows from operating activities:
Net loss	$	(23,390	)	$	(117,442	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Goodwill impairment		—			98,196
Depreciation of property and equipment		11,205			7,484
Amortization of intangibles		11,529			11,773
Share-based compensation		3,141			8,430
Deferred income taxes		(929	)		(1,040	)
Provision (benefit) for accounts receivable recoveries		165			(134	)
Write-off (recovery) of TV business net assets		94			(1,819	)
Other		23			(384	)
Changes in operating assets and liabilities:
Accounts receivable		10,174			4,333
Other assets		(2,524	)		1,092
Accounts payable and other liabilities		(6,665	)		(1,370	)
Net cash provided by operating activities		2,823			9,119
Cash flows from investing activities:
Purchases of property and equipment		(3,488	)		(3,840	)
Capitalized costs of developing software		(12,557	)		(9,643	)
Acquisitions, net of cash acquired		(7,541	)		(6,079	)
Purchase of long term investment		—			(975	)
Other		(476	)		(842	)
Net cash used in investing activities		(24,062	)		(21,379	)
Cash flows from financing activities:
Purchases of treasury stock		(4,500	)		—
Payment of seller financing		(625	)		—
Payments of TV business liabilities		(342	)		(9,431	)
Proceeds from TV business assets		1,809			45,408
Payment of tax withholding obligation for shares tendered		(336	)		—
Net contributions from Parent		—			44,833
Net cash (used in) provided by financing activities		(3,994	)		80,810
Effect of exchange rate changes on cash and cash equivalents		(574	)		31
Net (decrease) increase in cash and cash equivalents		(25,807	)		68,581
Cash and cash equivalents at beginning of year		90,672			22,648
Cash and cash equivalents at end of period	$	64,865		$	91,229
Supplemental disclosures of cash flow information:
Cash paid (received) for income taxes	$	574		$	(1,272	)
Cash paid (received) for interest	$	(61	)	$	(340	)
Holdback obligations incurred to acquire businesses	$	1,097		$	625
Extended payment obligations incurred to purchase software	$	960		$	—

The accompanying notes are an integral part of these financial statements.

7

SIZMEK INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

1. Basis of Presentation

The Company

Sizmek Inc. ("Sizmek," the "Company," "we," "us," and "our"), a Delaware corporation formed in 2013, operates a leading independent global online ad campaign management and distribution platform as measured by the number of advertising impressions served and the number of countries in which we serve customers. Our revenues are principally derived from services related to online advertising. We help advertisers, agencies and publishers engage with consumers across multiple online media channels (mobile, display, rich media, video and social) while delivering efficient, impactful and measurable ad campaigns. We connect approximately 17,000 advertisers and 3,500 agencies to audiences in about 60 countries, serving more than 1.4 trillion impressions a year.

Separation from Digital Generation, Inc.

Prior to February 7, 2014, we operated as the online segment of Digital Generation, Inc. ("DG"), a leading global television and online advertising management and distribution business. On February 7, 2014, pursuant to the terms of the Agreement and Plan of Merger, dated as of August 12, 2013 (the "Merger Agreement"), by and among Extreme Reach, Inc. ("Extreme Reach"), Dawn Blackhawk Acquisition Corp., a wholly-owned subsidiary of Extreme Reach ("Acquisition Sub"), and DG, all of our issued and outstanding shares of common stock, par value $0.001 per share ("Sizmek Common Stock") were distributed by DG pro rata to its stockholders (the "Spin-Off") with the DG stockholders receiving one share of Sizmek Common Stock for each share of DG common stock ("DG Common Stock") they held. Immediately after the distribution of the Sizmek Common Stock, pursuant to the Merger Agreement, Acquisition Sub merged with and into DG with DG as the surviving corporation (the "Merger") and each of the outstanding shares of DG Common Stock was converted into the right to receive $3.00 per share, and DG became a wholly-owned subsidiary of Extreme Reach. Prior to the Spin-Off, pursuant to the Separation and Redemption Agreement and related documents, DG contributed to us all of the business and operations of its online advertising segment, all of DG's cash, most of the working capital from its television segment, and certain other corporate assets; and we agreed to indemnify DG and affiliates of DG (including Extreme Reach) from all pre-closing liabilities of DG, including stockholder litigation, tax obligations, and employee liabilities. Sizmek now operates as a separate, stand-alone publicly-traded company in the online advertising services business segment.

Carve-out Financial Statements Prior to Spin-Off

Prior to our Spin-Off from DG on February 7, 2014, our combined financial statements were derived from the consolidated financial statements and accounting records of DG. These statements reflected the combined historical results of operations, financial position and cash flows of DG's online business primarily conducted through MediaMind Technologies Inc., EyeWonder, LLC, Peer39, Inc., and Unicast EMEA, Ltd., and an allocable portion of DG's corporate costs. For the period prior to the Spin-Off, our financial statements are presented as if such businesses had been combined for all periods presented.

All intercompany transactions have been eliminated. All intercompany transactions between us and DG have been included in these combined financial statements and are considered to be effectively settled for cash in the combined financial statements at the time the transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the combined statements of cash flows as a financing activity.

For the period prior to our Spin-Off on February 7, 2014, the combined financial statements include expense allocations for (1) certain corporate functions historically provided by DG, including, but not limited to, finance, audit, legal, information technology, human resources, communications, compliance, and shared services; (2) employee benefits and incentives; and (3) share-based compensation. These expenses have been allocated to us on the basis of direct usage when identifiable, with the remainder allocated on a pro-rata basis of combined revenues, headcount or other measures of the Company and DG. We consider the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services provided to, or the benefit received by, us during the period presented. The allocations may not, however, reflect the expense we would have incurred as an independent, publicly-traded company for the period presented. We benefited from sharing the corporate cost structure of DG rather than incurring such costs ourselves on a stand-alone basis.

8

The majority of the pre Spin-Off expense allocations were charged to general and administrative expense. For the periods subsequent to the Spin-Off, general and administrative expense as a percentage of revenues (excluding the accelerated recognition of share-based payment awards in connection with the Spin-Off in February 2014) has been comparable to the corresponding period of the prior year. Accordingly, while we benefited from sharing DG's cost structure prior to the Spin-Off, since the Spin-Off we have been able to control our corporate overhead expenses to a level reasonably consistent with the pre Spin-Off periods.

2. General

Principles of Consolidation and Combination

The consolidated and combined financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of our wholly-owned, and majority-owned and controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation or combination.  For the period prior to the Spin-Off, the carve-out financial statements have been prepared on a basis that management believes to be reasonable to reflect the results of operations and cash flows of the Company’s operations, including portions of DG’s corporate costs and administrative shared services. These unaudited financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

These financial statements have been prepared by us without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.  However, we believe the disclosures are adequate to make the information presented not misleading.  The unaudited consolidated and combined financial statements reflect all adjustments, which are, in the opinion of management, of a normal and recurring nature and necessary for a fair presentation of our financial position as of the balance sheet dates, and the results of operations and cash flows for the periods presented.

Seasonality

Our business is seasonal. Revenues tend to be the highest in the fourth quarter as a large portion of our revenues follow the advertising spend or budgets of our customers which tend to be at their highest during the holiday season.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to the recoverability and useful lives of our long-lived assets, the adequacy of our allowance for doubtful accounts and credit memo reserves, contingent consideration and income taxes. We base our estimates on historical experience, future expectations and on other relevant assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Effective November 1, 2014, we shortened the estimated remaining useful life of our Sizmek MDX platform assets from an average of 46 months to 20 months in anticipation of our new platform, which is currently in development.  We anticipate the new platform will be operational by the end of 2015 and we expect to retire our existing platform by mid-2016.  For the first nine months of 2015, this change increased our net loss and loss per share by $2.3 million and $0.08, respectively.

Risk of Goodwill Impairment

See Note 5 for a discussion of the risk of a future impairment of our goodwill.

9

Assets and Liabilities of DG’s TV Business

Pursuant to the Separation and Redemption Agreement, DG contributed to us substantially all of its television business current assets and certain other assets existing on February 7, 2014, and we agreed to assume substantially all of DG’s television business liabilities that existed on February 7, 2014 or were attributable to periods up to and including February 7, 2014.  These net assets contributed were recorded at $78.5 million.  The details of these assets and liabilities outstanding as of September 30, 2015 and December 31, 2014 were as follows (in thousands):

Description	September 30,  2015		December 31,  2014
Current assets of television business:
Income tax receivables	$	748	$	1,943
Trade accounts receivable	9		367
Springbox revenue sharing	200		160
Total	$	957	$	2,470
Current liabilities of television business:
Trade accounts payable	$	—	$	165
Accrued liabilities	420		230
Total	$	420	$	395
Non-current liabilities of television business:
Uncertain tax positions	$	273	$	260

Derivative Instruments

We enter into foreign currency forward contracts and options to hedge a portion of the exposure to the variability in expected future cash flows resulting from changes in related foreign currency exchange rates between the New Israeli Shekel (“NIS”) and the U.S. Dollar. These transactions were designated as cash flow hedges, as defined by Accounting Standards Codification (“ASC”) Topic 815, “Derivatives and Hedging.”  ASC Topic 815 requires that we recognize derivative instruments as either assets or liabilities in our balance sheet at fair value. These contracts are Level 2 fair value measurements in accordance with ASC Topic 820, “Fair Value Measurements and Disclosures.” For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss), net of taxes, and reclassified into earnings (various operating expenses) in the same period or periods during which the hedged transaction affects earnings.

Our cash flow hedging strategy is to hedge against the risk of overall changes in cash flows resulting from certain forecasted foreign currency rent and salary payments during the next twelve months. We hedge portions of our forecasted expenses denominated in the NIS with a single counterparty using foreign currency forward contracts and options.  At September 30, 2015, we had $16.2 million notional amount of foreign currency forward contracts and options outstanding that had a net fair value liability balance of $0.1 million ($0.3 million liability, net of a $0.2 million asset).  At December 31, 2014, we had $14.3 million notional amount of foreign currency forward contracts and options outstanding that had a net fair value liability balance of $0.1 million ($0.2 million liability, net of a $0.1 million asset). The net liability at September 30, 2015 is included in accrued liabilities and is expected to be recognized in our results of operations in the next twelve months. The net liability at December 31, 2014 was also included in accrued liabilities.  The vast majority of any gain or loss from hedging activities is included in our various operating expenses. As a result of our hedging activities, we incurred the following gains and losses in our results of operations (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015				2014
Hedging gain (loss) recognized in operations	$	(24	)	$	6		$	(71	)		$	121

It is our policy to offset fair value amounts recognized for derivative instruments executed with the same counterparty. In connection with our foreign currency forward contracts and options and other banking arrangements, we have agreed to maintain $1.5 million of cash in bank accounts with our counterparty, which we classify as restricted cash on our balance sheet.

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Accumulated Other Comprehensive Income (Loss)

Components of accumulated other comprehensive income (loss) (“AOCI” or “AOCL”), net of tax, for the three and nine months ended September 30, 2015 and 2014 were as follows (in thousands):

	Three Months Ended September 30, 2015
	Foreign Currency Translation			Unrealized Gains (Losses) on Foreign Currency Derivatives			Unrealized Gains (Losses) on Available for Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at June 30, 2015	$	(2,896	)	$	276		$	1,021		$	(1,599	)
Other comprehensive loss before reclassifications		(805	)		(403	)		(176	)		(1,384	)
Amounts reclassified out of AOCL		—			22			—			22
Net current period activity		(805	)		(381	)		(176	)		(1,362	)
Balance at September 30, 2015	$	(3,701	)	$	(105	)	$	845		$	(2,961	)

	Nine Months Ended September 30, 2015
	Foreign Currency Translation			Unrealized Gains (Losses) on Foreign Currency Derivatives			Unrealized Gains (Losses) on Available for Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2014	$	(2,672	)	$	(98	)	$	1,255		$	(1,515	)
Other comprehensive loss before reclassifications		(1,029	)		(71	)		(410	)		(1,510	)
Amounts reclassified out of AOCL		—			64			—			64
Net current period activity		(1,029	)		(7	)		(410	)		(1,446	)
Balance at September 30, 2015	$	(3,701	)	$	(105	)	$	845		$	(2,961	)

	Three Months Ended September 30, 2014
	Foreign Currency Translation			Unrealized Gains (Losses) on Foreign Currency Derivatives			Unrealized Gains (Losses) on Available for Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at June 30, 2014	$	(726	)	$	24		$	1,800		$	1,098
Other comprehensive loss before reclassifications		(989	)		(18	)		(157	)		(1,164	)
Amounts reclassified out of AOCI		—			(6	)		—			(6	)
Net current period activity		(989	)		(24	)		(157	)		(1,170	)
Balance at September 30, 2014	$	(1,715	)	$	—		$	1,643		$	(72	)

	Nine Months Ended September 30, 2014
	Foreign Currency Translation			Unrealized Gains (Losses) on Foreign Currency Derivatives			Unrealized Gains (Losses) on Available for Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2013	$	(1,198	)	$	116		$	1,764		$	682
Other comprehensive loss before reclassifications		(517	)		(10	)		(121	)		(648	)
Amounts reclassified out of AOCI		—			(106	)		—			(106	)
Net current period activity		(517	)		(116	)		(121	)		(754	)
Balance at September 30, 2014	$	(1,715	)	$	—		$	1,643		$	(72	)

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The following table summarizes the reclassifications from AOCI or AOCL to the consolidated and combined statements of operations for the three and nine months ended September 30, 2015 and 2014 (in thousands):

	Amounts Reclassified out of AOCI or AOCL
	Three Months Ended  September 30, 2015			Three Months Ended  September 30, 2014		Affected Line Items in the Consolidated and  Combined Statements of Operations
Gains (losses) on cash flow hedges:
Foreign currency derivatives	$	(2	)	$	1	Cost of revenues
Foreign currency derivatives		(1	)		—	Selling and marketing
Foreign currency derivatives		(13	)		4	Research and development
Foreign currency derivatives		(4	)		1	General and administrative
Foreign currency derivatives		(4	)		—	Other, net
Total before taxes		(24	)		6
Tax amounts		2			—
Income (loss) after tax	$	(22	)	$	6

	Amounts Reclassified out of AOCI or AOCL
	Nine Months Ended  September 30, 2015			Nine Months Ended  September 30, 2014			Affected Line Items in the Consolidated and Combined Statements of Operations
Gains (losses) on cash flow hedges:
Foreign currency derivatives	$	(7	)	$	12		Cost of revenues
Foreign currency derivatives		(3	)		5		Selling and marketing
Foreign currency derivatives		(47	)		58		Research and development
Foreign currency derivatives		(12	)		16		General and administrative
Foreign currency derivatives		(2	)		30		Other, net
Total before taxes		(71	)		121
Tax amounts		7			(15	)
Income (loss) after tax	$	(64	)	$	106

Merger, Integration and Other Expenses

Merger, integration and other expenses reflect the expenses incurred in (i) DG's Merger with Extreme Reach and our Spin-Off from DG, (ii) acquiring or disposing of a business, (iii) integrating an acquired operation (e.g., office closure costs) into the Company and (iv) certain other items of income or expense not deemed to be part of our core operations. A summary of our merger, integration and other expenses is as follows (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
Description	2015		2014			2015		2014
Merger and Spin-Off (1)	$	—	$	471		$	—	$	5,209
Severance		1		504			467		1,062
Integration and restructuring costs		1,057		912			2,127		1,867
Acquisition, legal and due diligence fees		33		153			763		191
Write-off (recovery) of TV business net assets (2)		356		(1,819	)		94		(1,819	)
Total	$	1,447	$	221		$	3,451	$	6,510

___________________

(1) - See discussion of Merger and Spin-Off under “Separation from Digital Generation, Inc.” in Note 1.

(2) - Represents an increase (reduction) in expense due to realizing less (more) TV business net assets than originally estimated at the time of the Spin-Off.

Israel Operations

The majority of our research and development activities and a large portion of our accounting functions are performed in Herzliya, Israel. In total, about 26% of our workforce is located in Israel.  As a result, we are subject to risks associated with operating in the Middle East.

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Recently Issued Accounting Guidance

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)." ASU 2014-09 modifies revenue recognition guidance for GAAP. Previous revenue recognition guidance in GAAP comprised broad revenue recognition concepts together with numerous revenue requirements for particular industries or transactions, which sometimes resulted in different accounting for economically similar transactions. In contrast, International Accounting Standards Board ("IASB") provided limited guidance on revenue recognition. Accordingly, the FASB and IASB initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards ("IFRS"). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps:  

        Step 1: Identify the contract(s) with a customer.

        Step 2: Identify the performance obligations in the contract.

        Step 3: Determine the transaction price.

        Step 4: Allocate the transaction price to the performance obligations in the contract.

        Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

In August 2015, the FASB issued ASU 2015-14 to defer the effective date of ASU 2014-09 by one year.  As a result, for Sizmek, the amendments in ASU 2014-09 are now effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.  Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period.  An entity shall adopt the amendments in ASU 2014-09 by either (i) retrospectively adjusting each prior reporting period presented or (ii) retrospectively adjusting for the cumulative effect of initially applying ASU 2014-09 at the date of initial adoption. We have not as yet determined (i) the extent to which we expect ASU 2014-09 will impact our reported revenues or (ii) the manner in which it will be adopted.

In September 2015, the FASB issued ASU 2015-16, "Business Combinations (Topic 805)."  ASU 2015-16 modifies how changes to provisional amounts determined during the measurement period of a business combination are recognized.  Under existing accounting literature, changes to provisional amounts determined during the measurement period of a business combination, resulting from facts and circumstances that existed at the acquisition date, are recognized by retrospectively adjusting the provisional amounts at the acquisition date.   However, under ASU 2015-16, an acquirer recognizes adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustments are determined.  For Sizmek, ASU 2015-16 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period.  

3. Fair Value Measurements

ASC 820, Fair Value Measurement, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.

ASC 820 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

· Level 1—Quoted prices in active markets for identical assets or liabilities.

· Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

· Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

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We have classified our assets and liabilities that are measured at fair value on a recurring basis (at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.

The tables below set forth by level, assets and liabilities that were accounted for at fair value as of September 30, 2015 and December 31, 2014. The carrying values of our accounts receivable and accounts payable approximate their respective fair values due to the short-term nature of these financial instruments. The tables do not include cash on hand or assets and liabilities that are measured at historical cost or any basis other than fair value (in thousands).

		Fair Value Measurements at September 30, 2015
	Balance Sheet Location	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
Assets:
Money market funds	(a)	$	28,920	$	—	$	—	$	28,920
Revenue sharing arrangement	(b)	—		—		200		200
Marketable equity securities	(c)	1,186		—		—		1,186
Total		$	30,106	$	—	$	200	$	30,306
Liabilities:
Currency forward derivatives / options	(d)	$	—	$	130	$	—	$	130

		Fair Value Measurements at December 31, 2014
	Balance Sheet Location	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
Assets:
Money market funds	(a)	$	35,953	$	—	$	—	$	35,953
Revenue sharing arrangement	(b)	—		—		160		160
Marketable equity securities	(c)	1,596		—		—		1,596
Total		$	37,549	$	—	$	160	$	37,709
Liabilities:
Currency forward derivatives / options	(d)	$	—	$	113	$	—	$	113

_____________________________

(a) Included in cash and cash equivalents.

(b) Included in current assets of TV business.

(c) Included in other non-current assets.

(d) Included in accrued liabilities.

The fair value of our money market funds was determined based upon quoted market prices. The currency forward derivatives/options are derivative instruments whose value is based upon quoted market prices from various market participants. We have a zero cost basis in these derivative instruments. Our marketable equity securities relate to a single issuer and have a cost basis of $0.3 million.

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In connection with our Spin-Off from DG, DG contributed a revenue sharing asset to us that resulted from DG's sale of its Springbox unit. We are entitled to a percentage of the revenues collected by the business for three years after the closing date (June 1, 2012). Revenue sharing payments are generally made once a year. We have estimated the future revenues of Springbox based on the historical revenues and certain other factors, discounted to their present value. The following table provides a reconciliation of changes in the fair values of our Level 3 assets (in thousands):

	Revenue Sharing Arrangement
	Nine Months Ended  September 30, 2015
Balance at beginning of year	$	160
Additions recognized in operating results	40
Balance at end of period	$	200

In connection with an acquisition of a business, we sometimes include a contingent consideration component of the purchase price based on (i) future revenues or (ii) future revenues and operating results (e.g., adjusted EBITDA), that require minimum thresholds be met before any earnout payment becomes due. Accordingly, there can be significant volatility in the earnout liability. Each reporting period, we review our estimates of the performance indicators (e.g., revenue, adjusted EBITDA) and the corresponding earnout levels achieved, discounted to their present values. The change in fair value is recorded in cost of revenues in the accompanying statements of operations.

In connection with our acquisition of Republic Project, we agreed to make additional payments to the sellers if Republic's 2014 or 2015 revenues and adjusted EBITDA exceeded certain levels. As of September 30, 2015, we do not expect to make any payments with respect to the Republic Project contingent consideration arrangement.

Abakus Convertible Notes

In May 2014, we purchased $1.0 million of Abakus convertible promissory notes ("Convertible Notes") for $1.0 million. The Convertible Notes are due 90 days after written notice after the earlier of (i) May 30, 2016 or (ii) an occurrence of an Event of Default (as defined in the Convertible Notes). Abakus is a small private company that has developed a digital attribution software solution. The Convertible Notes bear interest at 5% per annum payable at maturity. The Convertible Notes are convertible into Abakus Series A Preferred Stock ("Series A Preferred") as follows:

a) Automatic conversion if Abakus sells $2.0 million of Series A Preferred ("Qualified Financing"), whereupon the Convertible Notes shall be converted, at Sizmek's option, at either (i) 75% of the share price in the Qualified Financing, or (ii) the quotient of $7.0 million divided by the number of shares outstanding upon exercise of all dilutive securities, or

b) Optional conversion at Sizmek's election if Abakus completes an Equity Financing (as defined in the Convertible Notes) that is not a Qualified Financing, whereupon the Convertible Notes shall be converted at 75% of the share price in the Equity Financing.

In addition, upon a Change in Control, as defined in the Convertible Notes, the Convertible Notes shall be paid off at the greater of (i) the outstanding balance, or (ii) the amount the holder would have received upon conversion of the Convertible Notes. The Convertible Notes are considered held-to-maturity securities and are carried at amortized cost. The fair value of the Convertible Notes is not readily determinable. We are not aware of a market for the Convertible Notes. The Convertible Notes are included in other non-current assets.

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4. Acquisitions

StrikeAd

On May 28, 2015, we acquired substantially all the assets and operations, and assumed certain liabilities, of privately-held StrikeAd, Inc. and its affiliates (collectively, “StrikeAd”) for $8.8 million. The purchase price includes $7.7 million in cash paid at closing and deferred payment obligations totaling $1.1 million.  StrikeAd operates a mobile demand side platform (“DSP”) based in the United Kingdom.  We intend to combine the StrikeAd assets with our existing programmatic assets to build an end-to-end DSP for use by our customers.

The objective of the transaction was to accelerate the development of our mobile technology in order to better serve the advertising community. We expect to realize operating synergies from this transaction.  StrikeAd has been included in our results of operations since the date of closing.

The $8.8 million purchase price was preliminarily allocated to the assets acquired and liabilities assumed based upon their estimated fair values. For estimation purposes, we preliminarily allocated $4.3 million to developed technology, $1.1 million to customer relationships and $11.1 million to goodwill.  The developed technology and customer relationships acquired in the transaction are presently being amortized on a straight-line basis over 3.2 years and 5.7 years, respectively.  The weighted average amortization period is 3.7 years. The goodwill and other intangible assets created in the acquisition are deductible for tax purposes.  The acquired assets include $3.7 million of gross receivables, which we recognized at their estimated fair value of $3.5 million.  For 2014, StrikeAd reported revenues of $11.0 million and a loss before income taxes of $6.2 million.  For the period from the acquisition date through September 30, 2015, StrikeAd reported $3.0 million of revenues.  The purchase price allocation is preliminary pending the completion of the valuation analysis.

Pixel

On September 4, 2014, we acquired all of the outstanding shares of Zestraco Investments Limited including its wholly-owned subsidiary PixelCo. D.O.O. (“Pixel”) for $0.45 million in cash and a deferred payment obligation of $0.05 million which was paid in December 2014.  Pixel performed advertising service operations principally for us prior to our purchase and had no appreciable assets.

The objective of the transaction was to bring in-house the group of technology service personnel that had been providing advertising operations service to us through a contract.  We expect to realize operating synergies from this transaction.  Pixel has been included in our results of operations since the date of closing. The $0.5 million purchase price was allocated to goodwill and is not deductible for income tax purposes.  The purchase price allocation is final.

Aerify Media

On August 11, 2014, we acquired substantially all the assets and operations of privately-held Aerify Media LLC (“Aerify”), a firm specializing in mobile tracking and retargeting, for $5.625 million in cash and a $0.625 million deferred payment obligation due in one-year.  Aerify’s mobile in-app and web tracking technology expands our capabilities in the fast-growing mobile segment, adding both talent and technology to the platform. 

The objective of the transaction was to accelerate the development of our mobile technology in order to better serve the advertising community. We expect to realize operating synergies from this transaction.  Aerify has been included in our results of operations since the date of closing.

The $6.25 million purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values. We allocated $2.05 million to developed technology, $0.4 million to customer relationships and $3.8 million to goodwill.  The developed technology and customer relationships acquired in the transaction are being amortized on a straight-line basis over 4 years and 5 years, respectively. The weighted average amortization period is 4.2 years. The goodwill and other intangible assets created in the acquisition are deductible for tax purposes.  For 2013, Aerify reported revenues of $3.1 million and a loss before income taxes of $0.6 million.  The purchase price allocation is final.

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Purchase Price Allocations

        The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the respective dates of acquisition for the above referenced transactions (in millions).

Category	StrikeAd (preliminary)			Pixel		Aerify
Cash	$	0.1		$	—	$	—
Receivables		3.5			—		—
Other current assets		0.1			—		—
Customer relationships		1.1			—		0.4
Developed technology		4.3			—		2.1
Goodwill		11.1			0.5		3.8
Total assets acquired		20.2			0.5		6.3
Less liabilities assumed		(11.4	)		—		—
Net assets acquired	$	8.8		$	0.5	$	6.3

Pro Forma Information

        The following pro forma information presents our results of operations for the nine months ended September 30, 2015 and 2014 as if the acquisitions of StrikeAd, Pixel and Aerify had occurred on January 1, 2014 (in thousands). A table of actual amounts is provided for reference.

	As Reported Nine Months Ended September 30,						Unaudited Pro Forma Nine Months Ended September 30,
	2015			2014			2015			2014
Revenue	$	117,241		$	121, 893		$	120,794		$	131,214
Net loss		(23,390	)		(117,442	)		(25,709	)		(121,742	)

5. Goodwill

We operate as a single reporting unit. Changes in the carrying value of our goodwill for the nine months ended September 30, 2015 were as follows (in thousands):

	Goodwill		Accumulated Impairment Losses			Net Carrying Value
Balance at December 31, 2014	$	380,681	$	(340,527	)	$	40,154
Acquisition of StrikeAd		11,134		—			11,134
Balance at September 30, 2015	$	391,815	$	(340,527	)	$	51,288

We evaluate goodwill for possible impairment each year on December 31st and whenever events or changes in circumstances indicate the carrying value of our goodwill may not be recoverable. Generally, the goodwill impairment test involves a two-step process.  In the first step, we compare the fair value of the Company to its carrying value. If the fair value of the Company exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the Company is less than its carrying value, we must perform the second step of the impairment test to measure the amount of the impairment loss. In the second step, the Company's fair value is allocated to its assets and liabilities, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the Company was being acquired in a business combination. If the implied fair value of the Company's goodwill is less than the carrying value, the difference is recorded as an impairment loss.

During the third quarter of 2014, we determined that indicators of potential impairment existed requiring us to perform an interim goodwill impairment test.  As a result, we performed an extensive analysis to estimate the fair value of the Company using a discounted cash flow methodology.  The analysis concluded that the implied fair value of the Company's goodwill was $98.2 million less than its carrying value, which we recorded as a goodwill impairment loss during the third quarter of 2014.

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ASC 350-20-35 allows an entity to assess qualitatively whether it is necessary to perform step one of the prescribed two-step annual goodwill impairment test. If an entity believes, as a result of its qualitative assessment, that it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, the two-step goodwill impairment test is not required.  Since we had performed an extensive analysis of the fair value of the Company as of September 30, 2014, at December 31, 2014, we performed a qualitative assessment of our goodwill and determined that the two-step process was not necessary.  

During the third quarter of 2015, we considered our recent performance and the impact the acquisition of StrikeAd is likely to have on our long term performance.  We also considered our future revenue growth, synergies and increases in operating leverage we expect to realize, our recent market capitalization and other qualitative factors.  Taking into account these considerations, at September 30, 2015, we continue to believe the Company's fair value exceeds its carrying value and goodwill is not impaired.

Risk of Future Impairment

At December 31, 2014, based on our discounted cash flow model that uses our internal forecast, we determined the fair value of the Company was only slightly in excess of its carrying value. In preparing our discounted cash flow model, we made assumptions about future revenues and expenses for several periods to determine the cash flows that would result.

As with any forecast, there is substantial risk our forecasted cash flows may fall short of our current expectations. If actual or expected future cash flows should fall sufficiently below our current forecast, we may be required to record another goodwill impairment charge. Future net cash flows are impacted by a variety of factors including revenues, operating margins, capital expenditures, income tax rates, and a discount rate.

Further, the market value of our common stock plus a reasonable control premium is an indicator of the fair value of our Company. If the market value of our common stock should fall sufficiently below the current level for an extended period of time, it would likely cause us to conclude that our goodwill is impaired and we would be required to record another goodwill impairment charge.

6.  Share-based Compensation

Prior to our Spin-Off from DG on February 7, 2014, certain of our employees participated in DG’s equity based incentive programs.  Share-based compensation expense reflected in the accompanying financial statements up until February 7, 2014 relates to DG’s stock plan awards and not to our stock awards.  Immediately prior to completing the Spin-Off transaction, all outstanding equity awards became fully vested and were converted into shares of DG Common Stock to the extent the award had an intrinsic value. Equity awards with no intrinsic value were cancelled.  DG’s equity incentive plans were terminated in connection with the Merger Agreement (see Note 1).  Below is a summary of our share-based compensation expense related to the stock awards (in thousands):

	Nine Months Ended September 30,
Description	2015		2014
DG stock options and RSUs awarded to our employees	$	—	$	2,650
DG share-based awards allocated to us as part of corporate services		—		3,817
Sizmek share-based awards granted		3,141		1,963
Total	$	3,141	$	8,430

In the first quarter of 2015, Sizmek’s Compensation Committee granted (i) 159,245 performance-based restricted stock units (“RSUs”), (ii) 192,867 time-based RSUs and (iii) 133,600 time-based stock options, to certain of our employees and directors.  The RSUs and stock options expected to vest were valued at $2.8 million and $0.6 million, respectively.  The awards (i) vest over periods ranging from one to three years, (ii) are subject to the employees’ continued employment with us or the director’s continued service on our Board of Directors, and (iii) with respect to the performance-based RSUs, are subject to reaching certain (a) revenue, (b) adjusted EBITDA and (c) free cash flow growth targets (i.e., performance conditions).

In the second quarter of 2015, Sizmek’s Compensation Committee granted (i) 87,251 performance-based RSUs, (ii) 361,112 time-based RSUs and (iii) 86,175 time-based stock options to certain of our employees.  The RSUs and stock options expected to vest were valued at $3.4 million and $0.4 million, respectively.  The awards (i) vest over periods ranging from one to three years, (ii) are subject to the employees’ continued employment with us, and (iii) with respect to the performance-based RSUs, are subject to reaching certain (a) revenue, (b) adjusted EBITDA and (c) free cash flow growth targets (i.e., performance conditions).

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In the third quarter of 2015, Sizmek’s Compensation Committee granted 5,230 time-based RSUs valued at less than $0.1 million to one of our employees.  The award vests over three years and is subject to the employee’s continued employment with us.

Generally, the awards granted in 2015 vest on an accelerated basis upon the occurrence of the holder’s (a) death, (b) termination by reason of disability, (c) termination without Cause (as defined) following a Change of Control (as defined) or (d) resignation for Good Reason (as defined) following a Change in Control.  Unrecognized compensation costs related to unvested RSUs and stock options were $6.5 million at September 30, 2015.

7.  Income Taxes

For the nine months ended September 30, 2015, our effective tax rate was 7.7% compared to 0.9% for the nine months ended September 30, 2014.  The effective tax rates for each period differ from the expected federal statutory rate of 35.0% as a result of state and foreign income taxes; certain non-deductible expenses; and changes in our valuation allowances in the U.S. and state jurisdictions within the U.S.  In the U.S. and state jurisdictions within the U.S., we have historically experienced tax losses.  As a result, we do not recognize a tax benefit in the U.S. or state jurisdictions within the U.S. when we incur taxable losses as realization of those tax benefits is not more-likely-than-not.  Conversely, in certain foreign jurisdictions we report earnings and recognize a tax expense or benefit on that income in accordance with the tax statutes of those jurisdictions.

We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more-likely-than not sustain the position following an audit.  For tax positions meeting the more-likely-than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.  During the nine months ended September 30, 2015, there were no additional uncertain tax positions. Interest and penalties related to uncertain tax positions are recognized in income tax expense.  For each of the nine month periods ended September 30, 2015 and 2014, we recognized less than $0.1 million of interest or penalties related to uncertain tax positions in our financial statements. The changes in uncertain tax positions for the nine months ended September 30, 2015 and 2014 were as follows (in thousands):

	Nine Months Ended September 30,
	2015			2014
Balance at beginning of year	$	1,507		$	1,701
Changes for tax positions related to prior years		(13	)		362
Balance at end of period	$	1,494		$	2,063

If we reduced our reserve for uncertain tax positions, it would result in our recognition of a tax benefit.

As of September 30, 2015, we provided a valuation allowance against substantially all of our U.S. and state NOL carryforwards as ultimate realization of these NOLs was determined to be not more-likely-than not.  Accordingly, we have NOL carryforwards available to us (should we have sufficient future taxable income to utilize them) that are not reflected in our consolidated balance sheets at September 30, 2015 and December 31, 2014.

We are subject to U.S. federal income tax, income tax from multiple foreign jurisdictions including Israel and the United Kingdom, and income taxes of multiple state jurisdictions. U.S. federal, state and local income tax returns for 2011 through 2014 remain open to examination. Israeli and United Kingdom income tax returns remain open to examination for 2010 through 2014 and 2009 through 2014, respectively. Prior to our Spin-Off, our operating results had been included in DG's U.S. federal and state tax returns or tax returns of non-U.S. jurisdictions. Subsequent to our Spin-Off, we file stand-alone income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various foreign jurisdictions. Prior to our Spin-Off, we entered into a tax matters agreement with DG that governs the parties' respective rights, responsibilities and obligations with respect to taxes. The tax matters agreement generally provides that the filing of tax returns, the control of audit proceedings, and the payment of any additional tax liability relative to DG and its consolidated subsidiaries for periods prior to February 8, 2014 is our responsibility.

We do not provide deferred taxes on the undistributed earnings of our non-U.S. subsidiaries in situations where our intention is to reinvest such earnings indefinitely. Furthermore, we believe our U.S. subsidiaries have significant net assets, liquidity, and other financial resources available to meet their operational and capital investment requirements such that we do not need to repatriate the undistributed earnings of our non-U.S. subsidiaries to the U.S.

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8.  Loss per Share

Basic earnings (loss) per common share excludes dilution and is calculated by dividing net earnings (loss) by the weighted-average number of common shares outstanding during the period.  Diluted earnings (loss) per common share is calculated by dividing net earnings (loss) by the weighted-average number of common shares outstanding during the period, as adjusted for the potential dilutive effect of non-participating share-based awards such as stock options and RSUs.

On February 7, 2014, 30.4 million shares of our common stock were distributed to DG stockholders in conjunction with the Spin-Off.  For comparative purposes, and to provide a more meaningful calculation of the weighted-average shares outstanding, we have assumed this amount to be outstanding for any period presented prior to the Spin-Off in the calculation of weighted-average shares outstanding.

The following table presents our loss per common share for the three and nine months ended September 30, 2015 and 2014 (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net loss	$	(7,548	)	$	(101,382	)	$	(23,390	)	$	(117,442	)
Weighted average common shares outstanding — basic		29,567			30,399			29,633			30,399
Dilutive securities		—			—			—			—
Weighted average common shares outstanding - diluted		29,567			30,399			29,633			30,399
Basic and diluted loss per common share	$	(0.26	)	$	(3.34	)	$	(0.79	)	$	(3.86	)
Antidilutive securities not included:
Stock options and RSUs		862			847			979			847

9.  Geographical Information and Product Categories

We have one operating segment. Our chief operating decision maker is considered to be our Chief Executive Officer. The chief operating decision maker allocates resources and assesses performance of the business and other activities at the operating segment level.

The following table summarizes our revenues by geographic area (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues:
United States	$	21,918	$	19,594	$	62,493	$	58,135
Europe, Middle East and Africa		10,783		10,522		31,954		36,149
Asia Pacific		5,609		6,506		16,680		18,918
Latin America		1,233		2,068		3,982		5,784
North America (excluding U.S.)		723		823		2,132		2,907
Total	$	40,266	$	39,513	$	117,241	$	121,893

For the nine months ended September 30, 2015, about 47% of our revenues were attributable to foreign jurisdictions. However, no one country other than the United States represented more than 10% of our consolidated revenues.

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The following table summarizes our revenues by product category (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues:
Core products	$	28,727	$	25,337	$	82,151	$	76,426
Rich media		4,142		10,043		19,255		33,220
Programmatic managed services		7,397		4,133		15,835		12,247
Total	$	40,266	$	39,513	$	117,241	$	121,893

The following table summarizes our long-lived assets by country (in thousands):

	September 30, 2015		December 31, 2014
Long-Lived Assets:
Israel	$	30,710	$	24,818
United States		7,180		7,181
Other countries		1,747		2,037
Total	$	39,637	$	34,036

10.  Related Party Transactions

Prior to the Spin-Off, DG provided certain management and administrative services to us. These services included, among others, accounting, treasury, audit, tax, legal, executive oversight, human resources, real estate, information technology and risk management. These expenses have been allocated to us on a basis of direct usage when identifiable, with the remainder allocated on the basis of revenue, headcount, or other measures.  DG also allocated to us (i) merger, integration and other expenses and (ii) share-based compensation, largely based on revenues. DG's allocation of these expenses to us was as follows (in thousands):

DG’s Expense Allocation to Sizmek	Nine Months Ended September 30, 2014
Management and administrative services	$	637
Merger, integration and other	4,038
Share-based compensation	3,817
Total	$	8,492

Included in the above allocations are costs of DG's employee benefit plans and other employee incentives. Employee benefits and incentives include 401(k) matching contributions, participation in DG's long-term incentive compensation award plans and healthcare plans. The employee benefit and incentive costs are reflected in the statements of operations and are classified consistently with how the underlying employee's salary and other compensation costs have been recorded.

We consider the allocated cost for corporate services, employee benefits and incentives to be reasonable based on our utilization of such services. However, we believe the allocated cost for these services are different from the cost we would have incurred if we had been an independent publicly-traded company during those periods.

11. Subsequent Event – Purchase of Point Roll

On November 12, 2015, we acquired all of the shares of Point Roll, Inc. (“Point Roll”), from TEGNA, Inc. (“Seller”) for a total purchase price of $20 million, subject to adjustment.  Point Roll is in the business of providing rich media and dynamic creative ad serving technologies that allow interactivity in online advertising, such as streaming video, polling, and e-mail and data collection.  Of the total purchase price (i) $11 million was paid in cash at closing, (ii) $7 million will be paid one year after the closing date and (iii) $2 million will be paid one year after the closing date, subject to any indemnification claims.  The purchase price was paid from cash on hand.  Point Roll does not have any debt and its net working capital, as defined, is expected to be at least $8.5 million. 

We expect to realize certain operating synergies as we combine our existing operation with the business of Point Roll.  In connection with the transaction, the Seller has agreed not to compete (as defined) with the business of Point Roll for a period of three years after the closing date.  We have not as yet allocated the purchase price to the assets acquired and the liabilities assumed.

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Item 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with our unaudited consolidated and combined financial statements and notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (“Report”).

The following discussion contains forward-looking statements.  The matters discussed in these forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements.  Factors that could cause or contribute to these differences include those discussed elsewhere in this Report, particularly in “Cautionary Note Regarding Forward-Looking Statements.” 

Critical Accounting Policies and Estimates

The following discussion and analysis of the financial condition and results of operations are based on the unaudited consolidated and combined financial statements and notes to unaudited consolidated and combined financial statements contained in this Report that have been prepared in accordance with the rules and regulations of the SEC and do not include all the disclosures normally required in annual financial statements prepared in accordance with GAAP.  The preparation of these financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities.  We base these estimates on historical results and various other assumptions believed to be reasonable, all of which form the basis for making estimates concerning the carrying values of our assets and liabilities that are not readily available from other sources.  Actual results may differ from these estimates.

Our significant accounting policies are described in Note 2 to the consolidated and combined financial statements presented in our Annual Report on Form 10-K for the year ended December 31, 2014 (“Annual Report”).  Our critical accounting policies are described in MD&A in our Annual Report.  Our significant and critical accounting policies have not changed significantly since the filing of our Annual Report. 

See Note 5 of our unaudited consolidated and combined financial statements regarding the risk of a future impairment of our goodwill.

Overview

We operate a leading open ad management and distribution platform. We assist approximately 17,000 advertisers and 3,500 agencies engage with consumers in approximately 60 countries across multiple online media channels (mobile, display, rich media, video and social). Our revenues are principally derived from services related to online advertising. Our technology and service help advertisers overcome the fragmentation in the online advertising market and achieve optimal results from their advertising campaigns.

Our business can be impacted by several factors, including general economic conditions, the overall advertising market, new emerging digital technologies, and the continued growth of online and other alternative advertising.

Our Business Strategy

Our goal is to operate the leading independent ad management platform worldwide, and become the platform of choice among advertisers, agencies and publishers. We are in the process of completing the development of a single, integrated ad management platform across multiple channels and formats that we anticipate making available to our customers by the end of 2015.  In order to achieve our objective, we need to:

(i) continue to expand the products available on our platform,

(ii) expand our partnership program by inviting developers with the latest technology and features to partner with us and implement their technology onto our platform, and

(iii) control our costs.

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In 2015, we are focusing on four key growth areas:

(i) Programmatic / Mobile—with our recent acquisition of StrikeAd, a mobile DSP operator, we now have a robust mobile offering across the mobile web and in-app technology which supplements our HTML based products.

(ii) Data Analytics—we believe our Peer 39 unit is the largest provider of data for ad buying (and selling) decisions by customers’ world-wide. Our solutions provide page and event based data enabling advertisers to access safer, appropriate and relevant web page environments for their ads.

(iii) Data Management—we intend to enable our clients to centralize, manage and activate their data and leverage deeper data sets within our Sizmek MDX platform for dynamic, creative targeting and frequency capping.

(iv) Video—our roots and heritage, video is an area of the market also experiencing heavy growth, and is the vehicle of choice for branding advertisers as they move to digital and programmatic managed services.

Completion of Merger and Spin-Off

Prior to February 7, 2014, we operated as the online segment of DG. On February 7, 2014 the Merger between DG, Extreme Reach and Acquisition Sub was completed. Immediately prior to the Merger, DG contributed its cash and most of its other working capital to us, and the shares of our common stock were distributed to DG's shareholders (the "Spin-Off") resulting in Sizmek becoming a new publicly-held company with its shares traded on the NASDAQ Global Select Market under the symbol SZMK. See Notes 1 and 10 of our consolidated and combined financial statements contained elsewhere herein.

Comparability of Operating Results before and after the Spin-Off

Prior to the Spin-Off, our combined financial statements were derived from the consolidated financial statements and accounting records of DG, which includes an allocation of DG's corporate costs. To a degree, prior to the Spin-Off we benefited from sharing the corporate cost structure of DG rather than incurring such costs ourselves on a stand-alone basis. Since the Spin-Off, we have been able to control our corporate overhead expenses to a level reasonably consistent with the pre Spin-Off periods. However, our operating results before and after the Spin-Off are not entirely comparable.  In particular, operating results for the nine months ended September 30, 2014 include (i) costs associated with accelerating the vesting of share-based payment awards in connection with consummating the Merger and Spin-Off ($6.3 million) and (ii) transaction related costs incurred in connection with completing the Merger and Spin-Off transactions ($5.2 million).

Acquisitions

        We have a history of acquisitions.  In August 2014, September 2014 and May 2015, we acquired Aerify Media, Pixel and StrikeAd, respectively.  As a result of these acquisitions, our operating results from period to period are not entirely comparable.  Each of the acquisitions has been included in our results of operations since their respective dates of closing.

Seasonality

Our business is seasonal. Revenues tend to be the highest in the fourth quarter as a large portion of our revenues follow the advertising spend or budgets of our customers which tend to be at their highest during the holiday season.

Third Quarter 2015 Highlights

· Revenues increased $0.8 million, or 2%, compared to the same quarter of 2014.  Our core products revenue grew by $3.4 million, or 13%, and our programmatic managed services revenue grew $3.3 million, or 79%.  This growth was offset by a continued decline in our rich media revenues which fell $5.9 million, or 59%.

· In the third quarter of 2015, foreign currency exchange rates generally weakened compared with the U.S. Dollar, when compared to the third quarter of 2014.  This resulted in us reporting lower revenues ($2.4 million) and lower operating expenses ($2.2 million) than if the exchange rates were held constant with those in effect in the third quarter of 2014.

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· Excluding the goodwill impairment charge in the third quarter of 2014, our loss from operations increased $7.2 million in the third quarter of 2015 as compared to the same period of 2014.  The increase in loss was due to higher operating expenses ($8.0 million), partially offset by a slight increase in revenues ($0.8 million).  A portion of the increase in operating loss was due to the following unusual items:

· Our purchase of StrikeAd increased our operating expenses more than the revenue it produced.  Over time, we expect StrikeAd will experience significant revenue growth and leverage its operating expenses to make solid contributions to operating income.

· In late 2014 we made the decision to shorten the estimated remaining useful life of our Sizmek MDX platform by about two years in anticipation of completing the development of our new platform.  As a result, in each quarter of 2015 we are recognizing an additional $0.9 million of depreciation expense.

· In the third quarter of 2015 merger, integration and other expense increased $1.2 million over the same period in 2014.  The increase was due to the 2014 period recognizing a credit of $1.8 million from recovering more TV net assets than originally anticipated.

In 2015, we also increased our staffing levels (to further expand our business) in anticipation that our revenues would be substantially higher.  The higher levels of revenue have not yet occurred and, as a result, our operating loss increased.

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Results of Operations

Three Months Ended September 30, 2015 vs. Three Months Ended September 30, 2014

The following table sets forth certain historical financial data (dollars in thousands):

							% Change			As a % of Total Revenues
	Three Months Ended						2015			Three Months Ended
	September 30,						vs.			September 30,
	2015			2014			2014			2015			2014
Revenues:
Platform – core products	$	28,727		$	25,337			13	%		71.3	%		64.1	%
Platform – rich media		4,142			10,043			(59	)		10.3			25.4
Subtotal		32,869			35,380			(7	)		81.6			89.5
Programmatic		7,397			4,133			79			18.4			10.5
Total		40,266			39,513			2			100.0			100.0
Costs and expenses:
Cost of revenues:
Platform (a)		11,029			11,708			(6	)		27.4			29.6
Programmatic (a)		6,002			2,566			134			14.9			6.5
Total		17,031			14,274			19			42.3			36.1
Selling and marketing		15,597			14,082			11			38.7			35.6
Research and development		3,816			3,300			16			9.5			8.4
General and administrative		5,005			4,276			17			12.4			10.8
Merger, integration and other		1,447			221		NM				3.6			0.6
Depreciation and amortization		7,524			6,280			20			18.7			15.9
Goodwill impairment		—			98,196			(100	)		—			248.5
Total costs and expenses		50,420			140,629		NM				125.2			355.9
Loss from operations		(10,154	)		(101,116	)	NM				(25.2	)		(255.9	)
Other (income) expense, net		(58	)		479		NM				(0.1	)		1.2
Loss before income taxes		(10,096	)		(101,595	)	NM				(25.1	)		(257.1	)
Benefit for income taxes		(2,548	)		(213	)	NM				(6.3	)		(0.5	)
Net loss	$	(7,548	)	$	(101,382	)	NM				(18.8	)		(256.6	)

__________________________

(a)     Excludes depreciation and amortization.

NM – Not meaningful.

Revenues – Platform.    For the three months ended September 30, 2015, platform revenues decreased $2.5 million, or 7%, as compared to the same period in the prior year.  The decrease was due to a decline in our rich media services revenue ($5.9 million), partially offset by growth in our core products revenue ($3.4 million).  Our rich media services revenue declined due to a continuing reduction in the number of impressions served and the average selling price per impression served.  Our core products revenue grew primarily due to greater usage of our mobile services and our smart versioning optimization product, partially offset by slight declines in other services.

Revenues – Programmatic.    For the three months ended September 30, 2015, programmatic managed services revenues increased $3.3 million, or 79%, as compared to the same period in the prior year.  The increase was principally due to our acquisition of StrikeAd, a demand side platform (DSP) operator that we purchased in May 2015.  We are in the process of combining StrikeAd’s operations with our existing programmatic business.  We expect to grow our programmatic business over the next few years as our operations are combined and product offering is optimized.

Revenues – Foreign Currency Impact.  For the three months ended September 30, 2015, foreign currency exchange rates compared to the U.S. Dollar were generally weaker than they were during the three months ended September 30, 2014.  This resulted in us reporting revenues that were $2.4 million lower than if the exchange rates were held constant in both periods.

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Cost of Revenues – Platform.    For the three months ended September 30, 2015, platform cost of revenues decreased $0.7 million, or 6%, as compared to the same period in the prior year. As a percentage of total revenues, platform cost of revenues decreased to 27.4% in the third quarter of 2015, as compared to 29.6% in the third quarter of 2014.  Platform cost of revenues decreased primarily due to a reduction in compensation costs ($0.8 million) and professional fees ($0.1 million), partially offset by an increase in delivery costs ($0.4 million).  Compensation costs were reduced due to lower average compensation levels per employee.  Delivery costs increased due to a 2015 decision to lease file servers rather than own file servers.  The decision to lease servers gives us greater flexibility and more reliability but increases costs.  In addition, the entire leasing cost is charged to the area using the server.  When the file server was owned only the maintenance cost was charged to the area using the server and the cost of the equipment was recognized over time as depreciation expense.

Cost of Revenues – Programmatic.    For the three months ended September 30, 2015, programmatic cost of revenues increased $3.4 million, or 134%, as compared to the same period in the prior year.  Our programmatic gross profit percentage decreased to 18.9% in the third quarter of 2015, as compared to 37.9% in the third quarter of 2014.  The decrease was largely due to (i) the acquisition of StrikeAd, which operates at a lower gross profit percentage than our historical trading operation and (ii) our decision to accept a lower gross profit margin in order to attract more business.

Selling and Marketing.    For the three months ended September 30, 2015, selling and marketing expense increased $1.5 million, or 11%, as compared to the same period in the prior year.  The increase principally relates to higher compensation costs ($1.4 million).  Our compensation costs increased due to a 30% increase in sales personnel and a revision to our commission program to place a greater emphasis on performance based compensation.

Research and Development.    For the three months ended September 30, 2015, research and development expense increased $0.5 million, or 16%, as compared to the same period in the prior year.  The increase was primarily due to higher deployment costs.  Deployment costs increased due to a 2015 decision to lease file servers rather than own the servers.  Generally, the cost of leasing servers is greater than the cost of owning servers.  See “Cost of Revenues – Platform” above for more detail about the decision to lease rather than own the file servers.

General and Administrative.    For the three months ended September 30, 2015, general and administrative expense increased $0.7 million, or 17%, as compared to the same period in the prior year.  The increase was primarily attributable to higher compensation costs ($0.3 million) and legal and consulting fees ($0.3 million).  Compensation costs increased due to (i) an increase in our administrative staff and (ii) higher share-based compensation.

Merger, Integration and Other.    For the three months ended September 30, 2015, merger, integration and other costs increased $1.2 million as compared to the same period in the prior year. The increase principally relates to higher TV business net asset charges of $2.2 million, partially offset by reductions in (i) severance charges ($0.5 million) and (ii) Merger and Spin-Off costs ($0.5 million).  In the third quarter of 2015, we incurred TV business net asset charges of $0.4 million, compared to a credit of $1.8 million in the same period in 2014.  The 2014 credit of $1.8 million reflects the realization of more TV business net assets than originally estimated at the time of the Spin-Off from DG in February 2014.

Depreciation and Amortization.    For the three months ended September 30, 2015, depreciation and amortization increased $1.2 million, or 20%, as compared to the same period in the prior year. The increase was attributable to greater depreciation of capitalized software ($1.5 million), partially offset by lower (i) depreciation of other property and equipment ($0.2 million) and (ii) amortization of intangible assets ($0.1 million).  The increase in depreciation of capitalized software relates to (i) shortening the estimated remaining useful life of our Sizmek MDX platform from 46 months to 20 months effective November 1, 2014 in anticipation of retiring the MDX platform in June 2016 ($0.9 million) and (ii) an increase in capitalized software, which is attributable to working on more software development projects that qualify for capitalization.  See Use of Estimates in Note 2 to our consolidated and combined financial statements.

Other (income) expense, net.    For the three months ended September 30, 2015, other income and expense was a net income of $0.1 million as compared to a net expense of $0.5 million for the same period in 2014.  The 2014 expense primarily related to foreign exchange losses, which resulted from the strengthening of the U.S. dollar in comparison with other currencies in which we conduct business.

Benefit for Income Taxes.    For the three months ended September 30, 2015, our effective tax rate was 25.2% compared to 0.2% for the same period in 2014. The effective tax rate for each period differs from the expected federal statutory rate of 35% as a result of (i) not recognizing any tax benefit for the tax losses we incur in the U.S., (ii) reporting taxable income in several foreign jurisdictions where the marginal tax rates are different from the U.S. tax rate, (iii) non-deductible expenses, and (iv) state income taxes.  Presently, our operations in the U.S. are in a net operating loss position and we have not recognized a tax benefit for those losses as realization of the tax benefit has not been determined to be likely.  

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Effect of Foreign Currency Exchange Rates.   For the three months ended September 30, 2015, foreign currency exchange rates had weakened against the U.S. Dollar when compared to the same period in 2014.  As a result, we reported lower revenues ($2.4 million), lower operating expenses ($2.2 million), and a larger operating loss ($0.2 million) than if the exchange rates were held constant during both periods.

Nine Months Ended September 30, 2015 vs. Nine Months Ended September 30, 2014

The following table sets forth certain historical financial data (dollars in thousands):

							% Change			As a % of Total Revenues
	Nine Months Ended						2015			Nine Months Ended
	September 30,						vs.			September 30,
	2015			2014			2014			2015			2014
Revenues
Platform – core products	$	82,151		$	76,426			7	%		70.1	%		62.7	%
Platform – rich media		19,255			33,220			(42	)		16.4			27.3
Subtotal		101,406			109,646			(8	)		86.5			90.0
Programmatic		15,835			12,247			29			13.5			10.0
Total		117,241			121,893			(4	)		100.0			100.0
Costs and expenses:
Cost of revenues:
Platform (a)		33,039			35,739			(8	)		28.2			29.3
Programmatic (a)		12,144			8,289			47			10.3			6.8
Total		45,183			44,028			3			38.5			36.1
Selling and marketing		45,233			44,184			2			38.6			36.3
Research and development		10,393			10,041			4			8.9			8.2
General and administrative		14,298			17,464			(18	)		12.2			14.3
Merger, integration and other		3,451			6,510			(47	)		2.9			5.3
Depreciation and amortization		22,734			19,257			18			19.4			15.8
Goodwill impairment		—			98,196			(100	)		—			80.6
Total costs and expenses		141,292			239,680			(41	)		120.5			196.6
Loss from operations		(24,051	)		(117,787	)		(80	)		(20.5	)		(96.6	)
Other expense, net		1,287			687			87			1.1			0.6
Loss before income taxes		(25,338	)		(118,474	)		(79	)		(21.6	)		(97.2	)
Benefit for income taxes		(1,948	)		(1,032	)		89			(1.7	)		(0.8	)
Net loss	$	(23,390	)	$	(117,442	)		(80	)		(19.9	)		(96.4	)

___________________________

(a)     Excludes depreciation and amortization.

Revenues – Platform.    For the nine months ended September 30, 2015, platform revenues decreased $8.2 million, or 8%, as compared to the same period in the prior year.  The decrease was due to a decline in our rich media services revenue ($13.9 million), partially offset by growth in our core products revenue ($5.7 million).  Our rich media services revenue declined due to a continuing reduction in the number of impressions served and the average selling price per impression served.  Our core products revenue grew primarily due to greater usage of our (i) mobile services (ii) smart versioning optimization product, (iii) in-stream product and (iv) and our analytics tools, partially offset by declines in other services.

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Revenues – Programmatic.    For the nine months ended September 30, 2015, programmatic managed services revenues increased $3.6 million, or 29%, as compared to the same period in the prior year.  Revenues from our May 2015 acquisition of StrikeAd ($3.0 million) and growth in Aerify Media’s revenues ($1.3 million) (principally due to including nine months of Aerify’s revenues in the current year period versus only two months in the prior year period), were partially offset by a decrease in our trading revenues ($0.7 million).

Revenues – Foreign Currency Impact.  For the nine months ended September 30, 2015, foreign currency exchange rates compared to the U.S. Dollar were generally weaker than they were during the nine months ended September 30, 2014.  This resulted in us reporting revenues that were $7.4 million lower than if the exchange rates were held constant during both periods.

Cost of Revenues – Platform.    For the nine months ended September 30, 2015, platform cost of revenues decreased $2.7 million, or 8%, as compared to the same period in the prior year. As a percentage of total revenues, platform cost of revenues decreased to 28.2% in the first nine months of 2015, as compared to 29.3% in the same period of 2014.  Platform cost of revenues decreased primarily due to a reduction in compensation costs ($3.3 million) and professional fees and outsourcing costs ($0.6 million), partially offset by an increase in delivery costs ($1.5 million).  In 2015, compensation costs were reduced due to lower average compensation levels per employee.  In addition, our share-based compensation expense was higher in the 2014 period due to the accelerated vesting of all outstanding share-based payment awards in connection with the completion of the Merger and Spin-Off in February 2014.  Professional fees decreased primarily due to lower consulting and trafficking costs.  Delivery costs increased due to a 2015 decision to lease file servers rather than own file servers.  The decision to lease servers gives us greater flexibility and more reliability but increases costs.  In addition, the entire leasing cost is charged to the area using the server.  When the file server was owned only the maintenance cost was charged to the area using the server and the cost of the equipment was recognized over time as depreciation expense.

Cost of Revenues – Programmatic.    For the nine months ended September 30, 2015, programmatic cost of revenues increased $3.9 million, or 47%, as compared to the same period in the prior year.  Our programmatic gross profit percentage decreased to 23.3% in the first nine months of 2015, as compared to 32.3% in the same period of 2014.  The decrease was largely due to (i) the acquisition of StrikeAd, which operates at a lower gross profit percentage than our historical trading operation and (ii) our decision to accept a lower gross profit margin in order to attract more business.

Selling and Marketing.    For the nine months ended September 30, 2015, selling and marketing expense increased $1.0 million, or 2%, as compared to the same period in the prior year.  The increase relates to higher compensation costs ($1.6 million) partially offset by a reduction in reseller costs ($0.7 million).  Our compensation costs increased due to an increase in sales personnel and a revision to our commission program to place a greater emphasis on performance based compensation.  Our reseller costs declined due to lower average fees paid to resellers and lower revenues generated by resellers.  As a percentage of revenues, selling and marketing expense increased to 38.6% in the nine months ended September 30, 2015 as compared to 36.3% in the same period of 2014.  

Research and Development.    For the nine months ended September 30, 2015, research and development expense increased $0.4 million, or 4%, as compared to the same period in the prior year.  The increase was due to higher deployment costs ($0.8 million) and information technology costs ($0.3 million), partially offset by lower compensation costs ($0.7 million).  Deployment costs increased due to a 2015 decision to lease file servers rather than own the servers.  Generally, the cost of leasing servers is greater than the cost of owning servers.  See “Cost of Revenues – Platform” above for more detail about the decision to lease rather than own the file servers.  Our compensation costs decreased due to higher capitalized wages.  The increase in capitalized wages was due to working more hours on software development projects that qualified for capitalization.

General and Administrative.    For the nine months ended September 30, 2015, general and administrative expense decreased $3.2 million, or 18%, as compared to the same period in the prior year.  As a percentage of revenues, general and administrative expense decreased to 12.2% in the first nine months of 2015, as compared to 14.3% in the same period of 2014.  The decrease was primarily attributable to recognizing a smaller amount of share-based compensation ($3.6 million), partially offset by an increase in professional fees ($0.9 million) which principally represent legal and consulting fees.  In the nine months ended September 30, 2014, we recognized $4.1 million of share-based compensation as a result of the accelerated vesting of share-based payment awards in connection with the completion of the Merger and Spin-Off.   

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Merger, Integration and Other.    For the nine months ended September 30, 2015, merger, integration and other costs decreased $3.1 million, or 47%, as compared to the same period in the prior year. The decrease principally relates to a reduction in (i) Merger and Spin-Off costs and (ii) severance costs in connection with completing our Spin-Off from DG in February 2014, partially offset by a reduction in TV business net asset recoveries.  In the 2014 period, we recorded a credit of $1.8 million reflecting the realization of more TV business net assets than originally estimated at the time of the Spin-Off from DG in February 2014.

Depreciation and Amortization.    For the nine months ended September 30, 2015, depreciation and amortization increased $3.5 million, or 18%, as compared to the same period in the prior year. The increase was attributable to greater depreciation of capitalized software ($4.3 million), partially offset by lower depreciation of other property and equipment ($0.6 million) and lower amortization of intangible assets ($0.2 million).  The increase in depreciation of capitalized software for the nine months ended September 30, 2015 relates to (i) shortening the estimated remaining useful life of our Sizmek MDX platform from 46 months to 20 months effective November 1, 2014 in anticipation of retiring the MDX platform in June 2016 ($2.6 million) and (ii) an increase in capitalized software, which is attributable to working on more software development projects that qualify for capitalization.  See Use of Estimates in Note 2 to our consolidated and combined financial statements.  The reduction in property and equipment depreciation in the first nine months of 2015 was due to certain assets becoming fully depreciated.

Other expense, net.    For the nine months ended September 30, 2015, other expense, net was $1.3 million as compared to $0.7 million for the same period in 2014.  The increase in expense ($0.6 million) relates to increases in foreign exchange losses, which resulted from the U.S. dollar strengthening in comparison with other currencies in which we conduct our business.

Benefit for Income Taxes.    For the nine months ended September 30, 2015, our effective tax rate was 7.7% compared to 0.9% for the same period in 2014. The effective tax rate for each period differs from the expected federal statutory rate of 35% as a result of (i) not recognizing any tax benefit for the tax losses we incur in the U.S., (ii) reporting taxable income in several foreign jurisdictions where the marginal tax rates are different from the U.S. tax rate, (iii) non-deductible expenses, and (iv) state income taxes.  Presently, our operations in the U.S. are in a net operating loss position and we have not recognized a tax benefit for those losses as realization of the tax benefit has not been determined to be likely.  

Effect of Foreign Currency Exchange Rates.   For the nine months ended September 30, 2015, foreign currency exchange rates had weakened against the U.S. Dollar when compared to the same period in 2014.  As a result, we reported lower revenues ($7.4 million), lower operating expenses ($6.6 million), and a larger operating loss ($0.8 million) than if the exchange rates were held constant during both periods.

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Financial Condition

The following table sets forth certain major balance sheet accounts as of September 30, 2015 and December 31, 2014 (in thousands):

	September 30, 2015		December 31, 2014
Assets:
Cash and cash equivalents	$	64,865	$	90,672
Accounts receivable, net		43,835		51,125
Assets of TV business		957		2,470
Property and equipment, net		39,637		34,036
Goodwill		51,288		40,154
Intangible assets, net		65,293		71,306
Liabilities:
Accounts payable and accrued liabilities		28,344		23,147
Deferred income taxes		7,299		8,242
Stockholders’ equity		239,904		266,435

Cash and cash equivalents fluctuate with changes in operating, investing and financing activities. In particular, cash and cash equivalents fluctuate with (i) operating results, (ii) the timing of payments, (iii) capital expenditures, (iv) acquisition and investment activity, and (v) capital activity, including the purchase and sale of our common stock. The decrease in cash and cash equivalents during 2015 primarily relates to (i) our investment in capital assets ($16.0 million), (ii) our purchase of StrikeAd ($7.5 million), (iii) our purchases of treasury stock ($4.5 million) and (iv) proceeds from TV business assets, net of payments of TV business liabilities ($1.5 million), partially offset by cash generated by operating activities ($2.8 million).  

Accounts receivable generally fluctuate with revenues. As revenues increase or decrease, accounts receivable tend to increase or decrease, correspondingly. The number of days of revenue included in accounts receivable was 100 days and 96 days at September 30, 2015 and December 31, 2014, respectively.

Assets of TV business relate to assets contributed by DG immediately prior to the Spin-Off. The majority of these assets consists of city and state income tax receivables.

Property and equipment tends to increase when we make significant improvements to our equipment or properties, expand our platform or capitalize software development initiatives. It also can increase as a result of acquisition activity. Further, the balance of property and equipment is decreased by recording depreciation expense. For the nine months ended September 30, 2015 and 2014, purchases of property and equipment (used primarily to improve our ad serving platform) were $3.5 million and $3.8 million, respectively.  For the nine months ended September 30, 2015 and 2014, capitalized costs of developing software were $12.6 million and $9.6 million, respectively.

Intangible assets decreased during the nine months ended September 30, 2015 as a result of amortization, partially offset by intangible assets acquired in our purchase of StrikeAd.

Accounts payable and accrued liabilities increased $5.2 million to $28.3 million at September 30, 2015 as compared to $23.1 million at December 31, 2014.  The increase relates primarily to the liabilities assumed in the purchase of StrikeAd and the portion of the purchase price that was deferred ($1.1 million).

Stockholders' equity decreased by $26.5 million to $239.9 million at September 30, 2015 compared to $266.4 million at December 31, 2014, principally as a result of reporting a $23.4 million net loss and purchasing $4.5 million of treasury stock.

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Liquidity and Capital Resources

The following table sets forth a summary of our statements of cash flows (in thousands):

	Nine Months Ended September 30,
	2015			2014
Operating activities:
Net loss	$	(23,390	)	$	(117,442	)
Goodwill impairment		—			98,196
Depreciation and amortization		22,734			19,257
Share-based compensation and other		2,494			5,053
Changes in operating assets and liabilities, net		985			4,055
Total		2,823			9,119
Investing activities:
Purchases of property and equipment		(3,488	)		(3,840	)
Capitalized costs of developing software		(12,557	)		(9,643	)
Acquisitions, net of cash acquired		(7,541	)		(6,079	)
Other		(476	)		(1,817	)
Total		(24,062	)		(21,379	)
Financing activities:
Purchases of treasury stock		(4,500	)		—
Payments of TV business liabilities		(342	)		(9,431	)
Proceeds from TV business assets		1,809			45,408
Other		(961	)		—
Net contributions from Parent		—			44,833
Total		(3,994	)		80,810
Effect of exchange rate changes on cash and cash equivalents		(574	)		31
Net (decrease) increase in cash and cash equivalents	$	(25,807	)	$	68,581

We generate cash from operating activities principally from net loss adjusted for certain non-cash expenses such as (i) goodwill impairment, (ii) depreciation and amortization and (iii) share-based compensation.  In the first nine months of 2015, we generated $2.8 million in cash from operating activities, as compared to generating $9.1 million in the same period of 2014.  Cash provided by operating activities declined by $6.3 million in the first nine months of 2015 when compared to the same period in 2014 due primarily to a decline in operating results after adjusting for non-cash expenses (depreciation and amortization, share-based compensation and goodwill impairment charge).

Historically, we have invested our cash in (i) property and equipment, (ii) the development of software, (iii) strategic investments and (iv) the acquisition of complementary businesses.

In the first nine months of 2014, we obtained cash from financing activities as a result of capital contributions from DG, our former parent, and liquidating the net TV assets contributed by DG.  In the first nine months of 2015, we used cash in financing activities to purchase shares of our common stock ($4.5 million), and used cash in investing activities to purchase StrikeAd ($7.5 million).  We also used cash in investing activities to develop our software ($12.6 million in the 2015 period compared to $9.6 million in the 2014 period).

Sources of Liquidity

Our sources of liquidity include:

· cash and cash equivalents on hand (including $10.1 million held outside the United States at September 30, 2015, all of which can be repatriated into the United States with little or no adverse tax consequences);

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· cash generated from operating activities;

· borrowings from a credit facility we may enter into; and

· the issuance of equity securities.

We believe our sources of liquidity, including (i) cash and cash equivalents on hand and (ii) cash generated from operating activities, will satisfy our capital needs for the next twelve months.

Cash Requirements

We routinely evaluate our liquidity requirements, including alternative sources and uses of cash.  As a result of this process:

we expect to use cash in connection with:

· the purchase of capital assets (including the development of capitalized software projects);

· the organic growth of our business; and

we could use cash in connection with:

· the strategic acquisition of related businesses or investments, with cash requirements varying depending on if our common stock is used to fund all or part of any acquisition; and

· purchases of our common stock.

In August 2014, our Board of Directors approved a $15 million share repurchase program. In March 2015, our Board of Directors increased the share repurchase program to $30 million. The program allows us to repurchase shares of our common stock through open market purchases, privately negotiated transactions or otherwise, subject to certain conditions. The share repurchase program does not have an expiration date. Since implementation of our share repurchase program through September 30, 2015, we made share repurchases totaling $6.5 million. Depending on market conditions and other factors, these repurchases may be commenced or suspended from time to time without notice. We have no obligation to repurchase shares under the share repurchase program.

\

During 2015, we expect we will purchase property and equipment and incur capitalized software development costs of approximately $21 million to $23 million, a portion of which will be used toward completion of our new ad serving platform. We expect to use cash to further expand and develop our business as we anticipate our new ad serving platform will be operational by the end of 2015 and we expect to retire our existing platform by mid-2016.

On November 12, 2015 we acquired all of the shares of Point Roll for a total purchase price of $20 million, subject to adjustment.  Of the total purchase price (i) $11 million was paid in cash at closing, (ii) $7 million will be paid one year after the closing date and (iii) $2 million will be paid one year after the closing date, subject to any indemnification claims.  See Note 11 to our combined and consolidated financial statements.

Off-Balance Sheet Arrangements

We have entered into operating leases for all of our office facilities and certain equipment rentals. Generally these leases are for periods of three to ten years and usually contain one or more renewal options. We use leasing arrangements to preserve capital. We expect to continue to lease the majority of our office facilities under arrangements substantially consistent with the past.

Other than our operating leases, we are not a party to any off-balance sheet arrangement that we believe is likely to have a material impact on our current or future financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have no material changes to the disclosure on this matter made in our Annual Report.

Item 4.    CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), as of the end of the period covered by this Report, our management evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act).  Based on their evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of the date of such evaluation.

Changes in Internal Control over Financial Reporting

During the three months ended September 30, 2015, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II.               OTHER INFORMATION

Item 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

See a description of our share repurchase program in Part I, Item 2 of this Report under the heading “Liquidity and Capital Resources” and sub heading “Cash Requirements.”  There were no purchases made under our share repurchase program during the three months ended September 30, 2015.  As of September 30, 2015, $23.5 million remained available for future share repurchases under the share repurchase program.

Item 6.   EXHIBITS

Exhibits
3.1(a)	Amended and Restated Certificate of Incorporation of Registrant.
3.2(b)	Second Amended and Restated Bylaws of Registrant.
10.1**	Securities Purchase Agreement by and among Sizmek Technologies, Inc., Sizmek Inc. and TEGNA, Inc. dated November 12, 2015.
31.1 **	Rule 13a-14(a)/15d-14(a) Certification.
31.2 **	Rule 13a-14(a)/15d-14(a) Certification.
32.1 **	Section 1350 Certifications.
101  **	The following materials from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Unaudited Consolidated and Combined Statements of Operations, (iii) Unaudited Consolidated and Combined Statements of Comprehensive Loss, (iv) Unaudited Consolidated Statement of Stockholders’ Equity, (v) Unaudited Consolidated and Combined Statements of Cash Flows, and (vi) Notes to Unaudited Consolidated and Combined Financial Statements.

______________________

**	Filed herewith.
(a)	Incorporated by reference to the exhibit bearing the same title filed with the Registrant’s Current Report on Form 8-K filed February 4, 2014.
(b)	Incorporated by reference to the exhibit bearing the same title filed with the Registrant’s Current Report on Form 8-K filed November 3, 2014.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SIZMEK INC.
Date: November 13, 2015	By:	/s/ NEIL H. NGUYEN
	Name:	Neil H. Nguyen
	Title:	Chief Executive Officer and President
Date: November 13, 2015	By:	/s/ KENNETH SAUNDERS
	Name:	Kenneth Saunders
	Title:	Chief Financial Officer

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EX-10.1

Exhibit 10.1

Final Execution Copy

 

SECURITIES PURCHASE AGREEMENT

by and among

Sizmek Technologies, Inc.,

Sizmek Inc.

and

TEGNA Inc.

November 12, 2015

TABLE OF CONTENTS

Page

ARTICLE I  ASSET PURCHASE AND RELATED MATTERS 1

Section 1.1 Sale and Delivery of the Shares. 1

Section 1.2 Consideration. 1

Section 1.3 Potential Purchase Price Adjustment. 2

Section 1.4 Accounting Terms. 3

ARTICLE II CLOSING 3

Section 2.1 Location and Date. 3

Section 2.2 Closing Deliveries. 4

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER 5

Section 3.1 Organization. 5

Section 3.2 Authorization; Validity. 6

Section 3.3 Capitalization. 6

Section 3.4 No Subsidiaries. 6

Section 3.5 Organizational Documents. 6

Section 3.6 Title to the Shares. 7

Section 3.7 Title to Assets. 7

Section 3.8 Condition and Sufficiency of Assets. 7

Section 3.9 No Conflicts. 7

Section 3.10 No Governmental Consents. 8

Section 3.11 Financial Statements. 8

Section 3.12 Absence of Undisclosed Liabilities. 8

Section 3.13 Accounts Receivable. 9

Section 3.14 Leases. 9

Section 3.15 Litigation. 9

Section 3.16 Significant Customers. 9

Section 3.17 Material Contracts and Commitments. 10

Section 3.18 Absence of Certain Changes. 11

Section 3.19 Compliance with Law and Privacy Codes. 12

Section 3.20 Intellectual Property. 13

Section 3.21 Service Level Warranties. 15

Section 3.22 Taxes. 15

Section 3.23 Employee Matters. 16

Section 3.24 Employee Benefit Plans. 16

Section 3.25 Permits. 20

Section 3.26 Insurance. 20

Section 3.27 Environmental Matters. 21

Section 3.28 Books and Records. 21

Section 3.29 Brokers. 21

Section 3.30 Unlawful Payments. 22

Section 3.31 Related Parties. 22

Section 3.32 Disclosure. 22

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER 22

Section 4.1 Organization. 22

Section 4.2 Authorization; Validity. 22

Section 4.3 No Conflicts. 23

Section 4.4 Investment Intent. 23

Section 4.5 Brokers. 23

Section 4.6 Litigation. 23

Section 4.7 Solvency. 23

ARTICLE V COVENANTS 24

Section 5.1 Further Assurances. 24

Section 5.2 Tax Matters. 24

Section 5.3 Employees; Benefits. 25

Section 5.4 [Reserved]. 26

Section 5.5 Release by the Seller. 27

Section 5.6 Assistance with Permits and Filings. 27

Section 5.7 Public Disclosure. 27

Section 5.8 Expenses and Fees. 27

Section 5.9 Limitations on Assignability; Payments. 28

Section 5.10 Business Names. 28

Section 5.11 Preferred Provider. 28

ARTICLE VI INDEMNIFICATION 29

Section 6.1 General Indemnification by the Seller. 29

Section 6.2 General Indemnification by the Buyer. 30

Section 6.3 Limitation of Indemnification Obligations. 30

Section 6.4 Survival and Expiration of Representations, Warranties and Covenants. 31

Section 6.5 Indemnification Procedures. 32

Section 6.6 Indemnity Payments. 34

Section 6.7 Treatment of Indemnity Payments. 34

Section 6.8 Insurance Offset. 34

Section 6.9 Remedies Exclusive. 35

ARTICLE VII NON-COMPETITION AND CONFIDENTIALITY 35

Section 7.1 Prohibited Activities. 35

Section 7.2 Confidentiality. 36

Section 7.3 Reasonable Restraint. 36

Section 7.4 Severability; Reformation. 36

Section 7.5 Specific Performance. 37

Section 7.6 Independent Covenant. 37

Section 7.7 Materiality. 37

ARTICLE VIII GENERAL 37

Section 8.1 Successors and Assigns. 37

Section 8.2 Entire Agreement. 37

Section 8.3 Counterparts. 38

Section 8.4 Specific Performance; Remedies. 38

Section 8.5 Notices. 38

Section 8.6 Governing Law; Consent to Jurisdiction and Waiver of Trial by Jury. 39

Section 8.7 Severability. 40

Section 8.8 Absence of Third Party Beneficiary Rights. 41

Section 8.9 Mutual Drafting. 41

Section 8.10 Further Representations. 41

Section 8.11 Amendment; Waiver. 41

Section 8.12 Usage. 41

Section 8.13 Schedules. 42

Section 8.14 Defined Terms. 42

Section 8.15 Parent Guarantee. 50

SCHEDULES

3.1	Organization
3.7	Assets
3.9	Seller Conflicts and Consents
3.11	Financial Statements
3.12	Undisclosed Liabilities
3.13	Accounts Receivable
3.14	Leases
3.15	Litigation
3.16(a)	Significant Customers
3.16(b)	Lost Customers
3.17(a)	Material Contracts
3.17(c)	Material Contracts – Exceptions to Binding Nature
3.17(d)	Intercompany Arrangements
3.18(l)	Certain Changes – Employee Agreements
3.18(p)	Certain Changes – Assignments/Transfers
3.19	Compliance with Law and Privacy Codes
3.20(a)	Intellectual Property – Company Registrations
3.20(d)	Intellectual Property – Infringement
3.20(e)	Intellectual Property – Protection Measures
3.20(g)	Intellectual Property – Outbound Intellectual Property Agreements
3.20(h)	Intellectual Property – Inbound Intellectual Property Agreements
3.20(i)	Intellectual Property – Employee and Contractor Assignments
3.20(j)	Intellectual Property – Privacy Policies
3.21	Service Level Warranties
3.22	Taxes
3.23	Directors, Managers, Officers and Employees
3.24(b)	Company Plans
3.24(e)	Employee Benefit Plan Matters
3.24	Permits
3.25	Insurance
3.31	Related Party Contracts
7.1	Exceptions to Non-Competition

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of November 12, 2015, by and among Sizmek Technologies, Inc., a Delaware corporation (the “Buyer”), Sizmek Inc., a Delaware corporation (the “Parent”) and TEGNA Inc., a Delaware corporation (the “Seller”).

RECITALS

WHEREAS, the Seller currently owns all of the outstanding equity interests of Point Roll, Inc., a Delaware corporation (“Point Roll”), consisting of 89.56 shares of Point Roll’s common stock, par value $0.0001 per share (collectively, the “Shares”).

WHEREAS, the Company engages in the business of providing, as a vendor, rich media and dynamic creative ad serving technologies that enable interactivity in online advertising, such as streaming video, polling, and e-mail and data collection (the “Business”); and

WHEREAS, the Seller desires to sell all of the Shares to the Buyer, and the Buyer desires to purchase such Shares from the Seller, on the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the premises and of the mutual representations, warranties, covenants and agreements herein contained, and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

THE PURCHASE

Section 1.1                      Sale and Delivery of the Shares.

Upon the terms contained herein, the Seller hereby sells, assigns, conveys, transfers and delivers to the Buyer, and the Buyer hereby purchases from the Seller, all of the Shares, for the consideration set forth in Section 1.2.

Section 1.2                      Consideration.

In full consideration for the sale, assignment, conveyance, transfer and delivery of the Shares to the Buyer, the Buyer hereby agrees to pay to the Seller cash consideration in the aggregate amount of Twenty Million Dollars ($20,000,000) (as such sum may be adjusted pursuant to Section 1.3, the “Purchase Price”), payable as follows:

(a)      the Buyer shall pay to the Seller, by wire transfer of immediately available funds to an account specified in writing by the Seller not less than three business days prior to the Closing, cash in the amount of Eleven Million dollars ($11,000,000) (the “Initial Payment”);

(b)      the Buyer shall withhold Seven Million dollars ($7,000,000) from the Purchase Price (the “Deferred Payment”) and shall retain such Deferred Payment in a segregated account for the benefit of the Seller until the first anniversary of the Closing Date (the “Deferred Payment Date”), upon which the Deferred Payment (subject to the adjustment set forth in Section 1.3) shall be released by the Buyer to the Seller, by wire transfer of immediately available funds to an account specified in writing by the Seller to the Buyer not less than three business days prior to the Deferred Payment Date; and

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(c)      the Buyer shall withhold Two Million dollars ($2,000,000) from the Purchase Price (the “Indemnification Holdback Amount” and, such amount, the “Liability Cap”) and shall retain such Indemnification Holdback Amount in a segregated account for the benefit of the Seller and the Buyer (as provided herein) until the first anniversary of the Closing Date (the “Indemnification Retention Date”); provided, that on the Indemnification Retention Date, the portion of the Indemnification Holdback Amount that has not been applied against any indemnification claims arising from the Seller’s indemnification obligations hereunder or as to which indemnification has not been claimed pursuant to Article VI shall be released by the Buyer to the Seller; provided, further, that any portion of the Indemnification Holdback Amount properly retained after the Indemnification Retention Date in respect of any Claims shall promptly be released to the Seller if and when such portion of the applicable Claim is finally resolved pursuant to Section 6.5 and such amount is not indemnifiable hereunder.  All portions of the Indemnification Holdback Amount released to the Seller hereunder shall be delivered to Seller by wire transfer of immediately available funds to an account specified in writing by the Seller not less than three business days prior to the Indemnification Retention Date (or such other account as the Seller may specify in writing a reasonable period of time prior to the final resolution of any indemnification Claim).

Interest will not accrue on, and no interest shall be payable in respect of, any amount payable pursuant to this Section 1.2; provided, that if any portion of the Deferred Payment or Indemnification Holdback Amount is not paid when due under this Agreement, interest shall accrue on such defaulted amount at a rate of 5.0% per annum.

Section 1.3                      Potential Purchase Price Adjustment.

(a)      “Working Capital” means, as of the Closing, (i) the book value of the Company’s current assets, minus (ii) the book value of the Company’s current liabilities, in each case as computed in accordance with GAAP, except that (A) all liabilities under the Retained Plans, the Retention Bonuses and in respect of accrued but unpaid Transaction Costs, and all Taxes relating to the foregoing, shall be excluded, (B) any Net Debt shall be included as a current liability, (C) deferred Tax assets, deferred Tax liabilities and certain reserves for uncertain tax positions under ASC 740 or ASC 450 shall be excluded, (D) cash and cash equivalents, net of outstanding checks except where such checks have been applied to reduce a current liability, shall be excluded, (E) accounts receivable shall be included as a current asset, net of a bad debts reserve determined in accordance with the Company’s historical practices, and (F) Excluded Assets shall be excluded from current assets and liabilities pertaining to Excluded Assets shall be excluded from current liabilities.  All of the Company’s intercompany and Affiliate receivables from or liabilities to the Seller, Gannett Co., Inc. or any of their Affiliates (other than between Point Roll and Rovion) will be treated as shareholders’ equity by the parties, and all such items and any intercompany and Affiliate payables or liabilities of the Company to the Seller, Gannett Co., Inc. or any of their Affiliates (other than between Point Roll and Rovion) will be paid, or at the option of the Seller, otherwise discharged by the Seller, immediately prior to the Closing, and in each case such paid or discharged items shall be excluded from the calculation of Working Capital.

(b)      “Net Debt” means, as of the Closing, (i) the amount of indebtedness for borrowed money of the Company (including the current portion of any such indebtedness, book overdrafts, capital lease obligations and long-term debt, plus (ii) the amount of accrued but unpaid interest for borrowed money and accrued but unpaid Transaction Costs and prepayment fees, minus the amount of cash and cash equivalents on hand or in bank accounts (net of outstanding checks except where such checks have been applied to reduce a current liability)).

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(c)      “Stated Working Capital” means the amount of $8,500,000.

(d)      Within 90 days after the Closing, the Buyer shall calculate the actual Working Capital as of the Closing, and will notify the Seller of such calculation and provide reasonable documentation thereof, together with such other documentation for the Seller to confirm such calculation as Seller may reasonably request.  If the Seller disputes the accuracy of the Buyer’s calculation within 45 calendar days after receipt thereof, and the parties are unable to settle such dispute after good faith negotiations within an additional 30 calendar days, then the Seller will provide its own calculation of actual Working Capital in writing and the dispute shall be submitted promptly to a nationally known independent certified public accounting firm reasonably agreed upon by the Buyer and the Seller (the “Accountant”), which will determine the actual Working Capital of the Company as of the Closing.  The parties agree to provide to the Accountant all work papers and back-up materials reasonably requested by the Accountant.  The fees and expenses of the Accountant will be allocated to the party whose calculation differs from the Accountant’s calculation by the greater amount; provided, that in the event that neither party’s calculation differs from the Accountant’s calculation by 10% or greater, then the fees and expenses of the Accountant will be allocated one-half to the Buyer and one-half to the Seller.  The determination of the Accountant shall be conclusive and binding on each party.  If the Seller does not dispute the accuracy of the Buyer’s calculation within the time period set forth above, then the Seller will be deemed to have agreed with the Buyer’s calculation.  The actual Working Capital determined by the Buyer, by agreement between the parties or by the Accountant (as provided in this paragraph), is referred to herein as “Actual Working Capital.”  The Buyer and the Seller agree that the procedure set forth in this Section 1.3(d) for resolving disputes with respect to the Actual Working Capital shall be the sole and exclusive method for resolving any such disputes (but not with respect to any disputes regarding indemnification under Article VI or arising under Section 5.2 with respect to liabilities for Taxes not otherwise excluded from the definition of Working Capital); provided, that this provision shall not prohibit the Buyer or the Seller from instituting litigation to enforce the determination of the Accountant.

(e)      If Actual Working Capital is less than Stated Working Capital, then the Deferred Payment shall be reduced by the amount of such shortfall.  If Actual Working Capital is greater than Stated Working Capital, then no adjustment to the Purchase Price shall be made pursuant to this Section 1.3.  Any reduction in the amount of the Deferred Payment required pursuant to this Section 1.3 shall be considered an adjustment to the Purchase Price.

Section 1.4                      Accounting Terms.

Except as otherwise expressly provided in this Agreement, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered hereunder shall be prepared, in accordance with GAAP.

ARTICLE II

CLOSING

Section 2.1                      Location and Date.

The consummation of the transactions contemplated pursuant to this Agreement (the “Closing”) shall occur as of 12:01 a.m. on the date of the execution and delivery of this Agreement (the “Closing Date”) and shall take place at the offices of the Buyer at 500 West 5th Street, Suite 900, Austin, TX 78701 (remotely via the electronic exchange of documents and signatures).

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Section 2.2                      Closing Deliveries.

(a)      Deliveries by the Seller.  Upon the terms and subject to the conditions contained herein, the Seller shall deliver to the Buyer the following at the Closing, each in form and substance reasonably acceptable to the Buyer:

(i)           Certificates.  Certificates representing the Shares, duly endorsed for transfer or accompanied by appropriate transfer documents duly executed in blank, and any other documents that are necessary to transfer to the Buyer good title to all of the Shares;

(ii)          Books and Records.  The originals or copies of all of the Company’s business records, financial books and records, ledgers, disks, sales order files, purchase order files, engineering order files, warranty and repair files, supplier lists, customer lists, dealer, representative and distributor lists, studies, surveys, analyses, strategies, plans, forms, designs, diagrams, drawings, specifications, technical data and other proprietary information and other data, and all other written or electronic depositories of information, of or relating to the Company that are not Excluded Assets (collectively, the “Books and Records”);

(iii)         Resignation Letters.  An executed, written resignation letter from each director and officer of the Company, resigning from all positions with the Company (solely with respect to such offices and directorships and not with respect to employment), each of which shall include a release of the Company by the resigning director or officer (solely with respect to such offices and directorships and not with respect to employment);

(iv)         Transition Services Agreement.  A counterpart to the Transition Services Agreement among the Buyer, Point Roll, Rovion and the Seller being executed and delivered in connection with the Closing (the “Transition Services Agreement”), duly executed by the Seller, Point Roll and Rovion;

(v)          FIRPTA Certificate.  A non-foreign person affidavit dated the Closing Date from Seller, in form and substance required under the Treasury Regulations issued pursuant to Section 1445 of the Tax Code, stating that Seller is not a “foreign person” as defined in Section 1445 of the Tax Code;

(vi)         Consents and Approvals.  Evidence that all consents, waivers, approvals or authorizations of and filings with any Governmental Authority necessary or advisable for the consummation by the Buyer of the transactions contemplated hereby have been obtained or made, as applicable;

(vii)        Good Standing Certificates.  Certificates issued by the Delaware Secretary of State, certifying as of a date no more than five days prior to the Closing Date that each of the Seller, Point Roll, and Rovion is in good standing under the laws of such jurisdiction;

(viii)       Gannett Commercial Agreement.  A commercial agreement between Gannett Co., Inc. and Point Roll, duly executed by Gannett Co., Inc. and Point Roll;

(ix)          ShopLocal Agreement Amendment.  An amendment to the Service Agreement, dated as of December 12, 2013, by and between the Buyer (f/k/a MediaMind Technologies Inc.) and ShopLocal, adding Point Roll as a party thereto, duly executed by ShopLocal and Point Roll; and

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(x)           Other Documents.  All other consents, certificates, documents, instruments and other items required to be delivered by the Seller pursuant to this Agreement, and all such other documents, certificates and instruments as the Buyer reasonably requests in order to give effect to the transactions contemplated hereby.

(b)      Deliveries by the Buyer.  Upon the terms and subject to the conditions contained herein, the Buyer shall deliver to the Seller the following at the Closing, each in form and substance reasonably acceptable to the Seller:

(i)           Initial Payment.  The Initial Payment, by wire transfer of immediately available funds as specified in Section 1.2;

(ii)           Transition Services Agreement.  A counterpart to the Transition Services Agreement, duly executed by the Buyer;

(iii)          Consents and Approvals.  Evidence that all consents of and filings with any Person necessary to the consummation by the Buyer of the transactions contemplated hereby have been obtained or made, as applicable;

(iv)         ShopLocal Agreement Amendment.  An amendment to the Service Agreement, dated as of December 12, 2013, by and between the Buyer (f/k/a MediaMind Technologies Inc.) and ShopLocal, adding Point Roll as a party thereto, duly executed by the Buyer; and

(v)          Other Documents.  All other consents, certificates, documents, instruments and other items required to be delivered by the Buyer pursuant to this Agreement, and all such other documents, certificates and instruments as the Seller shall reasonably request in order to give effect to the transactions contemplated hereby.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF THE SELLER

To induce the Buyer to enter into this Agreement and consummate the transactions contemplated hereby, the Seller hereby represents and warrants to the Buyer as follows:

Section 3.1                      Organization.

Point Roll is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  The Company has full power to own, lease and operate its properties and to carry on its business, in the places and in the manner as presently conducted.  The Company is duly authorized and qualified to do business, and is in good standing under all applicable Laws, in each state or other jurisdiction in which any of its assets or located or in which its business or operations as presently conducted make such qualification necessary.  The Company is required to be qualified to do business as a foreign entity only in the jurisdictions set forth on Schedule 3.1, and, except as set forth on Schedule 3.1 the Company is so qualified in each such jurisdiction except where the failure to be qualified would not have, individually or in the aggregate, a Material Adverse Effect.  Set forth on Schedule 3.1 is a list of all assumed names under which the Company operates and all jurisdictions in which any of such assumed names is registered.  The Company is not in violation of, in conflict with, or in default under any provision of its certificate of incorporation or bylaws, and there exists no condition or event that, after notice or lapse of time, or both, would result in any such violation, conflict or default.

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Section 3.2                      Authorization; Validity.

The Seller has all requisite power and authority to execute, deliver and perform this Agreement and the transactions and other agreements and instruments contemplated hereby.  The execution, delivery and performance by the Seller of this Agreement and all other agreements and instruments contemplated hereby to which it is a party, and the consummation by the Seller of the transactions contemplated hereby or thereby, in each case have been duly and validly authorized by all necessary corporate action on the part of the Seller.  This Agreement and the other agreements and instruments contemplated hereby to which the Seller is a party have been duly executed and delivered by the Seller.  This Agreement and the transactions and other agreements and instruments contemplated hereby to which the Seller is a party constitute the valid and binding obligations of the Seller, enforceable against the Seller in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance or similar laws affecting the enforcement of creditors’ rights generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity) (the “Bankruptcy and Equity Exception”).

Section 3.3                      Capitalization.

The Shares constitute all of the issued and outstanding equity interests of Point Roll.  The Shares have been duly authorized and validly issued in compliance with all applicable Laws, and are fully paid and nonassessable and free of preemptive rights.  None of Point Roll’s equity interests are held in treasury or reserved for issuance.  There are no outstanding options, warrants, convertible or exchangeable securities or other rights, agreements, arrangements or commitments obligating the Company or the Seller, directly or indirectly, to issue, sell, purchase, acquire or otherwise transfer or deliver any equity interests in the Company, or any agreement, document, instrument or obligation convertible or exchangeable therefor.  There are no agreements, arrangements or commitments of any character (contingent or otherwise) pursuant to which any Person is or may be entitled to receive any payment based on the revenues or earnings of the Company, or calculated in accordance therewith, other than commission arrangements with the Company’s employees.  There are no voting trusts, proxies or other agreements or understandings to which the Company or the Seller is a party or by which the Company or the Seller is bound with respect to the voting of any equity interests in the Company.

Section 3.4                      No Subsidiaries.

Except for owning 100% of the issued and outstanding membership interests of Rovion, which are the only equity interests of Rovion, the Company does not currently have, and has never had, any direct or indirect subsidiary or other predecessor-in-interest, and the Company does not presently own, of record or beneficially, or control, directly or indirectly, any capital stock, securities convertible into capital stock or any other equity interest, or any debt interest or other form of proprietary interest, in any Person, or any obligation, right or option to acquire any such interest.  Rovion is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.

Section 3.5                      Organizational Documents.

The Sellers have delivered to the Buyer true, correct and complete copies of (a) Point Roll’s certificate of incorporation, bylaws, minute books and equity record books; and (b) Rovion’s certificate of formation, limited liability company agreement, minute books and equity record books.  Such records include minutes or consents reflecting all actions taken by the directors (including any committees) and stockholders of Point Roll and the managers and members of Rovion, as applicable.

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Section 3.6                      Title to the Shares.

The Seller owns the Shares, of record and beneficially, free and clear of any Liens.  Upon the sale of the Shares to the Buyer hereunder, the Buyer will acquire the entire legal and beneficial interests in the Shares, free and clear of any Liens and subject to no legal or equitable restrictions of any kind (other than restrictions on transfer under applicable securities laws and Liens arising from agreements of the Buyer).

Section 3.7                      Title to Assets.

(a)      The Company does not own any real property.  Set forth on Schedule 3.7 is a complete list (including the street address, where applicable) of:  (i) all real property leased by the Company or otherwise used in connection with the Business; (ii) all equipment owned or leased by the Company with a carrying value of $10,000 or more; and (iii) each other asset of the Company or otherwise used in connection with the Business having a book value in excess of $25,000.  Except as set forth on Schedule 3.7, no material tangible or intangible asset used in connection or associated with the Business is owned or leased by the Seller or any of its Affiliates (other than the Company).

(b)      The Company has good and marketable title to all of the assets reflected on the Base Balance Sheet (other than assets disposed of following the Base Balance Sheet Date in the ordinary course of business), and owns all of such assets free and clear of any Liens (other than Permitted Liens).  The Company holds a valid leasehold interest in, or otherwise has a valid and enforceable right to use (subject to the Bankruptcy and Equity Exception), each of the assets used in connection with the Business that it does not own, other than immaterial assets having values of less than $5,000 individually and an immaterial value in the aggregate that can be readily replaced at a cost consistent with their respective values.

Section 3.8                      Condition and Sufficiency of Assets.

Except for the Excluded Assets and except as set forth on Schedule 3.7, the assets of the Company, including any assets held under leases or licenses, together with the assets and services to be provided under the Transition Services Agreement:  (a) include all material assets used by the Company in connection with the Business and necessary to the conduct of the Business; (b) to the extent included on the Base Balance Sheet as current assets, are in good condition and repair, ordinary wear and tear excepted; and (c) are adequate and suitable for the purposes for which they are currently used.  The Seller has made available to the Buyer a complete and accurate inventory of all such assets that are fixed assets having a book value in excess of $5,000.

Section 3.9                      No Conflicts.

Except as set forth in the applicable subsection of Schedule 3.9, the execution, delivery and performance by the Seller of this Agreement and all other agreements and instruments contemplated hereby and the consummation of the transactions contemplated hereby and thereby, including the sale of the Shares to the Buyer, will not, with or without notice or lapse of time, or both:

(a)      conflict with or result in a breach or violation of any provision of the Seller’s certificate of incorporation or bylaws, or any resolution of (i) the board of directors (or comparable governing body) of the Seller or (ii) the Seller’s voting stockholders (or comparable equityholders);

(b)      conflict with, result in a default, modification or termination under, give any Person a right of termination, cancellation, acceleration, suspension or revocation under, result in the loss of a benefit or the imposition of an obligation under, or require any consent, waiver, approval, notice, filing, declaration or authorization under, any Material Contract or material Permit;

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(c)      result in the creation or imposition of any Lien on the Shares or any of the Company’s assets; or

(d)      violate any Law to which the Company or the Seller or any of their respective properties, rights or assets are subject or by which any of them are bound, or require any consent, waiver, approval, notice, filing, registration, declaration or authorization with any Governmental Authority; or

(e)      result in any Change of Control Obligations other than the Retention Bonuses and any obligations described in Section 5.3.

The consents, waivers, approvals, notices, filings, declarations and authorizations required to be disclosed pursuant to clauses (b) and (d) of this Section 3.9 are referred to as the “Third Party Consents.”

Section 3.10                    No Governmental Consents.

No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any Governmental Authority is required on the part of the Company or the Seller in connection with the sale and purchase of the Shares or any of the other transactions contemplated by this Agreement

Section 3.11                    Financial Statements.

Schedule 3.11 includes the following financial statements (collectively, the “Financial Statements”):  (a) true, complete and correct copies of the Company’s unaudited consolidated balance sheets and statements of income as of December 28, 2014 and December 29, 2013 and for the years then ended, respectively; and (b) a true, complete and correct copy of the unaudited balance sheet of the Company (the “Base Balance Sheet”) as of September 27, 2015 (the “Base Balance Sheet Date”) and statement of income for the nine months then ended.  Except as set forth in Schedule 3.11, each Financial Statement (including the notes thereto) has been prepared from the Books and Records and in accordance in all material respects with GAAP (subject to omission of footnotes and, in the case of interim Financial Statements, subject to normal year-end adjustments), and fairly presents in all material respects the consolidated financial condition of the Company as of the dates, and for the periods, indicated thereon.  Except as set forth in Schedule 3.11, since December 31, 2012, there have been no changes in the accounting policies of the Company (including any change in depreciation or amortization policies or rates, or policies with respect to reserves for uncollectible accounts receivable or excess or obsolete inventory) except for changes required by changes in GAAP or applicable Law, and no dispute with the Company’s auditors with respect to any matter set forth in any of the Financial Statements.

Section 3.12                    Absence of Undisclosed Liabilities.

The Company is not liable for or subject to any material liabilities or obligations, of any nature, in each case, whether or not accrued, contingent or otherwise, and whether or not they would be required by GAAP to be reflected on a balance sheet, except for (a) those liabilities reflected on, reserved against or otherwise disclosed in the Base Balance Sheet and not previously paid or discharged, (b) those liabilities incurred since the date of the Base Balance Sheet in the ordinary course of business, consistent with past practice, which are not, individually or in the aggregate, material, (c) those liabilities incurred pursuant to or permitted by this Agreement, or (d) those liabilities set forth on Schedule 3.12.

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Section 3.13                    Accounts Receivable.

All of the Accounts Receivable of the Company outstanding on the Base Balance Sheet Date are reflected properly according to GAAP on the Financial Statements, and all of the Accounts Receivable of the Company arising after the Base Balance Sheet Date are reflected properly in the Books and Records and represent valid obligations arising from sales actually made or services actually performed.  No portion of the Accounts Receivable is required or expected to be paid to any Person other than the Company.  To the Knowledge of the Seller, except as set forth on Schedule 3.13, there is no contest or claim, other than rebates and returns in the ordinary course of business, under any Contract with any maker of an Account Receivable relating to the amount or validity of such Account Receivable.

Section 3.14                    Leases.

Schedule 3.14 sets forth a complete and accurate list of each lease (including all amendments, renewals, extensions, modifications or supplements thereto) that is a lease of Real Property or is a lease which provides for aggregate future payments of more than $25,000, in each case that is used by the Business or to which the Company is a party (collectively, the “Leases”).  Neither the Company nor the Seller or any of its Affiliates has received notice of default under, and to the Knowledge of the Seller there is no condition that would constitute a default under, any Lease, and there are no maintenance or capital improvement obligations thereon in an amount over $5,000.  No Lease is subject or subordinate to any Lien (other than Permitted Liens).  Each Assumed Lease represents the entire agreement between the Company and the landlord thereunder.  The rent and other operating charges of the Company under each Assumed Lease have been fully paid through the most recent date on which a payment was due under such Assumed Lease.

Section 3.15                    Litigation.

Except as set forth on Schedule 3.15, there are no claims, actions, suits, proceedings, arbitrations, governmental investigations or inquiries (collectively, “Actions”) pending or, to the Knowledge of the Seller, threatened against the Company or any of its properties, rights or assets, or, to the Knowledge of the Seller, against any current or former stockholder, director, manager, officer, employee, consultant or agent of the Company (in their capacities as such) with respect to the Company, its business or any of its assets.  There are no Actions seeking to prevent or delay the transactions contemplated by this Agreement.  Except as set forth on Schedule 3.15, neither the Company nor the Seller has received any written notice of any Action involving or relating to the Company, its business or any of its assets.  Except as set forth on Schedule 3.15, there are no judgments, orders, injunctions, decrees, stipulations or awards (whether rendered by a court, administrative agency or other Governmental Authority, by arbitration or otherwise) against the Company, or against the Business or any of the Company’s assets.

Section 3.16                    Significant Customers.

(a)      Schedule 3.16(a) sets forth a true, complete and correct customer list showing the 30 largest customers (from an advertiser perspective) by gross purchases from the Company during the twelve month period ended on the date of the Base Balance Sheet (collectively, the “Significant Customers”).

(b)      Schedule 3.16(b) sets forth a true, complete and correct list of all present or former customers (from an advertiser perspective) of the Business that have produced at least $50,000 in revenue over any rolling 12 month period within the last two years and either (i) have terminated doing business with the Company; or (ii) produced revenue during the 2014 fiscal year but have not produced revenue in the 2015 fiscal year.

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(c)      Since December 28, 2014, except as set forth on Schedule 3.16(b), no Significant Customer has (i) stopped or materially reduced, or notified the Company in writing of its intention to stop or materially reduce, trading with or supplying the Company; (ii) or changed, or notified the Company in writing of its intention to change, materially and adversely, the terms and conditions on which it is prepared to trade with or supply the Company; or (iii) disputed, or notified the Company in writing of its intention to dispute, any services rendered by the Company with a value in excess of $10,000.

Section 3.17                    Material Contracts and Commitments.

(a)      Schedule 3.17(a) sets forth a true, complete and correct list of the following Contracts to which the Company is a party or by which the Company or any of the Company’s material assets are bound:

(i)           each Contract, or group of related Contracts, reasonably expected to give rise to obligations, liabilities, revenues or benefits exceeding $25,000 (or the equivalent value in the applicable currency);

(ii)          each Contract (other than employment, consulting and similar agreements) between, on the one hand, the Company, and on the other hand, any current or former stockholder, director, manager, officer or employee of the Seller or any of its Affiliates, or any of their respective Affiliates;

(iii)         each Contract evidencing Company Indebtedness;

(iv)         each Contract with outstanding obligations for the disposition of any portion of the assets or business of the Company (other than for sales of goods or services in the ordinary course of business) or for the acquisition by the Company of the assets or business of any other Person (other than for purchases of inventory or components in the ordinary course of business);

(v)          each Contract that is an In-License or an Out-License;

(vi)         each Contract that contains any non-solicitation, non-competition, right of first refusal, right of first negotiation or similar obligations binding the Company or that otherwise prohibit or restrict the Company from entering into or competing in any line of business or market, or from freely providing services or supplying products to any customer or potential customer;

(vii)        each Contract in which the Company has granted “most favored nation” pricing provisions or exclusive marketing or distribution rights relating to any products or territory or has agreed to purchase a minimum quantity of goods or services or has agreed to purchase goods or services exclusively from any Person;

(viii)       each Contract in which the Company has agreed, for a specified or unlimited period of time, to maintain a facility in a certain geographic area, to maintain a certain number of employees, to invest or expend a certain monetary amount, or to accept any other similar affirmative obligation with respect to the operation of its business;

(ix)          each Contract for the cleanup, abatement or other actions in connection with any Hazardous Material, the remediation of any existing environmental liability, violation of any Environmental Law or relating to the performance of any environmental audit or study;

(x)           each Contract concerning the establishment or operation of a partnership, joint venture or similar enterprise to which the Company is a party;

(xi)          each Contract with any Governmental Authority;

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(xii)         each Contract for the employment of any individual, or any retention bonus or severance Contract; and

(xiii)        each Lease.

(b)      Any and all Contracts described in Section 3.17(a) are collectively referred to as the “Material Contracts.”

(c)      Subject to the Bankruptcy and Equity Exception, and except as set forth on Schedule 3.17(c), each Material Contract is in full force and effect and is a legal, valid, binding and enforceable obligation of the Company, and to the Knowledge of the Company, each of the other parties thereto.  Except for breaches or defaults which have been cured or for which the breaching party has no material liability, neither the Company nor, to the Knowledge of the Seller, any other party to any Material Contract has breached or defaulted under, or has improperly terminated, revoked or accelerated, any Material Contract, and, to the Knowledge of the Seller, there exists no condition or event which, after notice or lapse of time, or both, would constitute any such breach, default, termination, revocation or acceleration.

(d)      Except as set forth on Schedule 3.17(d), there are no intercompany agreements or arrangements pursuant to which the Seller or any of its Affiliates has provided services to the Company or the Business at any time during the last year other than (i) agreements and arrangements relating to services to be provided pursuant to the Transition Services Agreement; and (ii) agreements and arrangements that are Excluded Assets or are not necessary for the operation of the Business and have been discharged in full without any continuing obligations or liabilities owed by the Company as of the Closing.

Section 3.18                    Absence of Certain Changes.

Since the Base Balance Sheet Date, the Company has conducted its business in the ordinary course of business, and there has not been:

(a)      any Material Adverse Effect;

(b)      any change, occurrence, fact, condition, circumstance or omission that by itself or together with other changes, occurrences, facts, conditions, circumstances or omissions has had, or would reasonably be expected to have, a Material Adverse Effect;

(c)      any breach by the Company (or any action or omission by the Company that, with or without notice or lapse of time, or both, would result in a breach), or any amendment or termination, of any Material Contract;

(d)      any sale, assignment, transfer, license or sublicense of, or the entering into of any Contract to sell, assign, transfer, license or sublicense, any of the Company’s assets (other than cash and cash equivalents), in each case other than in the ordinary course of business, consistent with past practice;

(e)      any transfer of assets (other than cash and cash equivalents and Excluded Assets) to or for the benefit of the Seller or any of its Affiliates;

(f)      any revaluation by the Company of any of its assets, including the writing down or off of notes or accounts receivable, other than in the ordinary course of business and consistent with past practice;

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(g)      any change by the Company in its accounting methods, principles or practices;

(h)      any purchase or acquisition of, or the entering into of any Contract to purchase or acquire, any property, right or asset of any Person, in each case other than in the ordinary course of business, consistent with past practice;

(i)      any entry by the Company into any commitment or transaction material to the Company, including incurring or agreeing to incur capital expenditures in excess of $10,000, individually or in the aggregate;

(j)      any increase in indebtedness for borrowed money, or any issuance or sale of any debt securities, or any assumption, guarantee or endorsement of any liability of any other Person, or any loan or advance to any other Person;

(k)      any cancellation, or agreement to cancel, any indebtedness or other obligation owing to the Company;

(l)      except as was required to comply with applicable Law or with Contracts then in effect, and except as set forth on Schedule 3.18(l), any action with respect to (i) entering into, terminating or amending any Company Plan, collective bargaining agreement or employment, retention or severance agreement, (ii) increasing the compensation or benefits of any director, manager, officer, employee or consultant of the Company (other than in the ordinary course of business, consistent with past practice), (iii) amending or accelerating the payment, right to payment or vesting of any compensation or benefits, including any outstanding equity compensation, (iv) paying any benefit not provided for as of such date under any Company Plan, (v) granting any award under any bonus, incentive, performance or other compensation plan or arrangement or benefit plan, including the grant of equity compensation or the removal of existing restrictions in any benefit plans or agreement or award made thereunder, or (vi) taking any action to fund or in any other way secure the payment of compensation or benefits under any Company Plan, agreement, contract or arrangement or benefit plan;

(m)     except as required hereby, any termination of employment (whether voluntary or involuntary) of any officer or key employee of the Company or any termination of employment (whether voluntary of involuntary) of employees of the Company in excess of historical attrition in personnel;

(n)      any settlement or compromise of any pending or threatened Action;

(o)      any authorization, recommendation, proposal or announcement of an intention to adopt a plan of complete or partial liquidation or dissolution of the Company;

(p)      except as set forth on Schedule 3.18(p), any other transaction, agreement or commitment entered into by the Company or affecting the Business or the Company, except in the ordinary course of business and consistent with past practice; or

(q)      any negotiation or agreement by or on behalf of the Company or the Seller to do or cause any of the foregoing, other than pertaining to this Agreement or any Transaction Document and the transactions contemplated hereby and thereby.

Section 3.19                      Compliance with Law and Privacy Codes.

Except as set forth on Schedule 3.19, the Company is conducting, and within the last five years has conducted, its business in compliance with all applicable Laws and Privacy Codes in all material respects.  In addition, except as set forth on Schedule 3.19, (a) neither the Company nor the Seller has received any written notice that the Company is not in compliance with any applicable Law or Privacy Code; (b) no claims, actions, suits, proceedings, arbitrations, investigations or inquiries by any Governmental Authority or under any Privacy Code have been made or, to the Knowledge of the Seller, threatened with respect to the Company asserting any violation of, liability for or potential responsibility under any Law or Privacy Code; and (c) neither the Company nor the Seller has conducted any internal investigation with respect to any actual, potential or alleged violation of any Law or Privacy Code by any director, manager, officer or employee of the Company.

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Section 3.20                    Intellectual Property.

(a)      Company Registrations.  Schedule 3.20(a) lists in reasonable detail all Intellectual Property Registrations that are registered or filed in the name of the Company, alone or jointly with others(the “Company Registrations”).  All assignments of the Company Registrations to the Company have been properly executed and recorded, except where such failure to execute or record would not have a Material Adverse Effect.  All material Company Registrations are valid and enforceable and all issuance, renewal, maintenance and other payments that are or have become due with respect thereto have been timely paid by or on behalf of the Company.

(b)      Prosecution Matters.  The Company has complied with its duty of candor and disclosure to the U.S. Patent and Trademark Office and any relevant foreign patent or trademark office with respect to all trademark applications filed by or on behalf of it and has made no material misrepresentation in such applications.  To the Knowledge of the Seller, there is no information that would preclude the Company from having clear title to each of the Company Registrations or affecting the patentability or enforceability of any Company Registration.

(c)      Ownership; Sufficiency.  The Company is the sole and exclusive owner of all Company Owned Intellectual Property, free and clear of all Liens (other than Permitted Liens).  Except for the Excluded Assets and the assets and services to be provided under the Transition Services Agreement, the Company Intellectual Property constitutes all Intellectual Property necessary to conduct the Business in the manner currently conducted.  No Company Owned Intellectual Property has been developed using, or is subject to rights and obligations with respect to, any (i) support, funding, resources or assistance for any Governmental Authority; or (ii) any Open Source Materials that require, when used or distributed in the same manner as Company does as of Closing, as a condition of use or distribution of such Open Source Materials, that other software incorporated into, derived from or distributed with such Open Source Materials be (1) disclosed or distributed in source code form, (2) licensed for the purpose of making derivative works, or (3) redistributable at minimal or no charge.  “Open Source Materials” means any software that is distributed as "free software" or "open source software", including the GNU General Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL), BSD Licenses, the Artistic License, the Netscape Public License, the Sun Community Source License (SCSL) the Sun Industry Standards License (SISL) and the Apache License and any variant or derivative of any of the foregoing licenses, or any other license approved as an open source license by the Open Source Initiative.

(d)      Infringement.To the Knowledge of the Seller, no activity or offering of the Company undertaken in connection with the Business constitutes, or within the last five years has constituted, an infringement upon, or material violation or misappropriation of, any Intellectual Property right of any third party.  The Company does not currently have, and has never had, any material liability for the infringement, violation or misappropriation of the Intellectual Property of any Person.  Except as set forth on Schedule 3.20(d), the Company has not received any written complaint, claim or notice, or threat of any of the foregoing, alleging any such infringement, violation or misappropriation or any request or demand for indemnification or defense with respect to any of the Company Intellectual Property.

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(e)      Protection Measures.The Company has taken reasonable measures to protect the proprietary nature of each item of Company Owned Intellectual Property, and to maintain in confidence all material trade secrets and confidential information comprising a part thereof.  Except as set forth on Schedule 3.20(e), the Company has not, and to the Knowledge of the Seller none of the licensors or service providers of the Company with respect to the operation of the Company’s business has, violated or breached any contractual or legal requirements or Privacy Codes.  No complaint relating to an improper use or disclosure of, or a breach in the security of, any such information has been made or, to the Knowledge of the Seller, threatened against the Company or any of its licensors or service providers with respect to the operation of the business of the Company.  There has been no unauthorized disclosure of any proprietary or confidential information of any Person in the possession, custody or control of the Company.

(f)      Infringement of the Rights of the Company.  To the Knowledge of the Seller, no Person (including any current or former employee or consultant of the Company) is infringing, violating or misappropriating any Company Owned Intellectual Property.

(g)      Outbound Intellectual Property Agreements.  Schedule 3.20(g) identifies each material license, covenant or other agreement or arrangement pursuant to which the Company has assigned, transferred,licensed, distributed or otherwise granted any right or access to any Person, or covenanted not to assert any right, with respect to any past, existing or future Company Intellectual Property (collectively, the “Out-Licenses”).  The Company has not agreed to indemnify any Person against any infringement, violation or misappropriation of any Intellectual Property rights, and the Company is not obligated to license any existing or future Intellectual Property to any Person.

(h)      Inbound Intellectual Property Agreements.Schedule 3.20(h) identifies (i) each material item of Company Licensed Intellectual Property and the license or agreement pursuant to which the Company exploits it (excluding currently-available, off-the-shelf software programs that are licensed by the Company pursuant to “shrink wrap” licenses or “click wrap” licenses or otherwise generally available under standard terms), (ii) each material agreement, contract, assignment or other instrument pursuant to which the Company has obtained any joint or sole ownership interest in or to each item of Company Owned Intellectual Property, and (iii) each material agreement, contract or other instrument pursuant to which the Company has obtained any ownership or license interest in Intellectual Property developed by a consultant, software or hardware developer or vendor to the Company (collectively, the “In-Licenses”).

(i)      Employee and Contractor Assignments.  Except as set forth on Schedule 3.20(i), each employee and independent contractor of the Company has executed a valid and binding written agreement expressly assigning to the Company all right, title and interest in any inventions and works of authorship, whether or not patentable, that was invented, created, developed, conceived and/or reduced to practice during the term of such employee’s employment or such independent contractor’s work for the Company, and all Intellectual Property rights therein.

(j)      Privacy Policies.  Except as set forth in Schedule 3.20(j), the Company has not collected any Personal Data from any Person.  The Company has complied in all material respects with all applicable Laws and the implementation of its internal privacy policies and terms of use relating to the collection of Personal Data from any Person (the “Company Privacy Policies”).  The Company Privacy Policies (i) comply in all material respects with all applicable Laws and (ii) do not require the delivery of any further notice to or consent from any Person, or prohibit the transfer of any customer data or Personal Data collected by and in the possession and control of the Seller, or any of their respective Affiliates, as a result of this Agreement and the transactions contemplated hereby.

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Section 3.21                    Service Level Warranties.

Schedule 3.21 sets forth a list of all Contracts of the Company containing ongoing service level warranties and guaranties given by the Company to any of its customers (collectively, the “Service Level Warranties”), true and correct copies of which have been made available to the Buyer.  To the Knowledge of the Seller, each product sold, licensed or delivered, or any service provided, by the Company to its customers pursuant to any Contract (collectively, the “Business Products”) meets, and at all times has met, in all material respects, all standards for quality and workmanship prescribed by Law, industry standards (if any), and Contracts with such customers.  Except as described on Schedule 3.21, (a) no material claims under the Service Level Warranties have been made that have not been fully resolved prior to the Closing, and no claims are, to the Knowledge of the Seller, threatened under the Service Level Warranties, and (b) in the last five years there have not been any material disruptions of availability of service levels with respect to any Business Product.  No Service Level Warranty claims relating to the Business involving amounts in excess of $25,000 have occurred within the past five years.

Section 3.22                     Taxes.

(a)      Except as set forth on Schedule 3.22(a), all federal, state, local, and other Tax Returns that are or were required to be filed by or with respect to the Company pursuant to applicable Laws have been accurately prepared and are true, correct, and complete in all material respects, and have been duly and timely filed.  The Company has not requested or been granted an extension of time for filing any Tax Return that has not yet been filed.

(b)      The Company has timely paid, or made provision for the payment of, or has established adequate reserves for the payment of, all Taxes that are due pursuant to such Tax Returns or otherwise for the periods covered by such Tax Returns, or pursuant to any assessment received by the Company or the Seller with respect to the Company.

(c)      Except as set forth on Schedule 3.22(c), all deficiencies proposed as a result of any such audits have been paid, reserved against, settled, or are being contested in good faith by appropriate proceedings.  The Company has not given or been requested to give waivers or extensions (or is or would be subject to a waiver or extension given by any other Person), by Contract or otherwise, of any statute of limitations relating to the payment of Taxes of the Company or for which the Company may be liable.

(d)      Except as set forth on Schedule 3.22(d), no Tax audit or Action is now pending or, to the Knowledge of the Seller, threatened against the Company, and no issue or question has been raised (and is currently pending) by any Tax authority in connection with the Company’s Tax Returns or reports.

(e)      The charges, accruals, and reserves (other than deferred Taxes) with respect to Taxes on the books of the Company are adequate (determined in accordance with GAAP) and are at least equal to the Company’s liability for Taxes.  There exists no proposed Tax assessment against the Company except as disclosed in the Base Balance Sheet.

(f)      The Company has duly withheld or collected from each payment made to or on behalf of each of its employees or contractors the full amount of all Taxes required to be withheld or collected therefrom and, if due and owing, has paid the same to the proper Tax receiving officers or authorized depositaries.

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(g)      There are no outstanding Contracts or waivers extending the statutory period of limitation applicable to any claim for, or the period for the collection or assessment of, Taxes due from or with respect to the Company for any taxable period.

(h)      There are no pending or, to the Knowledge of the Seller, threatened actions or proceedings in regard to any Taxes due from or with respect to the Company, the Business or any of the Company’s assets, or any Tax Return filed by or with respect to the Company, that could subject the Buyer to any liability for such Taxes for any period prior to the Closing, or that could impair any of the Company’s assets, nor is there a basis for any such actions or proceedings, and the Buyer shall not be subject to any Liability for any such Taxes or for any other Tax of the Company.

(i)      There is no tax sharing agreement that will require any payment by the Company after the date of this Agreement.  The Company is not, and has not been within the five-year period preceding the Closing Date, an “S” corporation.  During the consistency period (as defined in Section 338(h)(4) of the Tax Code with respect to the sale of the Shares to the Buyer), neither the Company nor any target affiliate (as defined in Section 338(h)(6) of the Tax Code with respect to the sale of the Shares to the Buyer) has sold or will sell any property or assets to the Buyer or to any member of the affiliated group (as defined in Section 338(h)(5) of the Tax Code) that includes the Buyer.

Section 3.23                    Employee Matters.

(a)      Schedule 3.23 lists the names of all directors, managers, officers and employees of the Company, together with their respective rates of total compensation.  No Key Employee has given notice to the Company or the Seller that such Key Employee intends to terminate his or her employment with the Company.

(b)      No claims, controversies, investigations, audits or suits are pending or, to the Knowledge of the Seller, threatened with respect to any applicable Laws respecting the Company’s employment practices, terms and conditions of employment and wages and hours.  Except as contemplated or permitted by this Agreement, neither the Company nor the Seller has incurred or taken any action that would reasonably be expected to result in any liability under WARN.  All employees of the Company are employed on an at-will basis.

(c)      The Company is not a party to or bound by any collective bargaining agreement, trade union agreement or similar agreement.  No labor unions or other organizations have represented or, to the Knowledge of the Seller, purported or attempted to represent any employee of the Company in such individual’s capacity as such.  No strike, slowdown, picketing, work stoppage, concerted refusal to work overtime or other similar labor activity with respect to any employee of the Company is currently ongoing or, to the Knowledge of the Seller, has been threatened in the two years preceding the date of this Agreement.

Section 3.24                    Employee Benefit Plans.

(a)      As used in this Section 3.24, the following terms have the following meanings:

(i)           “Company Plan” means (i) any material Plan of which the Company or any of its ERISA Affiliates is or was a Plan Sponsor, or to which the Company or any of its ERISA Affiliates otherwise contributes or has contributed, or in which the Company or any of its ERISA Affiliates otherwise participates or has participated; and (ii) all material plans or policies providing for “fringe benefits” (including but not limited to vacation, paid holidays, personal leave, employee discounts, educational benefits or similar programs), and each other bonus, incentive compensation, deferred compensation, profit sharing, stock, severance, retirement, health, life, disability, group insurance, employment, stock option, stock purchase, stock appreciation right, performance share, supplemental unemployment, layoff, or any other similar material plan, agreement, policy or understanding (whether qualified or nonqualified, currently effective or terminated within the six years preceding the date hereof), and any trust, escrow or other agreement related thereto, that (A) is or has been established, maintained or contributed to by the Company or any of its ERISA Affiliates with respect to the Business, or with respect to which the Company has or may have any liability that could affect the Business; or (B) provides benefits to any director, officer, employee, former director, officer, employee or dependent thereof of the Business, regardless of whether funded.  “Company Plan” also includes any written or enforceable oral representations made to any director, officer, employee or former director, officer or employee of the Business promising or guaranteeing any employer payment or funding for the continuation of medical, dental, life or disability coverage for any period of time beyond the end of the current plan year (except to the extent of coverage required under Section 4980B of the Tax Code).  All references in this Agreement to Plans are to Company Plans unless the context requires otherwise.

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(ii)           “Company VEBA” means a VEBA related to a Continuing Plan whose members include employees of the Company or any of its ERISA Affiliates.

(iii)          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor law, and regulations and rules issued pursuant thereto.

(iv)          “ERISA Affiliate” means, with respect to the Company, any other Person that, together with the Company, would be treated as a single employer under Section 414 of the Tax Code.

(v)           “Multi-Employer Plan” has the meaning given in ERISA § 3(37)(A).

(vi)          “PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

(vii)         “Pension Plan” has the meaning given in ERISA § 3(2)(A).

(viii)        “Plan” has the meaning given in ERISA § 3(3).

(ix)           “Plan Sponsor” has the meaning given in ERISA § 3(16)(B).

(x)           “Qualified Plan” means any Continuing Plan that meets or purports to meet the requirements of Section 401(a) of the Tax Code.

(xi)           “Title IV Plan” means all Pension Plans that are subject to Title IV of ERISA, 29 U.S.C. § 1301 et seq., other than Multi-Employer Plans.

(xii)          “VEBA” means a voluntary employees’ beneficiary association under Section 501(c)(9) of the Tax Code.

(xiii)         “Welfare Plan” has the meaning given in ERISA § 3(1).

(b)      Schedule 3.24(b) contains a complete and accurate list of all Company Plans and Company VEBAs, and identifies as such all Continuing Plans that are (i) Qualified Plans, (ii) Title IV Plans, or (iii) Multi-Employer Plans.Company Plans identified on Schedule 3.24(b)as “Retained Plans” are collectively referred to herein as “Retained Plans” and individually as a “Retained Plan.”  All Company Plans not identified on Schedule 3.24(b)as “Retained Plans” are collectively referred to herein as “Continuing Plans” and individually as a “Continuing Plan.”

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(c)      None of the Company Plans is a Multi-Employer Plan, and the Company does not have any liability with respect to a Multi-Employer Plan.

(d)      The Seller has delivered or made available to the Buyer:

(i)           all documents that set forth the terms of each Company Plan or Company VEBA and of any related trust, including (A) all plan descriptions and summary plan descriptions of Company Plans for which the Company is required to prepare, file, and distribute, and (B) all material summaries and descriptions furnished to participants and beneficiaries regarding Company Plans and Company VEBAs for which a plan description or summary plan description is not required;

(ii)           all material personnel, payroll, and employment manuals and policies;

(iii)           a written description of any Continuing Plan that is not otherwise in writing;

(iv)          all insurance policies purchased by or to provide benefits under any Company Plan that is a Continuing Plan;

(v)           all contracts with third party administrators, actuaries, investment managers, consultants, and other independent contractors that relate to any Company Plan or Company VEBA that are Continuing Plans;

(vi)          all material reports submitted within the two years preceding the date of this Agreement by third party administrators, actuaries, investment managers, consultants, or other independent contractors with respect to any Continuing Plan;

(vii)         the form of the notice used to notify employees of their rights under ERISA § 601 et seq. and Section 4980B of the Tax Code;

(viii)        the Form 5500 filed in each of the most recent three plan years with respect to each Continuing Plan, including all schedules thereto and the opinions of independent accountants;

(ix)           with respect to a Continuing Plan, all notices that were given by the Company or any of its ERISA Affiliates or any Company Plan to the IRS or the PBGC within the two years preceding the date of this Agreement, including notices that are expressly mentioned elsewhere in this Section 3.24;

(x)           with respect to a Continuing Plan, all notices that were given by the IRS, the PBGC, or the Department of Labor to the Company, any of its ERISA Affiliates, or any Continuing Plan within the two years preceding the date of this Agreement and all correspondence with the IRS and the Department of Labor relating to any outstanding controversy or with respect to any other material matter that has been resolved within the two years preceding the date of this Agreement; and

(xi)           with respect to Qualified Plans, the most recent determination or opinion letter issued by the IRS for each Plan of the Company that is a Qualified Plan.

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(e)      Except as set forth in Schedule 3.24(e):

(i)            Except for such instances that would not result in a Material Adverse Effect, the Company has performed its obligations under all Continuing Plans.  In all material respects, the Company has made appropriate entries in its Books and Records for all liabilities under such Plans that have accrued but are not yet due.

(ii)           Except for such instances that would not result in a Material Adverse Effect, the Company, with respect to all Continuing Plans, is in compliance, and each Continuing Plan complies in form and has complied in operation with its own terms and with all applicable requirements of ERISA, the Tax Code, and all other applicable Laws and applicable tax qualification requirements, including, without limitation, the provisions of such Laws expressly mentioned in this Section 3.24.

(iii)           Except for changes made in the ordinary course of business or changes contemplated by this Agreement or communicated to the Buyer (e.g., the termination of certain Continuing Plans), neither the Company nor any of its ERISA Affiliates has any formal plan or commitment, whether legally binding or not, to create any additional material Continuing Plan or, except as required to comply with applicable Law, to modify or change any existing Continuing Plan that would materially affect any present or former director, officer or employee of the Business, or such present or former director’s, officer’s or employee’s dependents or beneficiaries.

(iv)          No Continuing Plan is a Title IV Plan or a Multi-Employer Plan.

(v)           Except for such instances that would not result in a Material Adverse Effect, no transaction prohibited by ERISA § 406 and no “prohibited transaction” under Section 4975(c) of the Tax Code has occurred with respect to any Continuing Plan.  Except for such instances that would not result in a Material Adverse Effect, no act, omission, or transaction has occurred that would result, directly or indirectly, through its own liability, indemnification, or otherwise, in imposition on the Company of breach of fiduciary duty liability damages under Section 409 of ERISA, any liability under Section 502 of ERISA, or a tax or penalty on prohibited transactions imposed by Section 4975 or Chapter 43 of the Tax Code or sanctions imposed under Title I of ERISA.

(vi)           Except for such instances that would not result in a Material Adverse Effect, all filings required by ERISA and the Tax Code as to each Continuing Plan have been timely filed, and all notices and disclosures to participants required by either ERISA or the Tax Code have been timely provided.

(vii)         Except for such instances that would not result in a Material Adverse Effect, all contributions and payments made or accrued with respect to all Continuing Plans and Company VEBAs are deductible under Sections 162 or 404 of the Tax Code.

(viii)        Other than claims for benefits submitted by participants or beneficiaries, no claim against, or legal proceeding involving, any Continuing Plan is pending or, to Knowledge of the Seller, is threatened.

(ix)           Except for such instances that would not result in a Material Adverse Effect, each Qualified Plan of the Company is qualified in form and operation under Section 401(a) of the Tax Code; each trust for each such Plan is exempt from federal income tax under Section 501(a) of the Tax Code; each Company VEBA is exempt from federal income tax.  Except for such instances that would not result in a Material Adverse Effect, no event has occurred or circumstance exists that will or could give rise to disqualification or loss of tax-exempt status of any such Plan or trust.

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(x)           The Company does not provide, and is not obligated to provide, death, health, medical, or hospitalization benefits (whether or not insured), with respect to current or former directors, officers or employees of the Business, their dependents or beneficiaries beyond their retirement or other termination of employment other than (A) coverage mandated by applicable Law; (B) death benefits or retirement benefits under any Pension Plan; or (C) deferred compensation benefits accrued as liabilities on the Company’s Books and Records.

(xi)           No payment that is owed or may become due to any director, officer, employee, or agent of the Company will be non-deductible to the Company or subject to Tax under Section 280G or 4999 of the Tax Code; nor will the Company be required to “gross up” or otherwise compensate any such person because of the imposition of any excise tax on a payment to such person.

(xii)          With respect to the Continuing Plans, the consummation of the transactions contemplated by this Agreement will not (A) result in the payment, vesting or acceleration of any benefit, whether or not some other subsequent action or event would be required to cause such payment or provision to be triggered, (B) create or give rise to any additional vested rights or service credits under any Continuing Plan, or (C) conflict with the terms of any Continuing Plan.

(xiii)         Except for such instances that would not result in a Material Adverse Effect, with respect to each Continuing Plan which is (or but for an exemption could be) subject to Section 409A of the Tax Code (i) such plan has been maintained and administered in a manner consistent with avoiding adverse tax consequences under Section 409A of the Tax Code and (ii) the transactions contemplated by this Agreement will not result in such adverse tax consequences.

(xiv)        There is no Continuing Plan that is subject to the laws of a foreign government or jurisdiction.

(xv)          No option, warrant or right is outstanding as of the Closing Date under any Company Plan which grants or purports to grant any option, warrant or right entitling the holder thereof to purchase or otherwise acquire any shares of stock of Point Roll or Rovion.

Section 3.25                    Permits.

(a)      Schedule 3.25 sets forth a complete and accurate list of each material Permit.

(b)      The Company owns or holds all material Permits necessary for the conduct of its business as currently being conducted.  The Permits are valid and subsisting and no Governmental Authority has provided the Company or the Seller with any written notice that it intends to modify, cancel, terminate or not renew any Permit.  The Company has conducted and is conducting its business in compliance in all material respects with the requirements, standards, criteria and conditions set forth in the Permits.

Section 3.26                    Insurance.

Schedule 3.26 sets forth an accurate list of all insurance policies related to the Company, the Business or any of the Company’s assets, the amounts and types of insurance coverage available thereunder and all insurance loss runs and workers’ compensation claims received for the past three policy years.  With respect to each such insurance policy: (a) such policy is in full force and effect and is legal, valid, binding and enforceable in accordance with its terms (subject to the Bankruptcy and Equity Exception) and (b) the Company is not in breach or default (including any breach or default with respect to the payment of premiums or the giving of notice) of such policy, and no event has occurred which, after notice or lapse of time, or both, would constitute a breach or default or permit termination or modification, under such policy.  Neither the Company nor the Seller has received written notice of any threatened terminations of, or material premium increases with respect to, or material alteration of coverage under, any such policies.

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Section 3.27                    Environmental Matters.

(a)      Hazardous Material.  No material release of Hazardous Materials in any manner that would reasonably be expected to require remediation has occurred in, on or under any Real Property, including the land and the improvements, ground water and surface water thereof, that the Company or any other Person whose liabilities the Company has retained or assumed either by Contract or by operation of law (together, its “Predecessors”) has at any time owned, operated, occupied or leased.  There are no underground or aboveground fuel storage tanks located on any Real Property of the Company, nor to the Knowledge of the Company did any such fuel storage tanks exist on any Real Property of the Company or its Predecessors prior to the date hereof.

(b)      Hazardous Materials Activities.  Neither the Company nor any of its Predecessors has transported, stored, used, manufactured, disposed of or released, or exposed its employees or others to, Hazardous Materials in a manner that could create any material liability under Environmental Law for the Company, nor has the Company or any of its Predecessors disposed of, transported, sold or manufactured any product containing a Hazardous Material (collectively, the “Hazardous Materials Activities”) that would reasonably be expected to create any material liability under Environmental Law for the Company.

Section 3.28                    Books and Records.

The Company has made and kept (and given the Buyer access to) the Books and Records which, in reasonable detail, accurately and fairly reflect the activities of the Company in all material respects.  The Company has not engaged in any transaction, maintained any bank account or used any corporate funds except as reflected in its Books and Records.  All Books and Records are, and at all times have been, under the exclusive ownership and direct control of the Company or the Seller.

The Books and Records have been maintained in accordance with sound business practices and the requirements of Section 13(b)(2) of the Securities Exchange Act of 1934, as amended (regardless of whether or not the Company is subject to that Section), including the maintenance of an adequate system of internal controls, except for such failures as would not have a Material Adverse Effect.  The minute book of the Company contains accurate and complete records of all meetings held of, and corporate action taken by, the Company’s stockholders, board of directors, and all committees of the board of directors, and no meeting of any such stockholders, board of directors, or committee has been held for which minutes have not been prepared and are not contained in the Company’s minute book.  At the Closing, all of the Books and Records will be in the possession of the Company.

Section 3.29                    Brokers.

No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or the Seller.

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Section 3.30                    Unlawful Payments.

Neither the Seller nor any of its Affiliates, nor any of their respective stockholders, directors, managers, officers, employees, agents or representatives, has directly or indirectly made any improper contribution, gift, bribe, rebate, payoff, influence payment, kickback or other payment to any Person, private or public, regardless of what form, whether in money, property or services (a) to obtain favorable treatment for the Company or the Business or to secure any Contract, (b) to pay for favorable treatment for the Company or the Business or for Contracts secured, (c) to obtain special concessions for the Company or the Business or for special concessions already obtained, or (d) relating to the Company or the Business in violation of any legal requirement, including any such payments to any governmental official or employee or political party or campaign.  Neither the Company nor any of its directors, managers, officers, employees, agents or representatives has accepted or received any unlawful contributions, payments, gifts or expenditures.

Section 3.31                    Related Parties.

To the Knowledge of the Seller, except as set forth on Schedule 3.31, neither any current or former stockholder, director, manager, officer, employee or Affiliate of the Company nor any current or former Affiliate of any such Person (collectively, the “Related Parties”), owns any asset (except for assets pursuant to which services are to be provided under the Transition Services Agreement), property or right, tangible or intangible, used by the Company, has any claim or cause of action against the Company, or is owed any payment or other obligation by the Company.  Except as set forth on Schedule 3.31 and except for services being provided under the Transition Services Agreement, the Company is not currently a party to any Contract, transaction, arrangement or course of dealing with any Related Party other than on an arm’s length basis.

Section 3.32                    Disclosure.

None of the representations or warranties of the Seller contained herein or in any Transaction Document to which the Seller or the Company is a party contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements or facts contained herein and therein not misleading in light of the circumstances under which they were made.  The Company or the Seller has made available to the Buyer true, complete and correct copies of each written Contract that is referred to in the Schedules attached hereto.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE BUYER

To induce the Seller to enter into this Agreement and consummate the transactions contemplated hereby, the Buyer represents and warrants to the Seller as follows:

Section 4.1                      Organization.

The Buyer is duly incorporated, validly existing and in good standing under the Laws of Delaware.

Section 4.2                      Authorization; Validity.

The Buyer has full legal right and all requisite corporate power and authority to operate and carry on its business as presently conducted, and to execute, deliver and perform this Agreement and the transactions and other agreements and instruments contemplated hereby.  The execution, delivery and performance by the Buyer of this Agreement and all other agreements and instruments contemplated hereby to which it is a party, and the consummation by the Buyer of the transactions contemplated hereby or thereby, have been duly and validly authorized by all necessary action on the part of the Buyer.  This Agreement and the other agreements and instruments contemplated hereby to which the Buyer is a party have been duly executed and delivered by the Buyer.  This Agreement and the transactions and other agreements and instruments contemplated hereby have been duly approved by the board of directors of the Buyer and constitute the valid and binding obligations of the Buyer, enforceable in accordance with their respective terms, subject to the Bankruptcy and Equity Exception.

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Section 4.3                      No Conflicts.

The execution, delivery and performance of this Agreement and all other agreements and instruments contemplated hereby and the consummation of the transactions contemplated hereby and thereby will not, with or without notice or lapse of time, or both: (a) conflict with, or result in a breach or violation of, the Buyer’s certificate of incorporation or by-laws or any resolutions of the board of directors or stockholders of the Buyer, (b) conflict with, result in a default, modification or termination under, give any Person a right of termination, cancellation, acceleration, suspension or revocation under, result in the loss of a benefit or the imposition of an obligation under, or require any consent, waiver, approval, notice, filing, declaration or authorization under, any material Contract or Permit to which the Buyer is a party or by which any of its properties, rights or assets are bound or (c) violate any Law to which the Buyer or any of its properties, rights or assets are subject or by which any of them are bound or require any consent, waiver, approval, notice, filing, registration, declaration or authorization with any Governmental Authority.

Section 4.4                      Investment Intent.

The Buyer is acquiring the Shares for its own account and not with a view to their distribution within the meaning of Section 2(11) of the Securities Act of 1933, as amended.

Section 4.5                      Brokers.

No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission for which Seller shall have any obligations in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer.

Section 4.6                      Litigation.

There are no Actions pending or, to the knowledge of the Buyer, threatened against the Buyer or any of its properties, rights or assets seeking to prevent or delay the transactions contemplated by this Agreement.

Section 4.7                      Solvency.

Immediately after giving effect to the transactions contemplated by this Agreement, (a) the Buyer will not have incurred debts beyond its ability to pay such debts as they mature or become due and the then present fair salable value of the assets of the Buyer will exceed the amount that will be required to pay its respective probable liabilities (including the probable amount of all contingent liabilities) and its respective debts as they become absolute and matured, (b) the assets of the Buyer, at a fair valuation, will exceed its debts (including the probable amount of all contingent liabilities) and (c) the Buyer will not have unreasonably small capital to carry on its business as presently conducted or as proposed to be conducted.  No transfer of property is being made and no obligation is being incurred in connection with the transactions contemplated hereby with the intent to hinder, delay or defraud creditors of the Seller or the Business.

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ARTICLE V

COVENANTS

Section 5.1                      Further Assurances.

From time to time after the Closing Date, upon the reasonable request of any party, without further consideration, each party hereto shall execute, acknowledge and deliver all such other instruments and documents and shall use commercially reasonable efforts to take all such other actions as may be required to consummate and make effective the transactions contemplated by this Agreement.  For a period of six months after the date hereof, and except as provided in the Transition Services Agreement (in which case the Transition Services Agreement shall control), the Seller agrees to use commercially reasonable efforts to cooperate on a reasonable basis with the Buyer (a) to support the continuation of business between the Company or the Buyer and each supplier and customer of the Business (including, during such period, giving reasonable written notice as requested by the Buyer); (b) to refer all telephone or other inquiries from customers, suppliers and other persons regarding, relating to or in connection with the Business to the Company or the Buyer promptly (including any Service Level Warranty claims); and (c) to effect the transfer of the Company and the Business.

Section 5.2                      Tax Matters.

(a)      The Seller shall be responsible for and shall pay all Taxes of the Company for all periods and all Taxes that relate to the Company or the Business, or any Taxes for which the Company may be jointly or severally liable as part of any consolidated group prior to the Closing Date, that were incurred in or are attributable to any taxable period (or portion thereof) ending on or before the Closing Date.  The Seller shall prepare and file all Tax Returns for the Company for all periods ending before the Closing Date.  Such Tax Returns will be prepared and filed in accordance with applicable Law and, subject to the foregoing requirement, consistent with the past practice of the Company and, as to matters for which there is not a past practice, shall be prepared utilizing positions that have a realistic possibility of being sustained on their merits, as defined in Treas. Reg. Section 1.6694-2(b).  The Seller shall provide each such Tax Return to the Buyer at least 20 days before the due date of such Tax Return for the Buyer’s review and comment.  The Seller shall pay all Taxes required to be paid by the Company in connection with each such Tax Return, minus the amount of any accruals for such Taxes taken into account in determining the Actual Working Capital (which the Company shall pay), on or before the due date of such payment.

(b)      The Buyer shall cause the Company to prepare and timely file all required Tax Returns for the Tax periods beginning prior to the Closing Date and ending after the Closing Date (“Straddle Tax Periods”).  Such Tax Returns, which shall be provided to the Seller for its review and comment at least 20 days before the due date for filing (or, if required to be filed within 20 days after the Closing Date, as soon as reasonably possible following the Closing), shall be prepared in accordance with applicable Law and, subject to the foregoing requirement, consistent with the past practice of the Company and, as to matters for which there is not a past practice, shall be prepared utilizing positions that have a realistic possibility of being sustained on their merits, as defined in Treas. Reg. Section 1.6694-2(b); provided, that the Buyer shall incorporate the reasonable comments of the Seller consistent with this Agreement with respect thereto.  All Taxes for Straddle Tax Periods based on income, gross receipts or revenue shall be apportioned between the portion of the Straddle Tax Period ending on the day immediately preceding the Closing Date (the “Pre-Closing Portion”) and the portion of the Straddle Tax Period on and after the Closing Date (the “Post-Closing Portion”) as if the Pre-Closing Portion and Post-Closing Portion were separate Tax periods.  All other Taxes for Straddle Tax Periods shall be apportioned between the Pre-Closing Portion and the Post-Closing Portion based on the number of calendar days in each such portion.  Upon the written request of the Company setting forth in detail the computation of any amounts owed by the Seller, the Seller shall pay the Company the amount of all Taxes required to be paid by the Company with respect to the Pre-Closing Portion of each Straddle Tax Period, minus the amount of any accruals for such Taxes taken into account in determining the Actual Working Capital, on or before the due date of such payment.

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(c)      After the Closing Date, each of the Seller and the Buyer shall use commercially reasonable efforts to (and shall cause their respective Affiliates to use commercially reasonable efforts to), at no cost to the other party: (i) assist the other party in preparing any Tax Returns that such other party is responsible for preparing and filing in accordance with this Section 5.2; (ii) reasonably cooperate in preparing for any audits of, or disputes with Tax authorities regarding, any Tax Returns of the Company (provided that the Seller shall have sole control with respect to any audits relating to periods occurring exclusively prior to the Closing Date and the Buyer shall have sole control with respect to any audits relating to periods occurring exclusively on or after the Closing Date); (iii) make available to the other and to any Tax authority as reasonably requested all information, records, and documents relating to Taxes of the Company; (iv) provide timely notice to the other in writing of any pending or threatened Tax audits or assessments of the Company for taxable periods for which the other may have a liability; (v) furnish the other with copies of all correspondence received from any Tax authority in connection with any Tax audit or information request with respect to any such taxable period; (vi) timely sign and deliver such certificates or forms as may be necessary or appropriate to establish an exemption from (or otherwise reduce), or file Tax Returns or other reports with respect to, Taxes described in Section 5.8; and (vii) timely provide to the other powers of attorney or similar authorizations necessary to carry out the purposes of this Section 5.2.  The Buyer agrees to promptly provide the Seller with written notice of any written communication from any Governmental Authority with respect to any audit or Action in respect of Taxes of the Company for any period prior to the Closing Date, and the Seller agrees to promptly provide the Buyer with written notice of any written communication from any Governmental Authority with respect to any audit or Action in respect of Taxes of the Company for any period on or after the Closing Date, in each case providing copies of all such written notifications to the other party.

Section 5.3                  Employees; Benefits.

(a)      Effective as of the Closing, all employees of the Company as of the Closing shall remain employees of the Company (each, a “Hired Employee”); provided, that the Buyer, in its sole and absolute discretion, may terminate the employment of any Hired Employee after the Closing.  The Buyer may also, in its sole and absolute discretion, offer employment with the Buyer to certain of the Hired Employees, terminable at the will of the Buyer.  The Seller, on behalf of itself and all of its Affiliates, hereby consents to the continued employment of any such employees by the Company or the hiring of any such employees by the Buyer, as applicable, and waives any claims or rights that the Seller or any of its Affiliates may have against the Company or the Buyer or any such employee under any non-competition, confidentiality or employment agreement.  For the avoidance of doubt, nothing in this Section 5.3 shall give rise to any right to continuing employment on the part of any such employees, all of whom shall be employees “at will” except to the extent that the Buyer, at its sole option, may choose to enter into, or cause the Company to enter into, a separate contract of employment with any such employee.  Notwithstanding anything in this Agreement to the contrary, from and after the Closing Date, the Buyer will have sole and absolute discretion over the hiring, promotion, retention, termination and other terms and conditions of the employment of the employees of the Company.

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(b)      The Buyer shall, directly or through Affiliates, pay or cause to be paid to each Hired Employee who is involuntarily terminated by the Buyer or its Affiliates without “cause” (as determined by the Buyer in its sole and absolute discretion) during the period beginning on the Closing Date and ending 60 days after the Closing Date, separation payments as determined in the Buyer’s sole and absolute discretion and in accordance with the Buyer’s internal policies; provided, that any such separation payments shall be conditioned upon the execution and delivery by the applicable employee of a waiver and release of all claims he or she may have against the Buyer, the Company and their Affiliates in a form provided by the Buyer.

(c)      The Buyer shall credit each Hired Employee with such Hired Employee’s service with the Company and its ERISA Affiliates for eligibility and vesting purposes under the Buyer’s health and welfare Plans (other than with respect to defined benefit or post-employment benefits, if any).

(d)      The Buyer acknowledges and agrees that the Company, and not the Seller or its Affiliates, shall be responsible for all liabilities relating to the Continuing Plans.

(e)      Coverage and benefits under the Retained Plans shall end for all Hired Employees of the Company as of the Closing Date (or, where required by applicable Law or the terms of the applicable Retained Plan, the last day of the month in which the Closing Date occurs), other than Retained Plans where coverage is extended pursuant to the Transition Services Agreement.  The Seller shall be responsible for and shall pay when due all Retention Bonuses and liabilities (including Taxes) under any Retained Plans.

(f)      The Buyer shall be solely responsible for all obligations under WARN, including, without limitation, advance written notice, back pay and benefits, and payment of any civil penalties, whether incurred by the Seller or awarded under WARN, and costs awarded under WARN, with respect to employees of the Company and triggering events occurring on or after the Closing Date (including any plant closing, mass layoff, termination of employment or similar event).

(g)      The Seller shall provide health care continuation coverage under Section 4980B of the Tax Code and Part 6 of Subtitle B of Title I of ERISA (“COBRA”) to current and former employees of the Company (and their qualified beneficiaries) who are on or eligible to elect COBRA commencing before the Closing Date.  The Buyer shall provide health care continuation coverage under COBRA to current and former employees of the Company (and their qualified beneficiaries) who are eligible to elect COBRA commencing on or after the Closing Date.

(h)      The Seller agrees to continue the medical coverage being provided to Hired Employees as of the Closing Date through December 31, 2015.

(i)      This Section 5.3 is for the benefit of the parties to this Agreement only.  Nothing in this Section 5.3 or elsewhere in this Agreement shall be construed as (a) conferring any legal rights, as a third party beneficiary or otherwise, upon any Hired Employee including continuation of employment by the Company or its Affiliates or the Business, or (b) amending or establishing, requiring Buyer to implement, or limiting the rights of Buyer to amend or discontinue, any fringe benefit plan, program or practice or any other employee benefit plan of any nature whatsoever.

Section 5.4                      [Reserved].

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Section 5.5                      Release by the Seller.

Effective upon the Closing, the Seller, for itself and its Affiliates and their respective successors and assigns, hereby fully and unconditionally releases and forever discharges and holds harmless the Company and its directors, officers, employees, agents, Affiliates, successors and assigns from any and all claims, demands, losses, costs, expenses (including reasonable attorneys’ fees and expenses),  liabilities or damages of every kind and nature whatsoever, whether now existing, known or unknown, which arises relating to events that occurred from the beginning of time through the Closing relating exclusively to the Company or the Business, that the Seller or any of its Affiliates may now have or may hereafter claim to have against the Company or any of such directors, officers, employees, agents, Affiliates, successors or assigns, other than those demands, losses, costs, expenses (including reasonable attorneys’ fees and expenses),  liabilities or damages arising from or relating to this Agreement, any of the instruments or documents executed and delivered in connection herewith or any of the transactions contemplated hereby or thereby .

Section 5.6                      Assistance with Permits and Filings.

The Seller shall furnish the Buyer with all information concerning the Seller and the Company that is reasonably required for inclusion in any application or filing made by the Buyer to any Governmental Authority in connection with the transactions contemplated by this Agreement.  The Seller will, at the Buyer’s cost and expense, use commercially reasonable efforts to assist the Buyer in obtaining any Permits, or any consents to assignment related thereto, that the Buyer will require in connection with the continued operation of the Company after the Closing.

Section 5.7                      Public Disclosure.

Except for a press release jointly approved by the Buyer and the Seller at, prior to or after the Closing, or as required by applicable Law or requested by any Governmental Authority, none of the parties hereto shall make any disclosure or permit any of their respective Affiliates to make any disclosure (whether or not in response to an inquiry) of the subject matter of this Agreement unless previously approved by the Buyer and the Seller in writing, which approval shall not be unreasonably withheld or delayed.  Each party, on its own behalf and on behalf of its controlled Affiliates, covenants that, for a period of two years following the Closing Date, neither it nor its controlled Affiliates will knowingly make any public statements with the intent of disparaging the other party or their respective Affiliates, employees, or businesses.  Notwithstanding the foregoing, nothing in this Agreement shall preclude either party or any of its controlled Affiliates from making any true statements in connection with the exercise or enforcement of its rights under this Agreement or any other Company Agreement.  The foregoing shall not prohibit the Buyer or any of its Affiliates, following the Closing, from disclosing the change in ownership of the Company resulting from the consummation of the transactions contemplated pursuant to this Agreement.

Section 5.8                      Expenses and Fees.

The Buyer shall pay and be solely responsible for all of the fees, expenses and disbursements of the Buyer and its agents, representatives, brokers, finders, financial advisors, accountants and counsel incurred in connection with this Agreement and the transactions contemplated hereby, including negotiation, legal, travel and due diligence expenses.  The Seller shall pay at or prior to Closing and be solely responsible for all of the fees, expenses and disbursements of the Seller and the Company and their respective agents, representatives, brokers, finders, financial advisors, accountants and counsel incurred in connection with this Agreement and the transactions contemplated hereby, including negotiation, legal, travel and due diligence expenses, and including any transfer Taxes (including sales and use Taxes) associated with the transfer of the Business to the Buyer, if any (collectively, the “Transaction Costs”).

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Section 5.9                      Limitations on Assignability; Payments.

(a)      If a Third Party Consent has not been obtained as of the Closing, the Seller shall reasonably cooperate with the Buyer and the Company to obtain such Third Party Consent following the Closing.  Without limiting the foregoing, and whether or not required by the foregoing, the Seller shall promptly submit to the Company any claims under insurance policies covering the Company or the Business.

(b)      To the extent any such amount is not or will not be included in the adjustment provided by Section 1.3, the Seller shall promptly pay to the Buyer all monies received by the Seller or any of its Affiliates following the Closing with respect to the Business or the Company or any of the Company’s assets, including any claim, right or benefit arising thereunder included in the Business or the Company’s assets.

Section 5.10                    Business Names.

The Seller acknowledges and agrees that the Company is the sole owner of the Business Names, and upon the Closing, the Business Names and all goodwill associated therewith shall remain the exclusive property of the Company.  Notwithstanding anything to the contrary set forth herein, except as provided in this Section 5.10 and except for purposes of complying with Section 5.11, the Buyer does not grant the Seller or any of its Affiliates a license to use, and neither the Seller nor any of its Affiliates shall have any right, title or interest in or to, any Business Name following the Closing.  From and after the Closing, except pursuant to any arms’ length written Contract between the Buyer or any of its Affiliates and the Seller or any of its Affiliates, neither Seller nor any of its Affiliates shall directly or indirectly, use, or license others to use, the Business Names as a trademark, service mark, trade dress, logo, slogan, trade name, corporate name or otherwise; provided, that the Seller and its Affiliates shall not be required to remove all references to any of the Business Names from its historical information and archived web sites; provided further, that the Seller and its Affiliates shall remove all references to any of the Business Names (including, without limitation, with respect to Cofactor being a joint offering of ShopLocal and Point Roll) from their websites and promotional and similar materials as soon as reasonably practicable after the Closing, and in no event later than 30 days after the Closing Date.

Section 5.11                    Preferred Provider.

(a)      From the Closing Date until the first anniversary of the Closing Date, so long as the Seller continues to operate the Cofactor brand (or any replacement brand for similar services), the Seller shall use commercially reasonable efforts to cause ShopLocal and any other Affiliate of the Seller providing goods or services using the Cofactor brand (or any replacement brand for similar services) (each, a “Cofactor Affiliate”) to promote the Buyer or its Affiliates, as applicable, as its preferred provider for all Point Roll Services in respect of any products or services marketed through the Cofactor brand (or any replacement brand for similar services) (“Cofactor Services”), in the manner set forth in this Section 5.11.  As soon as reasonably practicable after the Closing, the Buyer shall deliver to the Seller its rate card for the Point Roll Services, which rate card may be updated by the Buyer from time to time on no less than 10 days’ prior written notice.  To the extent a Cofactor Service would require Point Roll Services to achieve the customer’s desired functionality, the applicable Cofactor Affiliate shall use commercially reasonable efforts to make available to such customer the Buyer’s rate card for such Point Roll Services; provided, that such rate card need not be made available to the extent such customer already utilizes the Buyer or its Affiliates or another service provider for such Point Roll Services.  In connection with the foregoing, the applicable Cofactor Affiliate’s representatives shall use commercially reasonable efforts to state that the Buyer or its Affiliate, as applicable, is such Cofactor Affiliate’s preferred third-party provider for the applicable Point Roll Services; provided, that such statement need not be made if the applicable Point Roll Services do not meet service levels that are generally consistent with the service levels provided by Point Roll prior to the Closing.  Each Cofactor Affiliate shall further be permitted to bill the applicable Point Roll Services to its customers at the rates set forth on the Buyer’s rate card, and shall remit such billed amounts to the Buyer on no less than a monthly basis.   For purposes of this Section 5.11, “Point Roll Services” means any products and services offered by the Company during the 12 months immediately preceding the Closing; provided, that if the Buyer transitions any such products or services to another Affiliate of the Buyer, then such products and services shall remain Point Roll Services hereunder.

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(b)      The Seller hereby grants the Buyer a 30-day, limited, non-exclusive, non-sublicensable, royalty-free right and license to use the name “Cofactor” solely in the manner currently used by the Company and to inform its customers that the Cofactor brand is no longer being utilized by the Company; provided, that the Buyer shall not use such name in connection with the marketing of any products or services, including any Point Roll Services.  The Buyer shall cause the Company to remove all references to Cofactor (including, without limitation, with respect to Cofactor being a joint offering of ShopLocal and Point Roll) from its website and promotional and similar materials as soon as reasonably practicable after the Closing, and in no event later than 30 days after the Closing Date.  Notwithstanding the foregoing, during the preferred provider period under Section 5.11(a), the Buyer shall be permitted to promote its status as a preferred provider to the Cofactor Affiliates on the Buyer’s website and in its promotional and similar materials with the Seller’s prior written consent.

(c)      As soon as reasonably practicable after the Closing, and in no event later than 30 days after the Closing Date, the Seller shall update the “Partners” page on the “www.cofactordigital.com” website (or any successor website thereto) to include the Buyer’s logo in a manner no less prominent than the Seller’s other listed partners and designate the Buyer as a preferred provider, with such designation to remain in place until the first anniversary of the Closing Date unless the Seller reasonably determines that the statement of such designation would be damaging to the Seller.

ARTICLE VI

INDEMNIFICATION

Section 6.1                      General Indemnification by the Seller.

Subject to the limitations of Section 6.3, the Seller covenants and agrees to indemnify, defend, protect and hold harmless the Buyer and each of its Affiliates, and each of their respective stockholders, directors, managers, members, control persons, officers, employees, representatives, successors and assigns (collectively, the “Buyer Indemnified Parties”) from, against and in respect of all Losses suffered, sustained, incurred or paid by any Buyer Indemnified Party in connection with, resulting from or arising out of, directly or indirectly:

(a)      any misrepresentation, breach or inaccuracy of any representation or warranty of the Seller set forth in this Agreement or any Transaction Document delivered by or on behalf of the Seller in connection herewith;

(b)      any nonfulfillment or breach of any covenant or agreement on the part of the Seller set forth in this Agreement or any Transaction Document delivered by or on behalf of the Seller in connection herewith;

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(c)      any liability arising from any Action or other third party claims relating to or arising from the activities and operations of the Company or the Business with respect to any period (or portion thereof) occurring prior to the Closing Date, including, without limitation, those matters set forth (or that should have been set forth) on Schedule 3.15; and

(d)      any claim for brokers’ or finders’ fees or agents’ commissions arising from or through the Company, the Seller or any of their respective Affiliates in connection with the negotiation or consummation of the transactions contemplated by this Agreement.

Section 6.2                      General Indemnification by the Buyer.

Subject to the limitations of Section 6.3, the Buyer covenants and agrees to indemnify, defend, protect and hold harmless the Seller and each of its Affiliates, and each of their respective stockholders, directors, managers, members, control persons, officers, employees, representatives, successors and assigns (collectively, the “Seller Indemnified Parties”) from and against and in respect of all Losses suffered, sustained, incurred or paid by any Seller Indemnified Party in connection with, resulting from or arising out of, directly or indirectly:

(a)      any misrepresentation, inaccuracy or breach of any representation or warranty of the Buyer set forth in this Agreement or any Transaction Document delivered by or on behalf of the Buyer in connection herewith;

(b)      any nonfulfillment or breach of any covenant or agreement on the part of the Buyer set forth in this Agreement or any Transaction Document delivered by or on behalf of the Buyer in connection herewith; and

(c)      any claim for brokers’ or finders’ fees or agents’ commissions arising from or through the Buyer or any of its Affiliates in connection with the negotiation or consummation of the transactions contemplated by this Agreement.

Section 6.3                      Limitation of Indemnification Obligations.

(a)      Notwithstanding anything to the contrary contained in this Agreement, the Buyer and the Seller acknowledge that, except for claims involving fraud or breach of the Seller Fundamental Representations (for which the indemnification obligations of the Seller under Section 6.1(a) shall be unlimited), the Seller shall not be liable for any indemnification obligations pursuant to Section 6.1(a) in excess of the Liability Cap, and shall not be required to pay for any indemnification obligations pursuant to Section 6.1(a) outside of the Indemnification Holdback Amount.

(b)      Notwithstanding anything to the contrary contained in this Agreement, the Buyer and the Seller acknowledge that, except for claims involving fraud or breach of the Buyer Fundamental Representations (for which the indemnification obligations of the Buyer under Section 6.2(a) shall be unlimited), the Buyer shall not be liable for any indemnification obligations pursuant to Section 6.2(a) in excess of the Liability Cap.

(c)      No Buyer Indemnified Party or Seller Indemnified Party shall be entitled to indemnification under Section 6.1(a) or Section 6.2(a) with respect to any Losses until the aggregate amount of such Losses exceeds $150,000 (the “Basket”); provided, that to the extent indemnifiable Losses hereunder exceed the Basket, then all such Losses shall be indemnifiable hereunder; provided, further, that the Basket shall not apply to breaches of Section 3.1  (Organization), Section 3.2 (Authorization; Validity), Section 3.3 (Capitalization), Section 3.4 (No Subsidiaries), Section 3.6 (Title to the Shares), Section 3.7 (Title to Assets), Section 3.22 (Taxes) or Section 3.29 (Brokers) (collectively, the “Seller Fundamental Representations”) or of Section 4.1 (Organization), Section 4.2 (Authorization; Validity), or Section 4.5 (Brokers) (collectively, the “Buyer Fundamental Representations”).

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(d)      No party shall be liable under this Article VI for any (i) Losses relating to any matter to the extent that there is included in the calculation of Working Capital a specific liability or reserve relating to such matter, but only to the extent of such reserve, or (ii) Losses in respect of punitive or exemplary damages (other than Losses in respect of punitive or exemplary damages payable to a third party in connection with a Third Party Claim).

(e)      Notwithstanding anything to the contrary in this Agreement, the right of any party hereto to indemnification, payment of Losses or other remedies at any time will not be affected in any way by any investigation conducted or knowledge (whether actual, constructive or imputed) acquired at any time by such party with respect to the accuracy or inaccuracy of or compliance with or performance of any representation, warranty, covenant, agreement or obligation or by the waiver of any condition.

(f)      Notwithstanding anything to the contrary herein, solely for purposes of calculating indemnifiable Losses under Section 6.1 and Section 6.2, each representation, warranty, covenant and agreement (whether made herein or in any other document, agreement or instrument delivered in connection herewith or therewith), other than the representations and warranties of the Seller set forth in Sections 3.11, 3.12, 3.17(a), 3.18(a), 3.24(a), 3.24(d), 3.25(a) and 3.32, shall be deemed to be made without any qualification or limitation as to materiality (including any qualification or limitation made by reference to a Material Adverse Effect) and, without limiting the foregoing, the words “material” and “Material Adverse Effect” and words of similar import (but not the term “Material Contract”) shall be deemed deleted from any such representation, warranty, covenant or agreement.

(g)      Notwithstanding anything to the contrary set forth herein, the Buyer shall have no obligations under Section 6.2 with respect to any matter for which any Buyer Indemnified Party is entitled to indemnification under Section 6.1 (without giving effect to any limitations, including with respect to time, survival periods or knowledge or materiality qualifiers).

(h)      If any fact, circumstance or event gives rise to a claim pursuant to multiple sections or provisions of this Agreement or any Transaction Document delivered in connection herewith, the party asserting such claim shall have the right, at its sole discretion, to assert its claim pursuant to any or all such sections or provisions, and shall be entitled to each and every remedy available pursuant to each and every section or provision pursuant to which such party elects, at its sole discretion, to assert such claim; provided that any liability for indemnification under this Agreement shall be determined without duplication of recovery.

(i)      Notwithstanding anything herein to the contrary, any claims involving fraud shall not be subject to the limitations under this Section 6.3.

Section 6.4                      Survival and Expiration of Representations, Warranties and Covenants.

(a)      The representations and warranties of the Buyer (whether set forth in this Agreement or any Transaction Document delivered by or on behalf of the Buyer in connection herewith) shall survive the Closing and shall expire on the later of the applicable dates specified in clause (i) or (ii) of this Section 6.4(a):

(i)           (A)      except as to Buyer Fundamental Representations, the Indemnification Retention Date;

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(B)      with respect to the Buyer Fundamental Representations, on the date that is (x) 90 days after the expiration of the longest federal, state, local or foreign statute of limitations (including extensions thereof) applicable to the underlying claim or (y) if there is no applicable statute of limitations, the seventh anniversary of the Closing Date; and

(ii)           with respect to any Claim properly made and not finally resolved, the final resolution of such Claim.

(b)      The representations and warranties of the Seller (whether set forth in this Agreement or any Transaction Document delivered by or on behalf of the Seller in connection herewith) shall survive the Closing and shall expire on the later of the applicable dates specified in clause (i) or (ii) of this Section 6.4(b):

(i)          (A)       except as to Seller Fundamental Representations, the Indemnification Retention Date;

(B)      with respect to the Seller Fundamental Representations, on the date that is (x) 90 days after the expiration of the longest federal, state, local or foreign statute of limitations (including extensions thereof) applicable to the underlying claim or (y) if there is no applicable statute of limitations, the seventh anniversary of the Closing Date; and

(ii)           with respect to any Claim properly made and not finally resolved, the final resolution of such Claim.

(c)      All covenants and agreements of the parties (whether set forth in this Agreement or any Transaction Document delivered in connection herewith, and including the obligations set forth in Section 6.1 and Section 6.2) shall survive the Closing, continue in effect and expire only in accordance with their respective terms.

Section 6.5                      Indemnification Procedures.

All claims for indemnification under this Article VI (“Claims”) shall be asserted and resolved as follows:

(a)      In the event that any Person entitled to indemnification hereunder (the “Indemnified Party”) has a Claim against any party obligated to provide indemnification pursuant to Section 6.1 or Section 6.2, as applicable (the “Indemnifying Party”), or any Claim for which the Indemnifying Party would be liable to an Indemnified Party hereunder has been asserted against an Indemnified Party by a third party (a “Third Party Claim”), the Indemnified Party shall with reasonable promptness notify the Indemnifying Party in writing of such Third Party Claim, specifying the nature of such Third Party Claim and the amount or the estimated amount thereof to the extent then feasible (which estimate shall not be conclusive of the final amount of such Third Party Claim) (the “Claim Notice”). The Indemnified Party’s failure to give reasonably prompt written notice as required by this Section 6.5 of any Third Party Claim that may give rise to a right of indemnification hereunder shall not relieve the Indemnifying Party of any liability that the Indemnifying Party may have to the Indemnified Party, except to the extent the failure to give such notice materially and adversely affects the ability of any Indemnifying Party to defend against such Third Party Claim.

(b)      If an Indemnified Party asserts a Claim (other than a Claim asserted pursuant to Section 6.5(e), except as provided therein) that does not involve a Third Party Claim and the Indemnifying Party does not notify the Indemnified Party in writing within 30 days after delivery of the Claim Notice (the “Notice Period”) that the Indemnifying Party disputes such Claim, the amount of such Claim shall be conclusively deemed a liability of the Indemnifying Party hereunder.  If the Indemnifying Party makes an objection in writing, the Indemnified Party and Indemnifying Party shall attempt in good faith for 30 days to agree upon the rights of the respective parties with respect to such Claim.  If the Indemnified Party and Indemnifying Party should so agree, a memorandum setting forth such agreement shall be prepared and signed by both parties and such Claim shall be deemed to be finally resolved hereunder.  If such parties shall not agree, each Indemnified Party shall be entitled to initiate proceedings and seek remedies as may be permitted under the terms of this Agreement and applicable Law, in which case such Claim shall be deemed finally resolved hereunder upon (i) the agreement of the parties or (ii) a final judgment of a court of competent jurisdiction with respect to such Claim.

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(c)      If any Indemnified Party asserts a Claim involving a Third Party Claim, the Indemnifying Party shall have the ability to assume the defense of such Third Party Claim so long as: (i) the Indemnifying Party notifies the Indemnified Party within the Notice Period that the Indemnifying Party does not dispute the Indemnifying Party’s obligation to indemnify hereunder and desires to defend the Indemnified Party against such Third Party Claim, (ii) the Indemnifying Party defends against such Third Party Claim by appropriate proceedings at its sole cost and expense with legal counsel reasonably acceptable to the Indemnified Party; (iii) the amount of Losses for which the Indemnified Party is potentially indemnifiable under this Article VI (as determined by the Indemnifying Party in its reasonable discretion) in connection with such Claim exceeds the amount of Losses sought in such Third Party Claim or would reasonably be expected to exceed the expected amount of such Losses; and (iv) the Third Party Claim does not (A) involve criminal liability, (B) involve any Governmental Authority as a plaintiff, or (C) involve issues that raise an actual conflict of interest between the Indemnifying Party and the Indemnified Party or for which the Indemnified Party may have different or additional defenses available to it; provided that unless the Indemnified Party otherwise agrees in writing, the Indemnifying Party may not settle any matter unless such settlement (x) includes a complete and unconditional release of the Indemnified Party in respect of the Third Party Claim, (y) involves no admission of wrongdoing by the Indemnified Party or its Affiliates, and (z) excludes any injunctive or non-monetary relief applicable to the Indemnified Party or its Affiliates.  If the Indemnified Party desires to participate in, but not control, any such defense or settlement, the Indemnified Party may do so at its sole cost and expense.  If the Indemnifying Party does not assume the defense of such Third Party Claim, the Indemnifying Party shall still have the right to participate in the defense of such claim at its sole cost and expense.  If the Indemnifying Party notifies the Indemnified Party of such participation, the Indemnified Party shall enter into a reasonable joint defense agreement with the Indemnifying Party and shall provide the Indemnifying Party with such information and materials relating to such Third Party Claim as the Indemnifying Party shall reasonably request.  The Indemnified Party may, with the Indemnifying Party’s prior written consent (which shall not be unreasonably withheld or delayed) during the Notice Period to file any motion, answer or other pleading and to take any other action that the Indemnified Party shall deem necessary or appropriate to protect the Indemnified Party’s interests.

(d)      If (i) the Indemnifying Party elects not to defend the Indemnified Party against such Third Party Claim, whether by failure of the Indemnifying Party to give the Indemnified Party timely notice as provided above or otherwise or (ii) the terms of this Agreement do not permit the Indemnifying Party to defend the Indemnified Party against such Third Party Claim, then the Indemnified Party, without waiving any rights against the Indemnifying Party, may settle or defend against any such Third Party Claim in the Indemnified Party’s sole discretion and the Indemnified Party shall be entitled to recover from the Indemnifying Party the amount of any settlement or judgment and, on an ongoing basis, all Losses of the Indemnified Party with respect thereto, including interest from the date such Losses were incurred.  All reasonable costs and expenses incurred by the Indemnified Party in so defending a Third Party Claim shall constitute Losses.  If the Indemnified Party defends itself against a Third Party Claim and the Indemnifying Party desires to participate in, but not control, the defense or settlement of the Third Party Claim, the Indemnifying Party may do so at its sole cost and expense.

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(e)      Notwithstanding anything to the contrary herein, an Indemnified Party may make a claim hereunder even where the Indemnified Party has not yet suffered Losses or where the full amount of any Losses is not yet known, provided (i) the Claim Notice sets forth the specific basis for any such claim, (ii) the Claim Notice includes an estimate of such potential Losses as reasonably determined by the Indemnified Party and the amount of such Claim is not in excess of such reasonable estimate, and (iii) the Indemnified Party provides the Indemnifying Party with all such information and documentation reasonably necessary for the Indemnifying Party to verify such estimate.  Once any Losses have been suffered by the Indemnified Party, the Indemnified Party shall promptly provide an updated Claim Notice to the Indemnifying Party and such Claim Notice shall become subject to the dispute procedures set forth in Section 6.5(b).

Section 6.6                      Indemnity Payments.

Any payment pursuant to a claim for indemnification under this Article VI shall be made by wire transfer or delivery of other immediately available funds to an account designated by the Indemnified Party no later than 30 days after (i) receipt by the Indemnifying Party of written notice from the Indemnified Party setting forth its wire instructions and (ii) such claim has been finally resolved as determined in accordance with this Agreement.  If any disputed claim (other than a Third Party Claim) is resolved by litigation after the rendering of a judgment or order from a court of competent jurisdiction, the non-prevailing party in such dispute shall promptly reimburse the prevailing party for any and all reasonable out-of-pocket costs and expenses (including all reasonable attorneys’ fees) incurred as a result of such litigation, in addition to any other costs or expenses such party may be obligated to pay pursuant the terms of this Agreement.  Notwithstanding anything to the contrary contained herein, with respect to any payment required under this Article VI to be made to a Buyer Indemnified Party by the Seller, the Buyer shall be required to apply the Indemnification Holdback Amount against such payment and, except with respect to the Seller Fundamental Representations or as provided in Section 6.3(i), shall have no other recourse against Seller and covenants not to sue Seller with respect to any such other amounts.

Section 6.7                      Treatment of Indemnity Payments.

Any payments made to an Indemnified Party pursuant to this Article VI shall be treated as an adjustment to the Purchase Price for tax purposes.

Section 6.8                      Insurance Offset.

If the Indemnified Party receives insurance proceeds or indemnity or contribution payments prior to being indemnified under this Article VI, the payment by an Indemnifying Party under this Article VI with respect to such Losses shall be reduced by the net amount of such insurance proceeds or indemnity or contribution payments paid to the Indemnified Party to the extent related to such Losses, less reasonable attorney’s fees and other expenses incurred in connection with such recovery.  If the Indemnified Party receives such insurance proceeds or indemnity or contribution payments after being indemnified by an Indemnifying Party with respect to such Losses, the Indemnified Party shall pay to the Indemnifying Party the net amount of such insurance proceeds or indemnity or contribution payments to the extent related to such Losses, less reasonable attorney’s fees and other expenses incurred in connection with such recovery.

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Section 6.9                      Remedies Exclusive.

Notwithstanding anything to the contrary contained in this Agreement, the Buyer and the Seller acknowledge that, except for (a) claims involving fraud, (b) equitable remedies under the provisions of Article VII, (c) claims for payments under Article I, and (d) specific performance of a breach of Section 5.2 (Tax Matters), the remedies provided in this Article VI shall be the exclusive remedies of the Indemnified Parties after the Closing in connection with any breach by an Indemnifying Party of a representation or warranty and non-performance, partial or total, of any covenant or agreement contained in this Agreement or any Transaction Document delivered by or on behalf of any party in connection herewith.

ARTICLE VII

NON-COMPETITION AND CONFIDENTIALITY

Section 7.1                      Prohibited Activities.

As further consideration for the purchase of the Shares and the other transactions contemplated by this Agreement and as inducement for the Buyer to enter into this Agreement, the Seller covenants and agrees with the Buyer that, for a period of two years following the Closing Date, the Seller shall not, and shall cause its controlled Affiliates not to, for any reason whatsoever, directly or indirectly (in any capacity, including as an officer, director, manager, trustee, stockholder, beneficiary, owner, partner, member, joint venturer, investor, employee, independent contractor, agent, consultant, adviser, sales representative of any other Person or otherwise), for the Seller or on behalf of or in conjunction with any other Person, anywhere in the world where the Business is conducted as of the date of this Agreement (the “Territory”):

(a)      engage in, participate with or have any direct or indirect financial interest in any business that competes with the Business (a “Competitive Business”); provided, that nothing in this Section 7.1(a) will prohibit Seller and its Affiliates from (i) owning securities having no more than five percent of the outstanding voting power of any entity having such securities actively traded on a national securities exchange, (ii) providing content, media or other related services to a Competitive Business so long as the provision thereof does not in and of itself constitute a Competitive Business, (iii) owning, managing or controlling any Competitive Business that Seller or its Affiliates may directly or indirectly acquire as part of a larger acquisition transaction, provided that the operations of the Competitive Business, in the aggregate, represent no more than ten percent (10%) of the total revenues of all properties acquired in such acquisition transaction, and (d) offering any of the products and services, or participating in the business relationships with any of the Persons, in each case as set forth on Schedule 7.1(a);

(b)      employ or hire away any Person who is, at that time, or who has been within one year prior to that time, within the Territory, an employee of the Business or of the Company, other than (i) the hiring of any Person who responds to any general solicitation or advertisement placed by Buyer or its Affiliates (including through the use of any executive recruiter or employment agency) not directed towards employees of the Business; or (ii) the hiring of any Person who was terminated by the Company and is no longer an employee of the Buyer or its Affiliates as long as such hiring occurs after the termination date specified in the termination notice delivered by the Company to such Person;

(c)      solicit or intentionally influence any employee, contractor, subcontractor, consultant, sales representative or vendor of the Business (each, a “Restricted Person”) for the purpose or with the intent of enticing such Restricted Person away from the Business, other than the solicitation of any Person who responds to any general solicitation or advertisement placed by Buyer or its Affiliates (including through the use of any executive recruiter or employment agency) not directed towards Restricted Persons of the Business; or

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(d)      solicit or intentionally influence any Person who is, at that time, or that has been within two years prior to that time, a customer of the Business or of the Company within the Territory for the purpose or with the intent of soliciting or selling, or in a manner reasonably likely to result in the sale of, products or services in direct or indirect competition with the Business or the Company within the Territory.

Section 7.2                      Confidentiality.

The Seller recognizes that by reason of the Seller’s ownership of the Company before the Closing Date and information provided by the Buyer to the Seller in connection with the transactions contemplated hereby, the Seller has acquired and will acquire Confidential Information, the use or disclosure of which could cause the Company or the Buyer or its Affiliates substantial loss and damages that could not be readily calculated and for which no remedy at law would be adequate.  Accordingly, the Seller covenants and agrees with the Buyer that it will not at any time, except in performance of its obligations to the Buyer, directly or indirectly, use, disclose or publish, or permit any other Person (including any Affiliate of the Seller) to disclose or publish, any Confidential Information, or use any such information in a manner detrimental to the interests of the Company or the Buyer or any of its Affiliates, unless (i) such information becomes generally known to the public through no fault of the Seller, (ii) the disclosing party is advised in writing by counsel that disclosure is required by Law or the order of any Governmental Authority of competent jurisdiction under color of Law, or (iii) the disclosing party reasonably believes that such disclosure is required in connection with the defense of a lawsuit against the disclosing party; provided, however, that prior to disclosing any information pursuant to clause (i), (ii) or (iii) above, such Person shall give prior written notice thereof to the Buyer and provide the Buyer with the opportunity to contest such disclosure and shall cooperate with efforts to prevent or limit such disclosure; provided, further, that the Seller may use Confidential Information for purposes of preparing its tax returns, as required by applicable Law, in order to exercise its rights and perform its obligations under this Agreement and the Transition Services Agreement and for purposes of evidencing its compliance with this Agreement and its other confidentiality obligations to the Buyer.

Section 7.3                      Reasonable Restraint.

The parties agree that the covenants in this Article VII impose a reasonable restraint on the Seller in light of the activities and business of the Company and the Business and the Buyer and its Affiliates on the date of the execution of this Agreement and the current plans of the Business and the Company and the Buyer and its Affiliates, but it is also the intent of the parties that such covenants be construed and enforced in accordance with the changing activities and business of the Business and the Company and the Buyer and its Affiliates throughout the term of such covenants.

Section 7.4                      Severability; Reformation.

The covenants in this Article VII are severable and separate, and the unenforceability of any specific covenant shall not affect the provisions of any other covenant.  Moreover, in the event any court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth are unreasonable, then it is the intention of the parties that such restrictions be enforced to the fullest extent that the court deems reasonable and the Agreement shall thereby be reformed.

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Section 7.5                      Specific Performance.

Each party hereto acknowledges that the other parties will be irreparably harmed and that there will be no adequate remedy at law for any violation by any party of any of the covenants or agreements set forth in this Article VII.  It is accordingly agreed that, in addition to any other remedies which may be available upon the breach of any such covenants or agreements, each party hereto shall have the rights set forth in Section 8.4 with respect to such covenants and agreements.

Section 7.6                      Independent Covenant.

Each of the covenants in this Article VII shall be construed as an agreement independent of any other provision in this Agreement, and the existence of any claim or cause of action of the Seller against the Buyer, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Buyer of such covenants.  The parties expressly acknowledge that the terms and conditions of this Article VII are independent of the terms and conditions of any other agreements, including any employment agreements entered into in connection with this Agreement.  It is specifically agreed that the periods set forth in this Article VII during which the agreements and covenants made in this Article VII shall be effective, shall be computed by excluding from such computation any time during which the Person bound by such agreement or covenant is found by a court of competent jurisdiction to have been in violation of any provision of this Article VII.  The covenants contained in this Article VII shall not be affected by any breach of any other provision hereof by any party hereto.

Section 7.7                      Materiality.

Each of the parties hereto hereby agrees that the covenants set forth in this Article VII are a material and substantial part of the transactions contemplated by this Agreement, supported by adequate consideration.

ARTICLE VIII

GENERAL

Section 8.1                      Successors and Assigns.

This Agreement and the rights of the parties hereunder may not be assigned without the prior written consent of the other parties hereto (except by operation of Law) and shall be binding upon and shall inure to the benefit of the parties hereto, and their respective successors, heirs and legal representatives; provided, however, that notwithstanding the foregoing, either party may assign any or all of its rights, obligations or liabilities hereunder to any of its Affiliates or in connection with a sale, merger or other transaction involving a transfer of substantially all of its assets.  Any attempted assignment in violation of the provisions hereof shall be null and void and have no effect.

Section 8.2                      Entire Agreement.

This Agreement (which includes the Schedules and Exhibits hereto) and all other agreements contemplated hereby set forth the entire understanding of the parties hereto with respect to the transactions contemplated hereby.  Any and all previous agreements and understandings between or among the parties regarding the subject matter hereof, whether written or oral, are superseded by this Agreement.  Each of the schedules (the “Schedules”) and exhibits (the “Exhibits”) to this Agreement is incorporated herein by this reference and expressly made a part hereof.  The obligations contained in Paragraph 10 of the Letter Agreement from the Buyer, agreed and accepted by the Seller, dated as of October 9, 2015, insofar as it covers confidential information relating exclusively or primarily to the Business, shall terminate effective as of the Closing, but shall remain in effect insofar as it covers other information disclosed thereunder.

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Section 8.3                      Counterparts.

This Agreement may be executed in multiple counterparts (including by electronic means such as facsimile or portable document format (.pdf)) and any party hereto may execute any such counterpart, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute one and the same instrument.  Signatures hereto transmitted by electronic means such as facsimile or portable document format (.pdf) shall be effective as original signatures.

Section 8.4                      Specific Performance; Remedies.

Each party hereto acknowledges that the other parties will be irreparably harmed and that there will be no adequate remedy at law for any violation by any party of any of the covenants or agreements contained in this Agreement, including without limitation the provisions set forth in Article VII.  It is accordingly agreed that, in addition to any other remedies that may be available upon the breach of any such covenants or agreements, each party hereto shall have the right to injunctive relief to restrain a breach or threatened breach of, or otherwise to obtain specific performance of, the other parties’ covenants and agreements contained in this Agreement, in any court of the United States or any state thereof having jurisdiction over the parties and the matter, in addition to any other remedy to which it may be entitled, at law or in equity.

Section 8.5                      Notices.

Any notice, request, claim, demand, waiver, consent, approval or other communication that is required or permitted hereunder shall be in writing and shall be deemed given if delivered personally or sent by facsimile (with confirmation of receipt), by electronic mail, by registered or certified mail, postage prepaid, or by nationally recognized overnight courier service, as follows:

If to the Buyer or the Parent, to:

Sizmek Technologies, Inc.

500 West 5th Street, Suite 900

Austin, Texas 78701

Attention:  Kenneth J. Saunders

Email:  ken.saunders@sizmek.com

with a copy (which shall not constitute notice) to:

Sizmek Technologies, Inc.

500 West 5th Street, Suite 900

Austin, Texas 78701

Attention:  Legal Department

Email:  legal-szmk@sizmek.com

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with another copy (which shall not constitute notice) to:

Latham & Watkins LLP

555 Eleventh Street, NW, Suite 1000

Washington, DC 20004

Attention:  William O’Neill

Email:  william.o’neill@lw.com

Telephone No.:   (202) 637-2275

Facsimile No.:     (202) 637-2201

If to the Seller, to:

TEGNA Inc.

7950 Jones Branch Dr.

McLean, VA 22107

Attention:  Tom Cox

Email:  tcox@tegna.com

With a copy (which shall not constitute notice) to:

TEGNA Inc.

7950 Jones Branch Drive

McLean, VA 22107

Attention:  Chief Legal Officer

Email:  tmayman@tegna.com

with a copy (which shall not constitute notice) to:

Nixon Peabody LLP

799 9th St NW, Suite 500

Washington, D.C. 20001

Attention:  John C. Partigan, Esq.

Email:  jpartigan@nixonpeabody.com

or to such other address as the Person to whom notice is to be given may have specified in a notice duly given to the sender as provided herein.  Such notice, request, claim, demand, waiver, consent, approval or other communication shall be deemed to have been given (a) if delivered personally, as of the date so delivered, (b) one business day after it is sent for next business day delivery via a reputable nationwide overnight courier service, (c) four business days after it is sent by prepaid registered or certified mail, or (d) only when actually received by the addressees if given by any other means.

Section 8.6                      Governing Law; Consent to Jurisdiction and Waiver of Trial by Jury.

(a)                 This Agreement, and all claims or causes of action (whether in contract, tort or otherwise) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), shall be governed by and construed in accordance with the internal laws, and not the laws governing conflicts of laws (other than Sections 5-1401 and 5-1402 of the New York General Obligations Laws) of the State of New York.

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(b)                 Each of the parties hereto agrees that any dispute, controversy or claim arising out of or relating to this Agreement or the transactions contemplated hereby shall be resolved only in the Courts of the State of New York sitting in the County of New York or the United States District Court for the Southern District of New York and the appellate courts having jurisdiction of appeals in such courts.  In that context, and without limiting the generality of the foregoing, each of the parties hereto by this Agreement irrevocably and unconditionally:

(i)           submits for itself and its property in any action or proceeding relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the exclusive jurisdiction of the Courts of the State of New York sitting in the County of New York, the United States District Court for the Southern District of New York, and appellate courts having jurisdiction of appeals from any of the foregoing, and agrees that all claims in respect of any such Action shall be heard and determined in such New York state court or, to the extent permitted by Law, in such federal court;

(ii)          consents that any such Action may and shall be brought in such courts and waives any objection that it may now or hereafter have to the venue or jurisdiction of any such Action in any such court or that such Action was brought in an inconvenient court and agrees not to plead or claim the same;

(iii)         agrees not to bring any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in any other court;

(iv)         agrees that service of process in any such Action may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address as provided in Section 8.5; and

(v)         agrees that nothing in this Agreement, or any document delivered pursuant hereto shall affect the right to effect service of process in any other manner permitted by the Laws of the State of New York.

(c)           EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE RELATED DOCUMENTS OR ANY OTHER TRANSACTION AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.  EACH PARTY (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE RELATED DOCUMENTS AND ANY OTHER TRANSACTION AGREEMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 8.6.

Section 8.7                      Severability.

If any provision of this Agreement or the application thereof to any Person or circumstances is held invalid or unenforceable in any jurisdiction, the remainder hereof, and the application of such provision to such Person or circumstances in any other jurisdiction, shall not be affected thereby, and to this end the provisions of this Agreement shall be severable.  The preceding sentence is in addition to and not in place of the severability provisions in Section 7.4.

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Section 8.8                      Absence of Third Party Beneficiary Rights.

No provision of this Agreement is intended, nor will be interpreted, to provide or to create any third party beneficiary rights or any other rights of any kind in any director, manager, stockholder, member, officer, employee, partner, client, customer or Affiliate of any party hereto or any other Person, other than the parties hereto, the Buyer Indemnified Parties and the Seller Indemnified Parties.

Section 8.9                      Mutual Drafting.

This Agreement is the mutual product of the parties hereto, and each provision hereof has been subject to the mutual consultation, negotiation and agreement of each of the parties and shall not be construed for or against any party hereto.

Section 8.10                    Further Representations.

Each party to this Agreement acknowledges and represents that it has been represented by its own legal counsel in connection with the transactions contemplated by this Agreement, with the opportunity to seek advice as to its legal rights from such counsel.  Each party further represents that it is being independently advised as to the tax consequences of the transactions contemplated by this Agreement and is not relying on any representation or statements made by any other party as to such tax consequences.

Section 8.11                    Amendment; Waiver.

This Agreement may be amended by the parties hereto at any time by execution of an instrument in writing signed on behalf of each of the parties hereto.  Any extension or waiver by any party of any provision hereto shall be valid only if set forth in an instrument in writing signed on behalf of such party.

Section 8.12                    Usage.

The defined terms herein shall apply equally to both the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  All references herein to “Articles,” “Sections,” “Schedules” and “Exhibits” shall be deemed to be references to Articles and Sections of and Schedules and Exhibits to this Agreement unless the context shall otherwise require.  All Schedules and Exhibits attached hereto shall be deemed incorporated herein as if set forth in full herein and, unless otherwise defined therein, all terms used in any Schedule or Exhibit shall have the meanings ascribed to such terms in this Agreement.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  Unless otherwise expressly provided herein, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein.  Unless otherwise expressly provided, wherever the consent of any Person is required or permitted herein, such consent may be withheld in such Person’s sole discretion.  All references to amounts denominated in dollars shall mean U.S. dollars, except where specifically noted otherwise.  Whenever any payment hereunder is to be paid in “cash,” payment shall be made in U.S. dollars and the method for payment shall be by wire transfer of immediately available funds.  In the event there is any need to convert U.S. dollars into any foreign currency, or vice versa, for any purpose under this Agreement, the exchange rate shall be that published by the Wall Street Journal on the date an obligation is paid (or if the Wall Street Journal is not published on such date, the first date thereafter on which the Wall Street Journal is published).

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Section 8.13                    Schedules.

Unless otherwise expressly specified, (a) each reference in this Agreement to any numbered Schedule is a reference to only that numbered Schedule and (b) no disclosure made on any particular numbered Schedule shall be deemed made on any other numbered Schedule unless the relation to such other numbered Schedule is readily apparent on its face that such disclosure applies to such other numbered Schedule.

Section 8.14                      Defined Terms.

(a)      Following is a list of the defined terms used in this Agreement and the section references where they are defined.

Accountant – Section 1.3(c)

Accounts Receivable – Section 8.14(b)

Actions – Section 3.15

Actual Working Capital – Section 1.3(c)

Affiliate – Section 8.14(b)

Agreement – Preamble

Assumed Leases – Section 8.14(b)

Bankruptcy and Equity Exception – Section 3.2

Base Balance Sheet – Section 3.11

Base Balance Sheet Date – Section 3.11

Basket – Section 6.3(c)

Books and Records – Section 2.2(a)(ii)

Business – Recitals

Business Names – Section 8.14(b)

Business Products – Section 3.21

Buyer – Preamble

Buyer Fundamental Representations – Section 6.3(c)

Buyer Indemnified Parties – Section 6.1

Change of Control Obligations – Section 8.14(b)

Claim Notice – Section 6.5(a)

Claims – Section 6.5

Closing – Section 2.1

Closing Date – Section 2.1

COBRA – Section 5.3(g)

Cofactor Affiliate – Section 5.11(a)

Cofactor Services – Section 5.11(a)

Company – Section 8.14(b)

Company Indebtedness – Section 8.14(b)

Company Intellectual Property – Section 8.14(b)

Company Licensed Intellectual Property – Section 8.14(b)

Company Owned Intellectual Property – Section 8.14(b)

Company Plan – Section 3.24(a)

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Company Privacy Policies – Section 3.20(j)

Company Registrations – Section 3.20(a)

Company VEBA – Section 3.24(a)

Competitive Business – Section 7.1(a)

Confidential Information – Section 8.14(b)

Continuing Plan – Section 3.24(b)

Contract – Section 8.14(b)

Deferred Payment – Section 1.2(b)

Deferred Payment Date – Section 1.2(b)

Environment – Section 8.14(b)

Environmental Law – Section 8.14(b)

ERISA – Section 3.24(a)

ERISA Affiliate – Section 3.24(a)

Exhibits – Section 8.2

Financial Statements – Section 3.11

GAAP – Section 8.14(b)

Governmental Authority – Section 8.14(b)

Hazardous Material – Section 8.14(b)

Hazardous Materials Activities – Section 3.27(b)

Hired Employee – Section 5.3(a)

In-Licenses – Section 3.20(h)

Indemnification Holdback Amount – Section 1.2(c)

Indemnification Retention Date – Section 1.2(c)

Indemnified Party – Section 6.5(a)

Indemnifying Party – Section 6.5(a)

Initial Payment – Section 1.2(a)

Intellectual Property – Section 8.14(b)

Intellectual Property Registrations – Section 8.14(b)

IRS – Section 8.14(b)

Key Employees – Section 8.14(b)

Knowledge of the Seller – Section 8.14(b)

Laws – Section 8.14(b)

Leases – Section 3.14

Liability Cap – Section 1.2(c)

Lien – Section 8.14(b)

Losses – Section 8.14(b)

Material Adverse Effect – Section 8.14(b)

Material Contracts – Section 3.17(b)

Multi-Employer Plan – Section 3.24(a)

Net Debt – Section 1.3(b)

Notice Period – Section 6.5(b)

Out-Licenses – Section 3.20(g)

Parent – Preamble

Patent Rights – Section 8.14(b) (definition of Intellectual Property)

PBGC – Section 3.24(a)

Pension Plan – Section 3.24(a)

Permit – Section 8.14(b)

Permitted Liens – Section 8.14(b)

Person – Section 8.14(b)

Personal Data – Section 8.14(b)

Personal Property – Section 8.14(b)

43

Plan – Section 3.24(a)

Plan Sponsor – Section 3.24(a)

Point Roll – Preamble

Point Roll Services – Section 5.11(a)

Post-Closing Portion – Section 5.2(b)

Pre-Closing Portion – Section 5.2(b)

Predecessors – Section 3.27(a)

Privacy Codes – Section 8.14(b)

Purchase Price – Section 1.2

Qualified Plan – Section 3.24(a)

Real Property – Section 8.14(b)

Related Parties – Section 3.31

Release – Section 8.14(b)

Restricted Person – Section 7.1

Retained Plan – Section 3.24(b)

Retention Bonuses – Section 8.14(b)

Rovion – Section 8.14(b)

Schedules – Section 8.2

Seller – Preamble

Seller Fundamental Representations – Section 6.3(c)

Seller Indemnified Parties – Section 6.2

Service Level Warranties – Section 3.21

Shares – Recitals

Significant Customers – Section 3.16(a)

Stated Working Capital – Section 1.3(c)

Straddle Tax Periods – Section 5.2(b)

Tax Code – Section 8.14(b)

Taxes – Section 8.14(b)

Tax Return – Section 8.14(b)

Territory – Section 7.1

Third Party Claim – Section 6.5(a)

Third Party Consents – Section 3.9

Title IV Plan – Section 3.24(a)

Trademarks – Section 8.14(b) (definition of Intellectual Property)

Transaction Costs – Section 5.8

Transition Services Agreement – Section 2.2(a)(iv)

VEBA – Section 3.24(a)

WARN – Section 8.14(b)

Welfare Plan – Section 3.24(a)

Working Capital – Section 1.3(a)

(b)      The following terms have the following meanings:

“Accounts Receivable” means all trade and other accounts and notes receivable of the Seller.

“Affiliate” means, with respect to any Person, any other Person that is deemed to be an affiliate of such Person under interpretations of the Securities Exchange Act of 1934, as amended.

44

“Assumed Leases” means Point Roll’s Leases for the premises located at 3200 Horizon Drive, Suite 120, King of Prussia, PA 19406; 2800 Livernois Road, Bldg D, Suite 630, Troy, MI 48083; and 11835 West Olympic Blvd., Suite 1250E, Los Angeles, CA 90064, in each case as amended.

“Business Names” means any and all business names, brand names, marketing names, trade names, trademarks, service marks and domain names related to or used in connection with the Business, including any business name, brand name, marketing name, trade name, trademark, service mark and domain name that includes any of the words “PointRoll” or “BadBoy” or “FatBoy” or “FoldOver” or “PaperBoy” or “TomBoy” or “TowelBoy” or “Rovion” or “InPerson” or “BlueStream” and any and all other derivatives thereof, including any registrations and/or applications for registration of the foregoing).

“Change of Control Obligations” means all severance, change of control and similar obligations owed by the Company to any Person in connection with the sale of the Shares by Seller to Buyer.

“Company” means Point Roll and Rovion, collectively, unless explicitly stated otherwise.

“Company Indebtedness” means, without duplication, the aggregate amount of (i) any obligations of the Company for borrowed money, or with respect to deposits or advances of any kind to the Company, and any prepayment premiums, penalties and any other fees and expenses required to satisfy such indebtedness, (ii) any obligations of the Company evidenced by bonds, debentures, notes or similar instruments, (iii) any compensation owed to any current or former employee of the Seller (other than deferred compensation payable by the Company in the ordinary course of business and reserved in the Financial Statements), (iv) any obligations of the Company under conditional sale or other title retention agreements, (v) any obligations of the Company issued or assumed as the deferred purchase price of property or services (excluding accounts payable incurred in the ordinary course of the Company’s business), (vi) any capitalized Lease obligations of the Company, (vii) any obligations of others secured by any Lien on property or assets owned or acquired by the Company, whether or not the obligations secured thereby have been assumed, (viii) any obligations of the Company under interest rate or currency swap transactions (valued at the termination value thereof), (ix) any letters of credit issued for the account of the Company (other than standby letters of credit in the ordinary course of business consistent with past practice), and (x) any guaranties or arrangements having the economic effect of a guaranty by the Company of any indebtedness of any other Person.

“Company Intellectual Property” means the Company Owned Intellectual Property and the Company Licensed Intellectual Property.

“Company Licensed Intellectual Property” means all Intellectual Property that is licensed to the Company by any third party.

“Company Owned Intellectual Property” means all Intellectual Property owned or purported to be owned by the Company, in whole or in part.

“Confidential Information” means information that has not been disclosed to the public or to the trade with respect to the Company or the Business or the Buyer or any of its Affiliates, or their respective present or future business, operations, services, products, research, inventions, discoveries, drawings, designs, plans, processes, models, technical information, facilities, methods, trade secrets, copyrights, software, source code, systems, patents, procedures, manuals, specifications, any other intellectual property, confidential reports, price lists, pricing formulas, customer lists, financial information (including the revenues, costs or profits associated with any of products or services of the Company or the Business or the Buyer or any of its Affiliates), business plans, lease structures, projections, prospects, opportunities or strategies, acquisitions or mergers, advertising or promotions, personnel matters, legal matters, any other confidential and proprietary information, and any other information not generally known outside the Company or the Business or the Buyer that may be of value to the Company or the Business or the Buyer, but excludes any information already properly in the public domain.  “Confidential Information” also includes confidential and proprietary information and trade secrets that third parties entrust to the Company or the Buyer or any of its Affiliates (or to the Seller in connection with the Business) in confidence.

45

“Contract” means any contract, plan, undertaking, arrangement, concession, understanding, agreement, agreement in principle, franchise, permit, instrument, license, lease, sublease, note, bond, indenture, deed of trust, mortgage, loan agreement or other binding commitment, whether written or oral.

“Environment” means any surface water, ground water, drinking water supply, land surface or subsurface strata or ambient air.

“Environmental Law” means any Law or Permit relating to the Environment, occupational health and safety, or exposure of Persons or property to Hazardous Materials, including any statute, regulation, administrative decision or order pertaining to: (A) the presence of or the treatment, storage, disposal, generation, transportation, handling, distribution, manufacture, processing, use, import, export, labeling, recycling, registration, investigation or remediation of Hazardous Materials or documentation related to the foregoing; (B) air, water and noise pollution; (C) groundwater and soil contamination; (D) the Release into the Environment, the workplace or other areas of Hazardous Materials, including emissions, discharges, injections, spills, escapes or dumping of Hazardous Materials; (E) transfer of interests in, or control of, real property which may be contaminated; (F) community or worker right-to-know disclosures with respect to Hazardous Materials; (G) the protection of wild life, marine life and wetlands, and endangered and threatened species; (H) storage tanks, vessels, containers, abandoned or discarded barrels and other closed receptacles; and (I) health and safety of employees and other Persons.

“Excluded Assets” means the following assets of the Seller: (i) all rights relating to refunds, recovery or recoupment of Taxes with respect to the Company or the Seller relating to all taxable periods ending before the Closing Date and an allocable portion thereof with respect to any Straddle Tax Periods; (ii) all insurance policies and insurance plans of Seller, assets of the foregoing, as well as all proceeds which may be payable thereunder; (iii) all Retained Plans and other benefit plans sponsored, maintained or contributed to by the Seller or any of its ERISA Affiliates, including for the benefit of employees of the Business, other than the Continuing Plans; (iv) all books and records relating to taxes, insurance policies, financial accounting or any other Excluded Asset, provided, that Seller shall grant to Buyer reasonable and timely access to all such books and records, including the right to take extracts therefrom and make copies thereof, to the extent that the books and records relate to the Business or Assets of the Company; (v) all Leases other than the Assumed Leases; and (vi) all right, title and interest in and to any trademark or trade name including the words “TEGNA” or “Gannett” or “Cofactor” or any logotype or variation thereof.

“GAAP” means United States generally accepted accounting principles consistently applied.

“Governmental Authority” means a federal, state, local or foreign governmental or quasi-governmental entity or municipality or subdivision thereof or any authority, department, commission, board, bureau, agency, court, tribunal or instrumentality, or any applicable self-regulatory organization.

46

“Hazardous Material” means any substance that is subject to regulation under any Environmental Law, or has been defined or designated by any Governmental Authority or by any applicable Environmental Law to be radioactive, toxic, a pollutant or contaminant, hazardous or otherwise a danger to health or the environment, including PCBs, oil, petroleum and petroleum products (including fractions thereof), urea-formaldehyde and all substances listed as hazardous substances pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or defined as a solid or hazardous waste pursuant to the Resource Conservation and Recovery Act of 1976, as amended, or regulated under the Occupational Safety and Health Act, as amended, or the regulations promulgated pursuant to said Laws, or pursuant to analogous state Laws or regulations.

“Intellectual Property” shall mean the following subsisting throughout the world: (a) patents, patent applications, design registrations and certificates of invention and other governmental grants for the protection of inventions or industrial designs (including all related continuations, continuations-in-part, divisionals, reissues and reexaminations) (collectively, “Patent Rights”); (b) registered trademarks and service marks and logos, and all registrations and applications for registration of the foregoing, common law trademarks and service marks and trade dress (collectively, “Trademarks”), and all goodwill in the foregoing; (c) copyrights, designs, data and database rights and registrations and applications for registration thereof, including moral rights of authors; (d) mask works and registrations and applications for registration thereof and any other rights in semiconductor topologies under the laws of any jurisdiction; (e) inventions, invention disclosures, statutory invention registrations, trade secrets and confidential business information, know-how, manufacturing and product processes and techniques, research and development information, whether patentable or non-patentable, whether copyrightable or non-copyrightable and whether or not reduced to practice; (f) Internet domain names; (g) trade names, Business Names and doing business designations; and (h) other proprietary rights relating to any of the foregoing (including remedies against infringement thereof and rights of protection of interest therein under the laws of all jurisdictions).

“Intellectual Property Registrations” means issued patents, registered Trademarks, registered copyrights and designs, mask work registrations, Internet domain name registrations, and applications for each of the foregoing.

“IRS” means the Internal Revenue Service.

“Key Employees” means Mario Diez, Tonya Jones-Dandridge, Mitchell Kreuch, Hal Trencher and John Galvin.

“Knowledge of the Seller” means the actual knowledge of Mario Diez, Tonya Jones-Dandridge, Mitchell Kreuch, Hal Trencher or John Galvin, after due inquiry of Brad Bookler and Christina Westwood.

“Laws” means all laws, orders, judgments, rules, codes, statutes, regulations, requirements, variances, decrees, writs, injunctions, awards, rulings or ordinances of any Governmental Authority, including the common law.

“Lien” means any adverse claims, security, mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, security interest, assignment, deposit arrangement, conditional sale agreement, title retention agreement, lease, sublease, concession, claim, charge, easement, license, right-of-way, preference, preferential arrangement, priority, covenant, condition, restriction, option, warrant, attachment, title defect, adverse or equitable claim, or right of first refusal, preemption, conversion, put or call or encumbrance, whether written or oral, or any financing lease involving substantially the same economic effect as any of the foregoing.

47

“Losses” means all liabilities, causes of action, lawsuits, administrative proceedings (including informal proceedings), investigations, audits, demands, assessments, adjustments, judgments, settlement payments, deficiencies, Taxes, penalties, fines, interest (including interest from the date of such damages) and costs and expenses (including reasonable attorneys’ fees and disbursements of every kind, nature and description); provided, that “Losses” shall not include (A) consequential damages, (B) damages that arise solely from the special circumstances of the Buyer, (C) lost profits or lost business, to the extent constituting consequential damages (it being understood, however, that in the event any Person is required to pay any of such damages described in clauses (A), (B) or (C) to a third party, such payment shall be considered actual “Losses” with respect to such Person and shall not be limited by the foregoing).

“Material Adverse Effect” means any change, event or effect that, individually or taken together with all other such changes, events or effects that have occurred prior to the date of determination, have or reasonably would be expected to have a material adverse effect on the business, results of operations, condition (financial or otherwise), assets or liabilities of the Company or the Business, in each case taken as a whole, but shall not include facts, circumstances, events or changes (a) generally affecting the business of providing rich media technologies that allow interactivity in online advertising in the United States which do not disproportionately impact the Business, (b) generally affecting the economy or the financial or securities markets in the United States or elsewhere in the world, including regulatory and political conditions or developments or any outbreak or escalation of hostilities or acts of war or terrorism or other acts of God) or (c) resulting from (i) the announcement or the existence of, or compliance with, this Agreement or the transactions contemplated hereby, including the effect of the announcement of the sale of the Company; (ii) any actions required or permitted or in any way resulting from this Agreement (including the termination by the Buyer of any employees after the Closing), (iii) changes in applicable Law (or interpretations thereof by any Governmental Authority) or accounting standards, or (iv) failure of the Company to meet any revenue or earnings projections.

“Permit” means any permit, license, franchise, security clearance, consent, contractual right and other authorization or approval of any Governmental Authority.

“Permitted Liens” means (a) statutory liens for Taxes that are not yet due and payable; (b) statutory liens to secure obligations to landlords, lessors or renters under Leases or rental agreements; (c) deposits or pledges made in connection with, or to secure payment of, workers’ compensation, unemployment insurance or similar programs mandated by Law; (e) statutory liens in favor of carriers, warehousemen, mechanics and materialmen, to secure claims for labor, materials or supplies and other like liens arising in the ordinary course of business; (f) easements, rights of way, zoning ordinances and other similar encumbrances or imperfections of title, which are not individually or in the aggregate material in character, amount or extent, and which do not individually or in the aggregate materially detract from the value, or materially interfere with the present use, of the property subject thereto or affected thereby; (g) the In-Licenses and Out-Licenses; (h) any Lien satisfied in full and discharged as of the Closing, and (i) any Lien which was incurred in the ordinary course of business since the Balance Sheet Date and is immaterial in amount.

“Person” means any natural person, corporation, general partnership, limited partnership, limited liability company, limited liability partnership, proprietorship, trust, union, association, court, tribunal, agency, government, department, commission, self-regulatory organization, arbitrator, board, bureau, instrumentality, Governmental Authority or other entity, enterprise, authority or business organization.

“Personal Data” means (a) a natural person’s name, street address, telephone number, e-mail address, photograph, social security number or tax identification number, driver’s license number, passport number, credit card number, bank information, or customer or account number; (b) any information that would qualify as “personally identifying information” under the Federal Trade Commission Act, as amended; (c) any information that would qualify as “personal information” under the Children’s Online Privacy Protection Act of 1998, as amended, or any rule promulgated pursuant thereto; (d) any information that would qualify as “customer proprietary network information” under Section 222 of the Telecommunications Act of 1996; or (e) any other piece of information that allows the identification of such natural person.

48

“Personal Property” means equipment, furniture, furnishings, office equipment, computer hardware and software, machinery, motorized and non-motorized equipment and vehicles, tools, molds, tooling, dies, spare parts, castings, forklifts, fixtures (including test fixtures), promotional and advertising materials (including all catalogs, brochures, videos, plans, manuals, handbooks and equipment), website content, leasehold and other improvements and all other tangible personal property.

“Privacy Codes” meansthe following advertising industry self-regulatory codes, principles, frameworks, best practice recommendations, and guidance documents, and any amendments, supplements or updates thereto: (a) the Self-Regulatory Code of Conduct, Mobile Application Code, and Health Transparency Guidance promulgated by the Network Advertising Initiative; (b) the Self-Regulatory Principles for Online Behavioral Advertising and the Self-Regulatory Principles for Multi-Site Data, including the Guidance for the Application of Self-Regulatory Principles to the Mobile Environment, promulgated by the Digital Advertising Alliance; (c) the Best Practice Recommendation on Online Behavioural Advertising promulgated by the European Advertising Standards Alliance; (d) the EU Framework for Online Behavioural Advertising promulgated by the Interactive Advertising Bureau Europe; and (e) the self-certification criteria for signatories of the IAB Europe OBA Framework promulgated by the European Interactive Digital Advertising Alliance.

“Real Property” means all interests in real property, including fee estates, leaseholds and subleaseholds, purchase options, easements, licenses, rights to access and rights of way, and all buildings and other improvements thereon, owned, leased, licensed or used by the Seller, together with any additions thereto or replacements thereof.

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into the Environment (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Materials).

“Retention Bonuses” means, collectively, the retention bonuses described in: (a) that certain letter agreement, dated September 25, 2015, by and between Seller and Mario Diez; (b) that certain letter agreement, dated September 25, 2015, by and between Seller and Tonya Jones-Dandridge; (c) that certain letter agreement, dated October 5, 2015, by and between Seller and Mitchell Kreuch; (d) that certain letter agreement, dated October 5, 2015, by and between Seller and John Galvin; and (e) that certain letter agreement, dated October 5, 2015, by and between Seller and Hal Trencher.

“Rovion” means Rovion, LLC, a Delaware limited liability company and wholly-owned subsidiary of Point Roll.

“ShopLocal” means ShopLocal, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Seller.

“Tax Code” means the Internal Revenue Code of 1986, as amended.

49

“Taxes” means any taxes, charges, fees, duties, levies or other assessments, including income, gross receipts, net proceeds, ad valorem, real and personal property (tangible and intangible), sales, use, franchise, user, transfer, fuel, excess profits, occupational, employees’ income withholding, unemployment and social security taxes, that are imposed by any Governmental Authority, and any interest and penalties required to be paid in connection therewith.

“Tax Return” means any return (including any information return), report, statement, schedule, notice, form, or other document or information (including income, property, sales, use, franchise, withholding, social security, and unemployment Tax returns) filed with or submitted to, or required to be filed with or submitted to, any Governmental Authority in connection with the determination, assessment, collection, or payment of any Taxes by any Person.

“Transaction Documents” means the Schedules to this Agreement, the Transition Services Agreement and each certificate executed and delivered by Seller, Point Roll or the Buyer pursuant to this Agreement.

“WARN” means the Worker Adjustment and Retraining Notification Act of 1988 and any equivalent state or local Law.

Section 8.15                      Parent Guarantee.

Parent hereby guarantees to Seller, as a primary obligor, payment and performance by Buyer of its obligations under this Agreement and under each of the other Transaction Documents to which Buyer is a party (including without limitation, all amendments hereof and thereof), in each case, subject to the terms, conditions and limitations hereof and thereof.  Parent hereby waives suretyship defenses, demand, payment, protest and notice of dishonor or nonperformance of any such obligations (other than any copies of notices required to be delivered under this Agreement to Parent), and no consent of Parent shall be required with respect to any amendment or waiver of this Agreement (other than this Section 8.15) that is effected in accordance with this Agreement.  The liability of Parent under this Agreement by reason of this Section 8.15 is primary, and the Seller shall not be required to make any demand on Buyer for performance of any of its obligations under this Agreement, nor to exhaust any legal, contractual or equitable remedies against Buyer, prior to proceeding against Parent.

[Signature Pages Follow]

50

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

BUYER:

SIZMEK TECHNOLOGIES, INC.

By: /s/ Neil H. Nguyen

Name: Neil H. Nguyen

Title: President

PARENT:

SIZMEK INC.

By: /s/ Neil H. Nguyen

Name: Neil H. Nguyen

Title: Chief Executive Officer

SELLER:

TEGNA INC.

By: /s/ Tom R. CoxName: Tom R. Cox

Title: Vice President / Corporate Development

[Securities Purchase Agreement – Signature Page]

51

EX-31.1

Exhibit 31.1

SIZMEK INC. AND SUBSIDIARIES

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)

I, Neil H. Nguyen, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Sizmek Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2015	/s/ Neil H. Nguyen
	Neil H. Nguyen
	Chief Executive Officer and
	President

EX-31.2

Exhibit 31.2

SIZMEK INC. AND SUBSIDIARIES

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)

I, Kenneth Saunders, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Sizmek Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2015	/s/ Kenneth Saunders
	Kenneth Saunders
	Chief Financial Officer

EX-32.1

Exhibit 32.1

SECTION 1350 CERTIFICATIONS

In connection with the Quarterly Report of Sizmek Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2015, as filed with the SEC on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 13, 2015	By:	/s/ Neil H. Nguyen
		Neil H. Nguyen
		Chief Executive Officer and
		President
Date: November 13, 2015	By:	/s/ Kenneth Saunders
		Kenneth Saunders
		Chief Financial Officer

XML

Fair Value Measurements (Abakus Convertible Notes) (Details) - Convertible Notes [Member] - Abakus [Member] - USD ($) $ in Millions	1 Months Ended	17 Months Ended
	May. 31, 2014	Sep. 30, 2015
Fair Value Measurements [Line Items]
Amount of convertible notes purchased	$ 1.0
Payment for convertible notes	$ 1.0
Period of time convertible notes are due after written notice		90 days
Interest rate		5.00%
Amount of Abakus Series A preferred shares to be sold by Abakus for triggering automatic conversion		$ 2.0
Conversion price as a percentage of the share price in Qualified Financing		75.00%
Amount divided by the number of shares outstanding upon exercise of all dilutive securities to derive quotient for determining conversion price upon automatic conversion		$ 7.0
Conversion price as a percentage of the share price in the Equity Financing		75.00%

XML

Loss per Share (Earnings (Loss) Per Common Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
	Jul. 07, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Loss per Share [Abstract]
Net loss		$ (7,548)	$ (101,382)	$ (23,390)	$ (117,442)
Weighted average common shares outstanding - basic		29,567	30,399	29,633	30,399
Dilutive securities
Weighted average common shares outstanding - diluted		29,567	30,399	29,633	30,399
Basic loss per common share (in dollars per share)		$ (0.26)	$ (3.34)	$ (0.79)	$ (3.86)
Diluted loss per common share (in dollars per share)		$ (0.26)	$ (3.34)	$ (0.79)	$ (3.86)
Antidilutive securities not included:
Stock options and RSUs (in shares)		862	847	979	847
Common stock distributed in conjunction with the Spin-Off	30,400

XML

Income Taxes (Narrative) (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Income Taxes [Abstract]
Effective tax rate (as a percent)	7.70%	0.90%
Federal statutory tax rate (as a percent)	35.00%
Maximum interest or penalities related to uncertain tax positions	$ 0.1	$ 0.1

XML

General (Components Of Accumulated Other Comprehensive Income (Loss) (AOCI or AOCL), Net Of Tax) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of the period	$ (1,599)	$ 1,098	$ (1,515)	$ 682
Other comprehensive loss before reclassifications	(1,384)	(1,164)	(1,510)	(648)
Amounts reclassified out of AOCL	22	(6)	64	(106)
Net current period activity	(1,362)	(1,170)	(1,446)	(754)
Balance at end of the period	(2,961)	(72)	(2,961)	(72)
Foreign Currency Translation [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of the period	(2,896)	(726)	(2,672)	(1,198)
Other comprehensive loss before reclassifications	$ (805)	$ (989)	$ (1,029)	$ (517)
Amounts reclassified out of AOCL
Net current period activity	$ (805)	$ (989)	$ (1,029)	$ (517)
Balance at end of the period	(3,701)	(1,715)	(3,701)	(1,715)
Unrealized Gains (Losses) on Foreign Currency Derivatives [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of the period	276	24	(98)	116
Other comprehensive loss before reclassifications	(403)	(18)	(71)	(10)
Amounts reclassified out of AOCL	22	(6)	64	(106)
Net current period activity	(381)	$ (24)	(7)	$ (116)
Balance at end of the period	(105)		(105)
Unrealized Gains (Losses) on Available for Sale Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of the period	1,021	$ 1,800	1,255	$ 1,764
Other comprehensive loss before reclassifications	$ (176)	$ (157)	$ (410)	$ (121)
Amounts reclassified out of AOCL
Net current period activity	$ (176)	$ (157)	$ (410)	$ (121)
Balance at end of the period	$ 845	$ 1,643	$ 845	$ 1,643

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2015

Income Taxes [Abstract]

Schedule of changes in uncertain tax positions

	Nine Months Ended September 30,
	2015			2014
Balance at beginning of year	$	1,507		$	1,701
Changes for tax positions related to prior years		(13	)		362
Balance at end of period	$	1,494		$	2,063

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Geographical Information and Product Categories (Revenues By Product Category) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Geographical information [Line Items]
Revenues	$ 40,266	$ 39,513	$ 117,241	$ 121,893
Core products [Member]
Geographical information [Line Items]
Revenues	28,727	25,337	82,151	76,426
Rich media [Member]
Geographical information [Line Items]
Revenues	4,142	10,043	19,255	33,220
Programmatic managed services [Member]
Geographical information [Line Items]
Revenues	$ 7,397	$ 4,133	$ 15,835	$ 12,247

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Acquisitions (Schedule of as Reported and Pro forma Results of Operations Relating to Acquisitions) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
As Reported
Revenues	$ 40,266	$ 39,513	$ 117,241	$ 121,893
Net loss	$ (7,548)	$ (101,382)	(23,390)	(117,442)
Unaudited Pro Forma, as if the acquisitions had occurred on January 1, 2014
Revenue			120,794	131,214
Net loss			$ (25,709)	$ (121,742)

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Fair Value Measurements (Fair Value Of Assets And Liabilities) (Details) - Recurring basis [Member] - USD ($) $ in Thousands		Sep. 30, 2015	Dec. 31, 2014
Assets:
Money market funds	[1]	$ 28,920	$ 35,953
Revenue sharing arrangement	[2]	200	160
Marketable equity securities	[3]	1,186	1,596
Total		30,306	37,709
Liabilities:
Currency forward derivatives/options		130	113	[4]
Quoted Prices in Active Markets (Level 1) [Member]
Assets:
Money market funds	[1]	$ 28,920	$ 35,953
Revenue sharing arrangement	[2]
Marketable equity securities	[3]	$ 1,186	$ 1,596
Total		$ 30,106	$ 37,549
Liabilities:
Currency forward derivatives/options				[4]
Significant Other Observable Inputs (Level 2) [Member]
Assets:
Money market funds	[1]
Revenue sharing arrangement	[2]
Marketable equity securities	[3]
Total
Liabilities:
Currency forward derivatives/options		$ 130	$ 113	[4]
Significant Unobservable Inputs (Level 3) [Member]
Assets:
Money market funds	[1]
Revenue sharing arrangement	[2]	$ 200	$ 160
Marketable equity securities	[3]
Total		$ 200	$ 160
Liabilities:
Currency forward derivatives/options				[4]

[1] Included in cash and cash equivalents.

[2] Included in current assets of TV business.

[3] Included in other non-current assets.

[4] Included in accrued liabilities.

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Related Party Transactions (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
DG's Expense Allocation to Sizmek
Management and administrative services		$ 637
Merger, integration and other		4,038
Share-based compensation		3,817
Total		$ 8,492

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Income Taxes (Changes In Uncertain Tax Positions) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Changes in uncertain tax positions
Balance at beginning of year	$ 1,507	$ 1,701
Changes for tax positions related to prior years	(13)	362
Balance at end of period	$ 1,494	$ 2,063

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General

9 Months Ended

Sep. 30, 2015

General [Abstract]

General

2. General

Principles of Consolidation and Combination

The consolidated and combined financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of our wholly-owned, and majority-owned and controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation or combination.  For the period prior to the Spin-Off, the carve-out financial statements have been prepared on a basis that management believes to be reasonable to reflect the results of operations and cash flows of the Company's operations, including portions of DG's corporate costs and administrative shared services. These unaudited financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2014.

These financial statements have been prepared by us without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.  However, we believe the disclosures are adequate to make the information presented not misleading.  The unaudited consolidated and combined financial statements reflect all adjustments, which are, in the opinion of management, of a normal and recurring nature and necessary for a fair presentation of our financial position as of the balance sheet dates, and the results of operations and cash flows for the periods presented.

Seasonality

Our business is seasonal. Revenues tend to be the highest in the fourth quarter as a large portion of our revenues follow the advertising spend or budgets of our customers which tend to be at their highest during the holiday season.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to the recoverability and useful lives of our long-lived assets, the adequacy of our allowance for doubtful accounts and credit memo reserves, contingent consideration and income taxes. We base our estimates on historical experience, future expectations and on other relevant assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Effective November 1, 2014, we shortened the estimated remaining useful life of our Sizmek MDX platform assets from an average of 46 months to 20 months in anticipation of our new platform, which is currently in development.  We anticipate the new platform will be operational by the end of 2015 and we expect to retire our existing platform by mid-2016.  For the first nine months of 2015, this change increased our net loss and loss per share by $2.3 million and $0.08, respectively.

Risk of Goodwill Impairment

See Note 5 for a discussion of the risk of a future impairment of our goodwill.

Assets and Liabilities of DG's TV Business

Pursuant to the Separation and Redemption Agreement, DG contributed to us substantially all of its television business current assets and certain other assets existing on February 7, 2014, and we agreed to assume substantially all of DG's television business liabilities that existed on February 7, 2014 or were attributable to periods up to and including February 7, 2014. These net assets contributed were recorded at $78.5 million. The details of these assets and liabilities outstanding as of September 30, 2015 and December 31, 2014 were as follows (in thousands):

Description	September 30,  2015		December 31,  2014
Current assets of television business:
Income tax receivables	$	748	$	1,943
Trade accounts receivable	9		367
Springbox revenue sharing	200		160
Total	$	957	$	2,470
Current liabilities of television business:
Trade accounts payable	$	—	$	165
Accrued liabilities	420		230
Total	$	420	$	395
Non-current liabilities of television business:
Uncertain tax positions	$	273	$	260

Derivative Instruments

We enter into foreign currency forward contracts and options to hedge a portion of the exposure to the variability in expected future cash flows resulting from changes in related foreign currency exchange rates between the New Israeli Shekel (“NIS”) and the U.S. Dollar. These transactions were designated as cash flow hedges, as defined by Accounting Standards Codification (“ASC”) Topic 815, “Derivatives and Hedging.”  ASC Topic 815 requires that we recognize derivative instruments as either assets or liabilities in our balance sheet at fair value. These contracts are Level 2 fair value measurements in accordance with ASC Topic 820, “Fair Value Measurements and Disclosures.” For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss), net of taxes, and reclassified into earnings (various operating expenses) in the same period or periods during which the hedged transaction affects earnings.

Our cash flow hedging strategy is to hedge against the risk of overall changes in cash flows resulting from certain forecasted foreign currency rent and salary payments during the next twelve months. We hedge portions of our forecasted expenses denominated in the NIS with a single counterparty using foreign currency forward contracts and options. At September 30, 2015, we had $16.2 million notional amount of foreign currency forward contracts and options outstanding that had a net fair value liability balance of $0.1 million ($0.3 million liability, net of a $0.2 million asset). At December 31, 2014, we had $14.3 million notional amount of foreign currency forward contracts and options outstanding that had a net fair value liability balance of $0.1 million ($0.2 million liability, net of a $0.1 million asset). The net liability at September 30, 2015 is included in accrued liabilities and is expected to be recognized in our results of operations in the next twelve months. The net liability at December 31, 2014 was also included in accrued liabilities. The vast majority of any gain or loss from hedging activities is included in our various operating expenses. As a result of our hedging activities, we incurred the following gains and losses in our results of operations (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
Hedging gain (loss) recognized in operations	$	(24	)	$	6	$	(71	)	$	121

It is our policy to offset fair value amounts recognized for derivative instruments executed with the same counterparty. In connection with our foreign currency forward contracts and options and other banking arrangements, we have agreed to maintain $1.5 million of cash in bank accounts with our counterparty, which we classify as restricted cash on our balance sheet.

Accumulated Other Comprehensive Income (Loss)

Components of accumulated other comprehensive income (loss) (“AOCI” or “AOCL”), net of tax, for the three and nine months ended September 30, 2015 and 2014 were as follows (in thousands):

	Three Months Ended September 30, 2015
	Foreign Currency Translation			Unrealized Gains (Losses) on Foreign Currency Derivatives			Unrealized Gains (Losses) on Available for Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at June 30, 2015	$	(2,896	)	$	276		$	1,021		$	(1,599	)
Other comprehensive loss before reclassifications		(805	)		(403	)		(176	)		(1,384	)
Amounts reclassified out of AOCL		—			22			—			22
Net current period activity		(805	)		(381	)		(176	)		(1,362	)
Balance at September 30, 2015	$	(3,701	)	$	(105	)	$	845		$	(2.961	)

	Nine Months Ended September 30, 2015
	Foreign Currency Translation			Unrealized Gains (Losses) on Foreign Currency Derivatives			Unrealized Gains (Losses) on Available for Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2014	$	(2,672	)	$	(98	)	$	1,255		$	(1,515	)
Other comprehensive loss before reclassifications		(1,029	)		(71	)		(410	)		(1,510	)
Amounts reclassified out of AOCL		—			64			—			64
Net current period activity		(1,029	)		(7	)		(410	)		(1,446	)
Balance at September 30, 2015	$	(3,701	)	$	(105	)	$	845		$	(2,961	)

	Three Months Ended September 30, 2014
	Foreign Currency Translation			Unrealized Gains (Losses) on Foreign Currency Derivatives			Unrealized Gains (Losses) on Available for Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at June 30, 2014	$	(726	)	$	24		$	1,800		$	1,098
Other comprehensive loss before reclassifications		(989	)		(18	)		(157	)		(1,164	)
Amounts reclassified out of AOCI		—			(6	)		—			(6	)
Net current period activity		(989	)		(24	)		(157	)		(1,170	)
Balance at September 30, 2014	$	(1,715	)	$	—		$	1,643		$	(72	)

	Nine Months Ended September 30, 2014
	Foreign Currency Translation			Unrealized Gains (Losses) on Foreign Currency Derivatives			Unrealized Gains (Losses) on Available for Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2013	$	(1,198	)	$	116		$	1,764		$	682
Other comprehensive loss before reclassifications		(517	)		(10	)		(121	)		(648	)
Amounts reclassified out of AOCI		—			(106	)		—			(106	)
Net current period activity		(517	)		(116	)		(121	)		(754	)
Balance at September 30, 2014	$	(1,715	)	$	—		$	1,643		$	(72	)

The following table summarizes the reclassifications from AOCI or AOCL to the consolidated and combined statements of operations for the three and nine months ended September 30, 2015 and 2014 (in thousands):

	Amounts Reclassified out of AOCI or AOCL
	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014		Affected Line Items in the Consolidated and Combined Statements of Operations
Gains (losses) on cash flow hedges:
Foreign currency derivatives	$	(2	)	$	1	Cost of revenues
Foreign currency derivatives		(1	)		—	Selling and marketing
Foreign currency derivatives		(13	)		4	Research and development
Foreign currency derivatives		(4	)		1	General and administrative
Foreign currency derivatives		(4	)		—	Other, net
Total before taxes		(24	)		6
Tax amounts		2			—
Income (loss) after tax	$	(22	)	$	6

	Amounts Reclassified out of AOCI or AOCL
	Nine Months Ended September 30, 2015			Nine Months Ended September 30, 2014			Affected Line Items in the Consolidated and Combined Statements of Operations
Gains (losses) on cash flow hedges:
Foreign currency derivatives	$	(7	)	$	12		Cost of revenues
Foreign currency derivatives		(3	)		5		Selling and marketing
Foreign currency derivatives		(47	)		58		Research and development
Foreign currency derivatives		(12	)		16		General and administrative
Foreign currency derivatives		(2	)		30		Other, net
Total before taxes		(71	)		121
Tax amounts		7			(15	)
Income (loss) after tax	$	(64	)	$	106

Merger, Integration and Other Expenses

Merger, integration and other expenses reflect the expenses incurred in (i) DG's Merger with Extreme Reach and our Spin-Off from DG, (ii) acquiring or disposing of a business, (iii) integrating an acquired operation (e.g., office closure costs) into the Company and (iv) certain other items of income or expense not deemed to be part of our core operations. A summary of our merger, integration and other expenses is as follows (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
Description	2015		2014			2015		2014
Merger and Spin-Off (1)	$	—	$	471		$	—	$	5,209
Severance		1		504			467		1,062
Integration and restructuring costs		1,057		912			2,127		1,867
Acquisition, legal and due diligence fees		33		153			763		191
Write-off (recovery) of TV business net assets (2)		356		(1,819	)		94		(1,819	)
Total	$	1,447	$	221		$	3,451	$	6,510

(1) - See discussion of Merger and Spin-Off under “Separation from Digital Generation, Inc.” in Note 1.

(2) - Represents an increase (reduction) in expense due to realizing less (more) TV business net assets than originally estimated at the time of the Spin-Off.

Israel Operations

The majority of our research and development activities and a large portion of our accounting functions are performed in Herzliya, Israel. In total, about 26% of our workforce is located in Israel.  As a result, we are subject to risks associated with operating in the Middle East.

Recently Issued Accounting Guidance

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)." ASU 2014-09 modifies revenue recognition guidance for GAAP. Previous revenue recognition guidance in GAAP comprised broad revenue recognition concepts together with numerous revenue requirements for particular industries or transactions, which sometimes resulted in different accounting for economically similar transactions. In contrast, International Accounting Standards Board ("IASB") provided limited guidance on revenue recognition. Accordingly, the FASB and IASB initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards ("IFRS"). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps:  

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

In August 2015, the FASB issued ASU 2015-14 to defer the effective date of ASU 2014-09 by one year.As a result, for Sizmek, the amendments in ASU 2014-09 are now effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period.An entity shall adopt the amendments in ASU 2014-09 by either (i) retrospectively adjusting each prior reporting period presented or (ii) retrospectively adjusting for the cumulative effect of initially applying ASU 2014-09 at the date of initial adoption. We have not as yet determined (i) the extent to which we expect ASU 2014-09 will impact our reported revenues or (ii) the manner in which it will be adopted.

In September 2015, the FASB issued ASU 2015-16, "Business Combinations (Topic 805)." ASU 2015-16 modifies how changes to provisional amounts determined during the measurement period of a business combination are recognized.Under existing accounting literature, changes to provisional amounts determined during the measurement period of a business combination, resulting from facts and circumstances that existed at the acquisition date, are recognized by retrospectively adjusting the provisional amounts at the acquisition date.However, under ASU 2015-16, an acquirer recognizes adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustments are determined.For Sizmek, ASU 2015-16 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period .

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Goodwill (Changes In Carrying Value Of Goodwill) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Goodwill
Balance at beginning of the period			$ 380,681
Acquisition of StrikeAd			11,134
Balance at end of the period	$ 391,815		391,815
Accumulated Impairment Losses
Balance at beginning of the period			$ (340,527)
Goodwill impairment loss		$ 98,196		$ 98,196
Balance at end of the period	$ (340,527)		$ (340,527)
Net Carrying Value
Balance at beginning of the period			40,154
Acquisition of StrikeAd			11,134
Balance at end of the period	$ 51,288		$ 40,154

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Basis of Presentation (Details)	9 Months Ended
	Sep. 30, 2015 item $ / shares	Dec. 31, 2014 $ / shares	Feb. 07, 2014 $ / shares
Basis of Presentation [Abstract]
Number of advertisers connected to audiences	17,000
Number of agencies connected to audiences	3,500
Number of countries in which entity operates	60
Minimum number of impressions served	1,400,000,000,000
Common stock, par value | $ / shares	$ 0.001	$ 0.001	$ 0.001
Per share distribution to DG shareholders | $ / shares			$ 3.00

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Related Party Transactions(Tables)

9 Months Ended

Sep. 30, 2015

Related Party Transactions [Abstract]

Schedule of allocation of related party expenses

DG's Expense Allocation to Sizmek	Nine Months  Ended September 30, 2014
Management and administrative services	$	637
Merger, integration and other	4,038
Share-based compensation	3,817
Total	$	8,492

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Share-based Compensation (Share-based Compensation Expense) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Share-based Compensation [Abstract]
DG stock options and RSUs awarded to our employees		$ 2,650
DG share-based awards allocated to us as part of corporate services		3,817
Sizmek share-based awards granted	$ 3,141	1,963
Share-based compensation expense related to the stock awards	$ 3,141	$ 8,430

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General (Narrative) (Details) - Certain internally developed software [Member] - USD ($) $ / shares in Units, $ in Millions			9 Months Ended
	Nov. 01, 2014	Oct. 31, 2014	Sep. 30, 2015
Useful Life [Line Items]
Estimated useful life	20 months	46 months
Reduction in net income due to change in estimated useful life			$ 2.3
Reduction in diluted earnings per share due to change in estimated useful life			$ 0.08

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General (Assets And Liabilities Of DG's TV Business) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Feb. 07, 2014
Assets and Liabilities of DG's TV Business [Abstract]
Net assets of TV business contributed by DG			$ 78,500
Current assets of television business:
Income tax receivable	$ 748	$ 1,943
Trade accounts receivable	9	367
Springbox revenue sharing	200	160
Current assets of TV business	$ 957	2,470
Current liabilities of television business:
Trade accounts payable		165
Accrued liabilities	$ 420	230
Current liabilities of TV business	420	395
Non-current liabilities of television business:
Uncertain tax positions	$ 273	$ 260

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Basis of Presentation

9 Months Ended

Sep. 30, 2015

Basis of Presentation [Abstract]

Basis of Presentation

1. Basis of Presentation

The Company

Sizmek Inc. ("Sizmek," the "Company," "we," "us," and "our"), a Delaware corporation formed in 2013, operates a leading independent global online ad campaign management and distribution platform as measured by the number of advertising impressions served and the number of countries in which we serve customers. Our revenues are principally derived from services related to online advertising. We help advertisers, agencies and publishers engage with consumers across multiple online media channels (mobile, display, rich media, video and social) while delivering efficient, impactful and measurable ad campaigns. We connect approximately 17,000 advertisers and 3,500 agencies to audiences in about 60 countries, serving more than 1.4 trillion impressions a year.

Separation from Digital Generation, Inc.

Prior to February 7, 2014, we operated as the online segment of Digital Generation, Inc. ("DG"), a leading global television and online advertising management and distribution business. On February 7, 2014, pursuant to the terms of the Agreement and Plan of Merger, dated as of August 12, 2013 (the "Merger Agreement"), by and among Extreme Reach, Inc. ("Extreme Reach"), Dawn Blackhawk Acquisition Corp., a wholly-owned subsidiary of Extreme Reach ("Acquisition Sub"), and DG, all of our issued and outstanding shares of common stock, par value $0.001 per share ("Sizmek Common Stock") were distributed by DG pro rata to its stockholders (the "Spin-Off") with the DG stockholders receiving one share of Sizmek Common Stock for each share of DG common stock ("DG Common Stock") they held. Immediately after the distribution of the Sizmek Common Stock, pursuant to the Merger Agreement, Acquisition Sub merged with and into DG with DG as the surviving corporation (the "Merger") and each of the outstanding shares of DG Common Stock was converted into the right to receive $3.00 per share, and DG became a wholly-owned subsidiary of Extreme Reach. Prior to the Spin-Off, pursuant to the Separation and Redemption Agreement and related documents, DG contributed to us all of the business and operations of its online advertising segment, all of DG's cash, most of the working capital from its television segment, and certain other corporate assets; and we agreed to indemnify DG and affiliates of DG (including Extreme Reach) from all pre-closing liabilities of DG, including stockholder litigation, tax obligations, and employee liabilities. Sizmek now operates as a separate, stand-alone publicly-traded company in the online advertising services business segment.

Carve-out Financial Statements Prior to Spin-Off

Prior to our Spin-Off from DG on February 7, 2014, our combined financial statements were derived from the consolidated financial statements and accounting records of DG. These statements reflected the combined historical results of operations, financial position and cash flows of DG's online business primarily conducted through MediaMind Technologies Inc., EyeWonder, LLC, Peer39, Inc., and Unicast EMEA, Ltd., and an allocable portion of DG's corporate costs. For the period prior to the Spin-Off, our financial statements are presented as if such businesses had been combined for all periods presented.

All intercompany transactions have been eliminated. All intercompany transactions between us and DG have been included in these combined financial statements and are considered to be effectively settled for cash in the combined financial statements at the time the transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the combined statements of cash flows as a financing activity.

For the period prior to our Spin-Off on February 7, 2014, the combined financial statements include expense allocations for (1) certain corporate functions historically provided by DG, including, but not limited to, finance, audit, legal, information technology, human resources, communications, compliance, and shared services; (2) employee benefits and incentives; and (3) share-based compensation. These expenses have been allocated to us on the basis of direct usage when identifiable, with the remainder allocated on a pro-rata basis of combined revenues, headcount or other measures of the Company and DG. We consider the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services provided to, or the benefit received by, us during the period presented. The allocations may not, however, reflect the expense we would have incurred as an independent, publicly-traded company for the period presented. We benefited from sharing the corporate cost structure of DG rather than incurring such costs ourselves on a stand-alone basis.

The majority of the pre Spin-Off expense allocations were charged to general and administrative expense. For the periods subsequent to the Spin-Off, general and administrative expense as a percentage of revenues (excluding the accelerated recognition of share-based payment awards in connection with the Spin-Off in February 2014) has been comparable to the corresponding period of the prior year. Accordingly, while we benefited from sharing DG's cost structure prior to the Spin-Off, since the Spin-Off we have been able to control our corporate overhead expenses to a level reasonably consistent with the pre Spin-Off periods.

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General (Derivative Instruments) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Derivative Instruments
Period for which certain forecasted foreign currency rent and salary payments are hedged			12 months
Notional amount of foreign currency forward contracts and options outstanding	$ 16,200		$ 16,200		$ 14,300
Net fair value asset (liability) balance of foreign currency forward contracts and options outstanding	(100)		(100)		(100)
Fair value liability balance of foreign currency forward contracts and options outstanding	300		300		200
Fair value asset balance of foreign currency forward contracts and options outstanding	200		200		100
Hedging gain (loss) recognized in operations	(24)	$ 6	(71)	$ 121
Restricted cash	$ 1,524		$ 1,524		$ 1,538

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Acquisitions (Narrative) (Details) - USD ($) $ in Thousands	1 Months Ended				4 Months Ended	12 Months Ended
	May. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Aug. 31, 2014	Sep. 30, 2015	Dec. 31, 2014	Dec. 31, 2013
Strike Ad [Member]
Business Acquisition [Line Items]
Acquisition date	May 28, 2015
Purchase price	$ 8,800
Cash consideration	7,700
Liabilities assumed	$ 1,100
Weighted average amortization period of intangible assets	3 years 8 months 12 days
Gross receivables amount	$ 3,700
Gross receivables fair value	$ 3,500
Revenues					$ 3,000
Reported revenues in fiscal year prior to purchase						$ 11,000
Reported loss before income taxes in fiscal year prior to purchase						$ 6,200
Strike Ad [Member] | Customer relationships [Member]
Business Acquisition [Line Items]
Weighted average amortization period of intangible assets	5 years 8 months 12 days
Strike Ad [Member] | Developed technology [Member]
Business Acquisition [Line Items]
Weighted average amortization period of intangible assets	3 years 2 months 12 days
Pixel [Member]
Business Acquisition [Line Items]
Acquisition date			Sep. 04, 2014
Cash consideration		$ 50	$ 450
Liabilities assumed			$ 50
Aerify [Member]
Business Acquisition [Line Items]
Acquisition date				Aug. 11, 2014
Cash consideration				$ 5,625
Liabilities assumed				$ 625
Weighted average amortization period of intangible assets				4 years 2 months 12 days
Reported revenues in fiscal year prior to purchase							$ 3,100
Reported loss before income taxes in fiscal year prior to purchase							$ 600
Aerify [Member] | Customer relationships [Member]
Business Acquisition [Line Items]
Weighted average amortization period of intangible assets				5 years
Aerify [Member] | Developed technology [Member]
Business Acquisition [Line Items]
Weighted average amortization period of intangible assets				4 years

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Subsequent Event (Details) - Subsequent event [Member] - Point Roll [Member] $ in Millions	Nov. 12, 2015 USD ($)
Subsequent event [Line items]
Acquisition date	Nov. 12, 2015
Purchase price	$ 20.0
Cash consideration	11.0
Consideration to be paid one year after the closing date	7.0
Consideration to be paid one year after the closing date, subject to any indemnification claims	2.0
Net working capital	$ 8.5
Term of period of agreement for not to compete the business	3 years

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
CURRENT ASSETS:
Cash and cash equivalents	$ 64,865	$ 90,672
Accounts receivable (less allowances of $978 and $813 as of September 30, 2015 and December 31, 2014, respectively)	43,835	51,125
Deferred income taxes	620	636
Restricted cash	1,524	1,538
Other current assets	7,501	5,254
Current assets of TV business	957	2,470
Total current assets	119,302	151,695
Property and equipment, net	39,637	34,036
Goodwill	51,288	40,154
Intangible assets, net	65,293	71,306
Deferred income taxes	358	387
Restricted cash	4,625	3,941
Other non-current assets	3,231	3,393
Total assets	283,734	304,912
CURRENT LIABILITIES:
Accounts payable	4,177	3,976
Accrued liabilities	24,167	19,171
Current liabilities of TV business	420	395
Total current liabilities	28,764	23,542
Deferred income taxes	7,299	8,242
Other non-current liabilities	7,494	6,433
Non-current liabilities of TV business	273	260
Total liabilities	$ 43,830	$ 38,477
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value-Authorized 15,000 shares; issued and outstanding-none
Common stock, $0.001 par value-Authorized 200,000 shares; 29,584 issued and outstanding at September 30, 2015; 30,399 issued and 30,071 outstanding at December 31, 2014	$ 30	$ 30
Treasury stock, at cost (328 shares at December 31, 2014)		(2,000)
Additional capital	$ 367,566	371,261
Accumulated deficit	(124,731)	(101,341)
Accumulated other comprehensive loss	(2,961)	(1,515)
Total stockholders' equity	239,904	266,435
Total liabilities and stockholders' equity	$ 283,734	$ 304,912

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Share-based Compensation (Narrative) (Details) - Sizmek Plan [Member] - USD ($) $ in Millions	3 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015
Share-based Compensation [Line Items]
Unrecognized compensation costs related to unvested RSUs and stock options	$ 6.5
Minimum [Member]
Share-based Compensation [Line Items]
Vesting period		1 year	1 year
Maximum [Member]
Share-based Compensation [Line Items]
Vesting period		3 years	3 years
Restricted Stock Units [Member]
Share-based Compensation [Line Items]
Value of RSUs granted in period		$ 3.4	$ 2.8
Restricted Stock Units [Member] | Performance Based [Member]
Share-based Compensation [Line Items]
Awards granted in period (in shares)		87,251	159,245
Restricted Stock Units [Member] | Time Based [Member]
Share-based Compensation [Line Items]
Awards granted in period (in shares)	5,230	361,112	192,867
Vesting period	3 years
Restricted Stock Units [Member] | Time Based [Member] | Minimum [Member]
Share-based Compensation [Line Items]
Value of RSUs granted in period	$ 0.1
Stock options [Member]
Share-based Compensation [Line Items]
Value of stock options granted in period		$ 0.4	$ 0.6
Stock options [Member] | Time Based [Member]
Share-based Compensation [Line Items]
Number of options granted (in shares)		86,175	133,600

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CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2015 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Treasury Stock [Member]	Additional Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]
Balance at Dec. 31, 2014	$ 266,435	$ 30	$ (2,000)	$ 371,261	$ (101,341)	$ (1,515)
Balance, shares at Dec. 31, 2014	30,399	30,399	(328)
Increase (Decrease) in Stockholders' Equity
Net loss	$ (23,390)				$ (23,390)
Share-based compensation	3,141			$ 3,141
Common stock issued pursuant to RSU agreements, net of shares tendered to satisfy required tax withholding	(336)			$ (336)
Common stock issued pursuant to RSU agreements, net of shares tendered to satisfy required tax withholding, shares		131
Purchase of treasury stock	$ (4,500)		$ (4,500)
Purchase of treasury stock, shares			(618)
Retirement of treasury stock			$ 6,500	$ (6,500)
Retirement of treasury stock, shares		(946)	946
Other comprehensive loss	$ (1,446)					$ (1,446)
Balance at Sep. 30, 2015	$ 239,904	$ 30		$ 367,566	$ (124,731)	$ (2,961)
Balance, shares at Sep. 30, 2015	29,584	29,584

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General (Merger, Integration And Other Expenses) (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
General [Abstract]
Merger and Spin-Off	[1]		$ 471		$ 5,209
Severance		$ 1	504	$ 467	1,062
Integration and restructuring costs		1,057	912	2,127	1,867
Acquisition, legal and due diligence fees		33	153	763	191
Write-off (recovery) of TV business net assets (2)	[2]	356	(1,819)	94	(1,819)
Total		$ 1,447	$ 221	$ 3,451	$ 6,510

[1] See discussion of Merger and Spin-Off under “Separation from Digital Generation, Inc.” in Note 1.

[2] Represents an increase (reduction) in expense due to realizing less (more) TV business net assets than originally estimated at the time of the Spin-Off.

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2015

Acquisitions [Abstract]

Summary of the estimated fair values of the assets acquired and liabilities assumed

Category	StrikeAd (preliminary)			Pixel		Aerify
Cash	$	0.1		$	—	$	—
Receivables		3.5			—		—
Other current assets		0.1			—		—
Customer relationships		1.1			—		0.4
Developed technology		4.3			—		2.1
Goodwill		11.1			0.5		3.8
Total assets acquired		20.2			0.5		6.3
Less liabilities assumed		(11.4	)		—		—
Net assets acquired	$	8.8		$	0.5	$	6.3

Schedule of as reported and pro forma results of operations relating to acquisitions

	As Reported Nine Months Ended September 30,						Unaudited Pro Forma Nine Months Ended September 30,
	2015			2014			2015			2014
Revenue	$	117,241		$	121,893		$	120,794		$	131,214
Net loss		(23,390	)		(117,442	)		(25,709	)		(121,742	)

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General (Israel Operations) (Details)	9 Months Ended
	Sep. 30, 2015
General [Abstract]
Percentage of workforce in Israel	26.00%

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Share-based Compensation (Tables)

9 Months Ended

Sep. 30, 2015

Share-based Compensation [Abstract]

Summary of share-based compensation expense

	Nine Months Ended September 30,
Description	2015		2014
DG stock options and RSUs awarded to our employees	$	—	$	2,650
DG share-based awards allocated to us as part of corporate services		—		3,817
Sizmek share-based awards granted		3,141		1,963
Total	$	3,141	$	8,430

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CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Net loss		$ (23,390)	$ (117,442)
Adjustments to reconcile net loss to net cash provided by operating activities:
Goodwill impairment			98,196
Depreciation of property and equipment		$ 11,205	7,484
Amortization of intangibles		11,529	11,773
Share-based compensation		3,141	8,430
Deferred income taxes		(929)	(1,040)
Provision (benefit) for accounts receivable recoveries		165	(134)
Write-off (recovery) of TV business net assets	[1]	94	(1,819)
Other		23	(384)
Changes in operating assets and liabilities:
Accounts receivable		10,174	4,333
Other assets		(2,524)	1,092
Accounts payable and other liabilities		(6,665)	(1,370)
Net cash provided by operating activities		2,823	9,119
Cash flows from investing activities:
Purchases of property and equipment		(3,488)	(3,840)
Capitalized costs of developing software		(12,557)	(9,643)
Acquisitions, net of cash acquired		$ (7,541)	(6,079)
Purchase of long term investment			(975)
Other		$ (476)	(842)
Net cash used in investing activities		(24,062)	$ (21,379)
Cash flows from financing activities:
Purchases of treasury stock		(4,500)
Payment of seller financing		(625)
Payments of TV business liabilities		(342)	$ (9,431)
Proceeds from TV business assets		1,809	$ 45,408
Payment of tax withholding obligation for shares tendered		$ (336)
Net contributions from Parent			$ 44,833
Net cash (used in) provided by financing activities		$ (3,994)	80,810
Effect of exchange rate changes on cash and cash equivalents		(574)	31
Net (decrease) increase in cash and cash equivalents		(25,807)	68,581
Cash and cash equivalents at beginning of year		90,672	22,648
Cash and cash equivalents at end of period		64,865	91,229
Supplemental disclosures of cash flow information:
Cash paid (received) for income taxes		574	(1,272)
Cash paid (received) for interest		(61)	(340)
Holdback obligations incurred to acquire businesses		1,097	$ 625
Extended payment obligations incurred to purchase software		$ 960

[1] Represents an increase (reduction) in expense due to realizing less (more) TV business net assets than originally estimated at the time of the Spin-Off.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
CONSOLIDATED BALANCE SHEETS [Abstract]
Accounts receivable, allowances	$ 978	$ 813
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, Authorized shares	15,000	15,000
Preferred stock, issued shares	0	0
Preferred stock, outstanding shares	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, Authorized shares	200,000	200,000
Common stock, issued shares	29,584	30,399
Common stock, outstanding shares	29,584	30,071
Treasury stock, shares		328

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Related Party Transactions

9 Months Ended

Sep. 30, 2015

Related Party Transactions [Abstract]

Related Party Transactions

10.  Related Party Transactions

Prior to the Spin-Off, DG provided certain management and administrative services to us. These services included, among others, accounting, treasury, audit, tax, legal, executive oversight, human resources, real estate, information technology and risk management. These expenses have been allocated to us on a basis of direct usage when identifiable, with the remainder allocated on the basis of revenue, headcount, or other measures.  DG also allocated to us (i) merger, integration and other expenses and (ii) share-based compensation, largely based on revenues. DG's allocation of these expenses to us was as follows (in thousands):

DG's Expense Allocation to Sizmek	Nine Months  Ended September 30, 2014
Management and administrative services	$	637
Merger, integration and other	4,038
Share-based compensation	3,817
Total	$	8,492

Included in the above allocations are costs of DG's employee benefit plans and other employee incentives. Employee benefits and incentives include 401(k) matching contributions, participation in DG's long-term incentive compensation award plans and healthcare plans. The employee benefit and incentive costs are reflected in the statements of operations and are classified consistently with how the underlying employee's salary and other compensation costs have been recorded.

We consider the allocated cost for corporate services, employee benefits and incentives to be reasonable based on our utilization of such services. However, we believe the allocated cost for these services are different from the cost we would have incurred if we had been an independent publicly-traded company during those periods.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 11, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	Sizmek Inc.
Entity Central Index Key	0001591877
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		29,584,359
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3

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Subsequent Event

9 Months Ended

Sep. 30, 2015

Subsequent Event - Purchase of Point Roll [Abstract]

Subsequent Event - Purchase of Point Roll

11. Subsequent Event – Purchase of Point Roll

On November 12, 2015, we acquired all of the shares of Point Roll, Inc. (“Point Roll”), from TEGNA, Inc. (“Seller”) for a total purchase price of $20 million, subject to adjustment. Point Roll is in the business of providing rich media and dynamic creative ad serving technologies that allow interactivity in online advertising, such as streaming video, polling, and e-mail and data collection. Of the total purchase price (i) $11 million was paid in cash at closing, (ii) $7 million will be paid one year after the closing date and (iii) $2 million will be paid one year after the closing date, subject to any indemnification claims. The purchase price was paid from cash on hand. Point Roll does not have any debt and its net working capital, as defined, is expected to be at least $8.5 million.

We expect to realize certain operating synergies as we combine our existing operation with the business of Point Roll. In connection with the transaction, the Seller has agreed not to compete (as defined) with the business of Point Roll for a period of three years after the closing date. We have not as yet allocated the purchase price to the assets acquired and the liabilities assumed.

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CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenues:
Platform related	$ 32,869	$ 35,380	$ 101,406	$ 109,646
Programmatic managed services	7,397	4,133	15,835	12,247
Total	40,266	39,513	117,241	121,893
Cost of revenues (excluding depreciation and amortization):
Platform related	11,029	11,708	33,039	35,739
Programmatic managed services	6,002	2,566	12,144	8,289
Total	17,031	14,274	45,183	44,028
Selling and marketing	15,597	14,082	45,233	44,184
Research and development	3,816	3,300	10,393	10,041
General and administrative	5,005	4,276	14,298	17,464
Merger, integration and other	1,447	221	3,451	6,510
Depreciation and amortization	$ 7,524	6,280	$ 22,734	19,257
Goodwill impairment		98,196		98,196
Loss from operations	$ (10,154)	(101,116)	$ (24,051)	(117,787)
Other (income) expense, net	(58)	479	1,287	687
Loss before income taxes	(10,096)	(101,595)	(25,338)	(118,474)
Benefit for income taxes	(2,548)	(213)	(1,948)	(1,032)
Net loss	$ (7,548)	$ (101,382)	$ (23,390)	$ (117,442)
Basic and diluted loss per common share	$ (0.26)	$ (3.34)	$ (0.79)	$ (3.86)
Weighted average common shares outstanding:
Basic and diluted	29,567	30,399	29,633	30,399

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Goodwill

9 Months Ended

Sep. 30, 2015

Goodwill [Abstract]

Goodwill

5. Goodwill

We operate as a single reporting unit. Changes in the carrying value of our goodwill for the nine months ended September 30, 2015 were as follows (in thousands):

	Goodwill		Accumulated Impairment Losses			Net Carrying Value
Balance at December 31, 2014	$	380,681	$	(340,527	)	$	40,154
Acquisition of StrikeAd		11,134		—			11,134
Balance at September 30, 2015	$	391,815	$	(340,527	)	$	51,288

We evaluate goodwill for possible impairment each year on December 31^st and whenever events or changes in circumstances indicate the carrying value of our goodwill may not be recoverable. Generally, the goodwill impairment test involves a two-step process.  In the first step, we compare the fair value of the Company to its carrying value. If the fair value of the Company exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the Company is less than its carrying value, we must perform the second step of the impairment test to measure the amount of the impairment loss. In the second step, the Company's fair value is allocated to its assets and liabilities, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the Company was being acquired in a business combination. If the implied fair value of the Company's goodwill is less than the carrying value, the difference is recorded as an impairment loss.

During the third quarter of 2014, we determined that indicators of potential impairment existed requiring us to perform an interim goodwill impairment test.  As a result, we performed an extensive analysis to estimate the fair value of the Company using a discounted cash flow methodology.  The analysis concluded that the implied fair value of the Company's goodwill was $98.2 million less than its carrying value, which we recorded as a goodwill impairment loss during the third quarter of 2014.

ASC 350-20-35 allows an entity to assess qualitatively whether it is necessary to perform step one of the prescribed two-step annual goodwill impairment test. If an entity believes, as a result of its qualitative assessment, that it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, the two-step goodwill impairment test is not required. Since we had performed an extensive analysis of the fair value of the Company as of September 30, 2014, at December 31, 2014, we performed a qualitative assessment of our goodwill and determined that the two-step process was not necessary.

During the third quarter of 2015, we considered our recent performance and the impact the acquisition of StrikeAd is likely to have on our long term performance. We also considered our future revenue growth, synergies and increases in operating leverage we expect to realize, our recent market capitalization and other qualitative factors. Taking into account these considerations, at September 30, 2015, we continue to believe the Company's fair value exceeds its carrying value and goodwill is not impaired.

Risk of Future Impairment

At December 31, 2014, based on our discounted cash flow model that uses our internal forecast, we determined the fair value of the Company was only slightly in excess of its carrying value. In preparing our discounted cash flow model, we made assumptions about future revenues and expenses for several periods to determine the cash flows that would result.

As with any forecast, there is substantial risk our forecasted cash flows may fall short of our current expectations. If actual or expected future cash flows should fall sufficiently below our current forecast, we may be required to record another goodwill impairment charge. Future net cash flows are impacted by a variety of factors including revenues, operating margins, capital expenditures, income tax rates, and a discount rate.

Further, the market value of our common stock plus a reasonable control premium is an indicator of the fair value of our Company. If the market value of our common stock should fall sufficiently below the current level for an extended period of time, it would likely cause us to conclude that our goodwill is impaired and we would be required to record another goodwill impairment charge.

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Acquisitions

9 Months Ended

Sep. 30, 2015

Acquisitions [Abstract]

Acquisitions

4. Acquisitions

StrikeAd

On May 28, 2015, we acquired substantially all the assets and operations, and assumed certain liabilities, of privately-held StrikeAd, Inc. and its affiliates (collectively, “StrikeAd”) for $8.8 million. The purchase price includes $7.7 million in cash paid at closing and deferred payment obligations totaling $1.1 million.  StrikeAd operates a mobile demand side platform (“DSP”) based in the United Kingdom.  We intend to combine the StrikeAd assets with our existing programmatic assets to build an end-to-end DSP for use by our customers.

The objective of the transaction was to accelerate the development of our mobile technology in order to better serve the advertising community. We expect to realize operating synergies from this transaction.  StrikeAd has been included in our results of operations since the date of closing.

The $8.8 million purchase price was preliminarily allocated to the assets acquired and liabilities assumed based upon their estimated fair values. For estimation purposes, we preliminarily allocated $4.3 million to developed technology, $1.1 million to customer relationships and $11.1 million to goodwill. The developed technology and customer relationships acquired in the transaction are presently being amortized on a straight-line basis over 3.2 years and 5.7 years, respectively. The weighted average amortization period is 3.7 years. The goodwill and other intangible assets created in the acquisition are deductible for tax purposes. The acquired assets include $3.7 million of gross receivables, which we recognized at their estimated fair value of $3.5 million. For 2014, StrikeAd reported revenues of $11.0 million and a loss before income taxes of $6.2 million. For the period from the acquisition date through September 30, 2015, StrikeAd reported $3.0 million of revenues. The purchase price allocation is preliminary pending the completion of the valuation analysis.

Pixel

On September 4, 2014, we acquired all of the outstanding shares of Zestraco Investments Limited including its wholly-owned subsidiary PixelCo. D.O.O. (“Pixel”) for $0.45 million in cash and a deferred payment obligation of $0.05 million which was paid in December 2014.  Pixel performed advertising service operations principally for us prior to our purchase and had no appreciable assets.

The objective of the transaction was to bring in-house the group of technology service personnel that had been providing advertising operations service to us through a contract.  We expect to realize operating synergies from this transaction.  Pixel has been included in our results of operations since the date of closing. The $0.5 million purchase price was allocated to goodwill and is not deductible for income tax purposes.  The purchase price allocation is final.

Aerify Media

On August 11, 2014, we acquired substantially all the assets and operations of privately-held Aerify Media LLC (“Aerify”), a firm specializing in mobile tracking and retargeting, for $5.625 million in cash and a $0.625 million deferred payment obligation due in one-year.  Aerify's mobile in-app and web tracking technology expands our capabilities in the fast-growing mobile segment, adding both talent and technology to the platform. 

The objective of the transaction was to accelerate the development of our mobile technology in order to better serve the advertising community. We expect to realize operating synergies from this transaction.  Aerify has been included in our results of operations since the date of closing.

The $6.25 million purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values. We allocated $2.05 million to developed technology, $0.4 million to customer relationships and $3.8 million to goodwill.  The developed technology and customer relationships acquired in the transaction are being amortized on a straight-line basis over 4 years and 5 years, respectively. The weighted average amortization period is 4.2 years. The goodwill and other intangible assets created in the acquisition are deductible for tax purposes.  For 2013, Aerify reported revenues of $3.1 million and a loss before income taxes of $0.6 million.  The purchase price allocation is final.

Purchase Price Allocations

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the respective dates of acquisition for the above referenced transactions (in millions).

Category	StrikeAd (preliminary)			Pixel		Aerify
Cash	$	0.1		$	—	$	—
Receivables		3.5			—		—
Other current assets		0.1			—		—
Customer relationships		1.1			—		0.4
Developed technology		4.3			—		2.1
Goodwill		11.1			0.5		3.8
Total assets acquired		20.2			0.5		6.3
Less liabilities assumed		(11.4	)		—		—
Net assets acquired	$	8.8		$	0.5	$	6.3

Pro Forma Information

The following pro forma information presents our results of operations for the nine months ended September 30, 2015 and 2014 as if the acquisitions of StrikeAd, Pixel and Aerify had occurred on January 1, 2014 (in thousands). A table of actual amounts is provided for reference.

	As Reported Nine Months Ended September 30,						Unaudited Pro Forma Nine Months Ended September 30,
	2015			2014			2015			2014
Revenue	$	117,241		$	121,893		$	120,794		$	131,214
Net loss		(23,390	)		(117,442	)		(25,709	)		(121,742	)

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Goodwill (Tables)

9 Months Ended

Sep. 30, 2015

Goodwill [Abstract]

Schedule of changes in carrying value of goodwill

	Goodwill		Accumulated Impairment Losses			Net Carrying Value
Balance at December 31, 2014	$	380,681	$	(340,527	)	$	40,154
Acquisition of StrikeAd		11,134		—			11,134
Balance at September 30, 2015	$	391,815	$	(340,527	)	$	51,288

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General (Policies)

9 Months Ended

Sep. 30, 2015

General [Abstract]

Principles of Consolidation and Combination

Principles of Consolidation and Combination

The consolidated and combined financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of our wholly-owned, and majority-owned and controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation or combination.  For the period prior to the Spin-Off, the carve-out financial statements have been prepared on a basis that management believes to be reasonable to reflect the results of operations and cash flows of the Company's operations, including portions of DG's corporate costs and administrative shared services. These unaudited financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2014.

These financial statements have been prepared by us without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.  However, we believe the disclosures are adequate to make the information presented not misleading.  The unaudited consolidated and combined financial statements reflect all adjustments, which are, in the opinion of management, of a normal and recurring nature and necessary for a fair presentation of our financial position as of the balance sheet dates, and the results of operations and cash flows for the periods presented.

Seasonality

Seasonality

Our business is seasonal. Revenues tend to be the highest in the fourth quarter as a large portion of our revenues follow the advertising spend or budgets of our customers which tend to be at their highest during the holiday season.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to the recoverability and useful lives of our long-lived assets, the adequacy of our allowance for doubtful accounts and credit memo reserves, contingent consideration and income taxes. We base our estimates on historical experience, future expectations and on other relevant assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Effective November 1, 2014, we shortened the estimated remaining useful life of our Sizmek MDX platform assets from an average of 46 months to 20 months in anticipation of our new platform, which is currently in development.  We anticipate the new platform will be operational by the end of 2015 and we expect to retire our existing platform by mid-2016.  For the first nine months of 2015, this change increased our net loss and loss per share by $2.3 million and $0.08, respectively.

Risk of Goodwill Impairment

Risk of Goodwill Impairment

See Note 5 for a discussion of the risk of a future impairment of our goodwill.

Assets and Liabilities of DG's TV Business

Assets and Liabilities of DG's TV Business

Pursuant to the Separation and Redemption Agreement, DG contributed to us substantially all of its television business current assets and certain other assets existing on February 7, 2014, and we agreed to assume substantially all of DG's television business liabilities that existed on February 7, 2014 or were attributable to periods up to and including February 7, 2014. These net assets contributed were recorded at $78.5 million. The details of these assets and liabilities outstanding as of September 30, 2015 and December 31, 2014 were as follows (in thousands):

Description	September 30,  2015		December 31,  2014
Current assets of television business:
Income tax receivables	$	748	$	1,943
Trade accounts receivable	9		367
Springbox revenue sharing	200		160
Total	$	957	$	2,470
Current liabilities of television business:
Trade accounts payable	$	—	$	165
Accrued liabilities	420		230
Total	$	420	$	395
Non-current liabilities of television business:
Uncertain tax positions	$	273	$	260

Derivative Instruments

Derivative Instruments

We enter into foreign currency forward contracts and options to hedge a portion of the exposure to the variability in expected future cash flows resulting from changes in related foreign currency exchange rates between the New Israeli Shekel (“NIS”) and the U.S. Dollar. These transactions were designated as cash flow hedges, as defined by Accounting Standards Codification (“ASC”) Topic 815, “Derivatives and Hedging.”  ASC Topic 815 requires that we recognize derivative instruments as either assets or liabilities in our balance sheet at fair value. These contracts are Level 2 fair value measurements in accordance with ASC Topic 820, “Fair Value Measurements and Disclosures.” For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss), net of taxes, and reclassified into earnings (various operating expenses) in the same period or periods during which the hedged transaction affects earnings.

Our cash flow hedging strategy is to hedge against the risk of overall changes in cash flows resulting from certain forecasted foreign currency rent and salary payments during the next twelve months. We hedge portions of our forecasted expenses denominated in the NIS with a single counterparty using foreign currency forward contracts and options. At September 30, 2015, we had $16.2 million notional amount of foreign currency forward contracts and options outstanding that had a net fair value liability balance of $0.1 million ($0.3 million liability, net of a $0.2 million asset). At December 31, 2014, we had $14.3 million notional amount of foreign currency forward contracts and options outstanding that had a net fair value liability balance of $0.1 million ($0.2 million liability, net of a $0.1 million asset). The net liability at September 30, 2015 is included in accrued liabilities and is expected to be recognized in our results of operations in the next twelve months. The net liability at December 31, 2014 was also included in accrued liabilities. The vast majority of any gain or loss from hedging activities is included in our various operating expenses. As a result of our hedging activities, we incurred the following gains and losses in our results of operations (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
Hedging gain (loss) recognized in operations	$	(24	)	$	6	$	(71	)	$	121

It is our policy to offset fair value amounts recognized for derivative instruments executed with the same counterparty. In connection with our foreign currency forward contracts and options and other banking arrangements, we have agreed to maintain $1.5 million of cash in bank accounts with our counterparty, which we classify as restricted cash on our balance sheet.

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

Components of accumulated other comprehensive income (loss) (“AOCI” or “AOCL”), net of tax, for the three and nine months ended September 30, 2015 and 2014 were as follows (in thousands):

	Three Months Ended September 30, 2015
	Foreign Currency Translation			Unrealized Gains (Losses) on Foreign Currency Derivatives			Unrealized Gains (Losses) on Available for Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at June 30, 2015	$	(2,896	)	$	276		$	1,021		$	(1,599	)
Other comprehensive loss before reclassifications		(805	)		(403	)		(176	)		(1,384	)
Amounts reclassified out of AOCL		—			22			—			22
Net current period activity		(805	)		(381	)		(176	)		(1,362	)
Balance at September 30, 2015	$	(3,701	)	$	(105	)	$	845		$	(2.961	)

	Nine Months Ended September 30, 2015
	Foreign Currency Translation			Unrealized Gains (Losses) on Foreign Currency Derivatives			Unrealized Gains (Losses) on Available for Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2014	$	(2,672	)	$	(98	)	$	1,255		$	(1,515	)
Other comprehensive loss before reclassifications		(1,029	)		(71	)		(410	)		(1,510	)
Amounts reclassified out of AOCL		—			64			—			64
Net current period activity		(1,029	)		(7	)		(410	)		(1,446	)
Balance at September 30, 2015	$	(3,701	)	$	(105	)	$	845		$	(2,961	)

	Three Months Ended September 30, 2014
	Foreign Currency Translation			Unrealized Gains (Losses) on Foreign Currency Derivatives			Unrealized Gains (Losses) on Available for Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at June 30, 2014	$	(726	)	$	24		$	1,800		$	1,098
Other comprehensive loss before reclassifications		(989	)		(18	)		(157	)		(1,164	)
Amounts reclassified out of AOCI		—			(6	)		—			(6	)
Net current period activity		(989	)		(24	)		(157	)		(1,170	)
Balance at September 30, 2014	$	(1,715	)	$	—		$	1,643		$	(72	)

	Nine Months Ended September 30, 2014
	Foreign Currency Translation			Unrealized Gains (Losses) on Foreign Currency Derivatives			Unrealized Gains (Losses) on Available for Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2013	$	(1,198	)	$	116		$	1,764		$	682
Other comprehensive loss before reclassifications		(517	)		(10	)		(121	)		(648	)
Amounts reclassified out of AOCI		—			(106	)		—			(106	)
Net current period activity		(517	)		(116	)		(121	)		(754	)
Balance at September 30, 2014	$	(1,715	)	$	—		$	1,643		$	(72	)

The following table summarizes the reclassifications from AOCI or AOCL to the consolidated and combined statements of operations for the three and nine months ended September 30, 2015 and 2014 (in thousands):

	Amounts Reclassified out of AOCI or AOCL
	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014		Affected Line Items in the Consolidated and Combined Statements of Operations
Gains (losses) on cash flow hedges:
Foreign currency derivatives	$	(2	)	$	1	Cost of revenues
Foreign currency derivatives		(1	)		—	Selling and marketing
Foreign currency derivatives		(13	)		4	Research and development
Foreign currency derivatives		(4	)		1	General and administrative
Foreign currency derivatives		(4	)		—	Other, net
Total before taxes		(24	)		6
Tax amounts		2			—
Income (loss) after tax	$	(22	)	$	6

	Amounts Reclassified out of AOCI or AOCL
	Nine Months Ended September 30, 2015			Nine Months Ended September 30, 2014			Affected Line Items in the Consolidated and Combined Statements of Operations
Gains (losses) on cash flow hedges:
Foreign currency derivatives	$	(7	)	$	12		Cost of revenues
Foreign currency derivatives		(3	)		5		Selling and marketing
Foreign currency derivatives		(47	)		58		Research and development
Foreign currency derivatives		(12	)		16		General and administrative
Foreign currency derivatives		(2	)		30		Other, net
Total before taxes		(71	)		121
Tax amounts		7			(15	)
Income (loss) after tax	$	(64	)	$	106

Merger, Integration and Other Expenses

Merger, Integration and Other Expenses

Merger, integration and other expenses reflect the expenses incurred in (i) DG's Merger with Extreme Reach and our Spin-Off from DG, (ii) acquiring or disposing of a business, (iii) integrating an acquired operation (e.g., office closure costs) into the Company and (iv) certain other items of income or expense not deemed to be part of our core operations. A summary of our merger, integration and other expenses is as follows (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
Description	2015		2014			2015		2014
Merger and Spin-Off (1)	$	—	$	471		$	—	$	5,209
Severance		1		504			467		1,062
Integration and restructuring costs		1,057		912			2,127		1,867
Acquisition, legal and due diligence fees		33		153			763		191
Write-off (recovery) of TV business net assets (2)		356		(1,819	)		94		(1,819	)
Total	$	1,447	$	221		$	3,451	$	6,510

(1) - See discussion of Merger and Spin-Off under “Separation from Digital Generation, Inc.” in Note 1.

(2) - Represents an increase (reduction) in expense due to realizing less (more) TV business net assets than originally estimated at the time of the Spin-Off.

Israel Operations

Israel Operations

The majority of our research and development activities and a large portion of our accounting functions are performed in Herzliya, Israel. In total, about 26% of our workforce is located in Israel.  As a result, we are subject to risks associated with operating in the Middle East.

Recently Issued Accounting Guidance

Recently Issued Accounting Guidance

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)." ASU 2014-09 modifies revenue recognition guidance for GAAP. Previous revenue recognition guidance in GAAP comprised broad revenue recognition concepts together with numerous revenue requirements for particular industries or transactions, which sometimes resulted in different accounting for economically similar transactions. In contrast, International Accounting Standards Board ("IASB") provided limited guidance on revenue recognition. Accordingly, the FASB and IASB initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards ("IFRS"). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps:  

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

In August 2015, the FASB issued ASU 2015-14 to defer the effective date of ASU 2014-09 by one year.As a result, for Sizmek, the amendments in ASU 2014-09 are now effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period.An entity shall adopt the amendments in ASU 2014-09 by either (i) retrospectively adjusting each prior reporting period presented or (ii) retrospectively adjusting for the cumulative effect of initially applying ASU 2014-09 at the date of initial adoption. We have not as yet determined (i) the extent to which we expect ASU 2014-09 will impact our reported revenues or (ii) the manner in which it will be adopted.

In September 2015, the FASB issued ASU 2015-16, "Business Combinations (Topic 805)." ASU 2015-16 modifies how changes to provisional amounts determined during the measurement period of a business combination are recognized.Under existing accounting literature, changes to provisional amounts determined during the measurement period of a business combination, resulting from facts and circumstances that existed at the acquisition date, are recognized by retrospectively adjusting the provisional amounts at the acquisition date.However, under ASU 2015-16, an acquirer recognizes adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustments are determined.For Sizmek, ASU 2015-16 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period .

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Loss per Share

9 Months Ended

Sep. 30, 2015

Loss per Share [Abstract]

Loss per Share

8.  Loss per Share

Basic earnings (loss) per common share excludes dilution and is calculated by dividing net earnings (loss) by the weighted-average number of common shares outstanding during the period.  Diluted earnings (loss) per common share is calculated by dividing net earnings (loss) by the weighted-average number of common shares outstanding during the period, as adjusted for the potential dilutive effect of non-participating share-based awards such as stock options and RSUs.

On February 7, 2014, 30.4 million shares of our common stock were distributed to DG stockholders in conjunction with the Spin-Off.  For comparative purposes, and to provide a more meaningful calculation of the weighted-average shares outstanding, we have assumed this amount to be outstanding for any period presented prior to the Spin-Off in the calculation of weighted-average shares outstanding.

The following table presents our loss per common share for the three and nine months ended September 30, 2015 and 2014 (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net loss	$	(7,548	)	$	(101,382	)	$	(23,390	)	$	(117,442	)
Weighted average common shares outstanding — basic		29,567			30,399			29,633			30,399
Dilutive securities		—			—			—			—
Weighted average common shares outstanding - diluted		29,567			30,399			29,633			30,399
Basic and diluted loss per common share	$	(0.26	)	$	(3.34	)	$	(0.79	)	$	(3.86	)
Antidilutive securities not included:
Stock options and RSUs		862			847			979			847

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Share-based Compensation

9 Months Ended

Sep. 30, 2015

Share-based Compensation [Abstract]

Share-based Compensation

6.  Share-based Compensation

Prior to our Spin-Off from DG on February 7, 2014, certain of our employees participated in DG's equity based incentive programs.  Share-based compensation expense reflected in the accompanying financial statements up until February 7, 2014 relates to DG's stock plan awards and not to our stock awards.  Immediately prior to completing the Spin-Off transaction, all outstanding equity awards became fully vested and were converted into shares of DG Common Stock to the extent the award had an intrinsic value. Equity awards with no intrinsic value were cancelled.  DG's equity incentive plans were terminated in connection with the Merger Agreement (see Note 1).  Below is a summary of our share-based compensation expense related to the stock awards (in thousands):

	Nine Months Ended September 30,
Description	2015		2014
DG stock options and RSUs awarded to our employees	$	—	$	2,650
DG share-based awards allocated to us as part of corporate services		—		3,817
Sizmek share-based awards granted		3,141		1,963
Total	$	3,141	$	8,430

In the first quarter of 2015, Sizmek's Compensation Committee granted (i) 159,245 performance-based restricted stock units (“RSUs”), (ii) 192,867 time-based RSUs and (iii) 133,600 time-based stock options, to certain of our employees and directors.  The RSUs and stock options expected to vest were valued at $2.8 million and $0.6 million, respectively.  The awards (i) vest over periods ranging from one to three years, (ii) are subject to the employees' continued employment with us or the director's continued service on our Board of Directors, and (iii) with respect to the performance-based RSUs, are subject to reaching certain (a) revenue, (b) adjusted EBITDA and (c) free cash flow growth targets (i.e., performance conditions).

In the second quarter of 2015, Sizmek's Compensation Committee granted (i) 87,251 performance-based RSUs, (ii) 361,112 time-based RSUs and (iii) 86,175 time-based stock options to certain of our employees. The RSUs and stock options expected to vest were valued at $3.4 million and $0.4 million, respectively. The awards (i) vest over periods ranging from one to three years, (ii) are subject to the employees' continued employment with us, and (iii) with respect to the performance-based RSUs, are subject to reaching certain (a) revenue, (b) adjusted EBITDA and (c) free cash flow growth targets (i.e., performance conditions).

In the third quarter of 2015, Sizmek's Compensation Committee granted 5,230 time-based RSUs valued at less than $0.1 million to one of our employees. The award vests over three years and is subject to the employee's continued employment with us.

Generally, the awards granted in 2015 vest on an accelerated basis upon the occurrence of the holder's (a) death, (b) termination by reason of disability, (c) termination without Cause (as defined) following a Change of Control (as defined) or (d) resignation for Good Reason (as defined) following a Change in Control. Unrecognized compensation costs related to unvested RSUs and stock options were $6.5 million at September 30, 2015.

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Income Taxes

9 Months Ended

Sep. 30, 2015

Income Taxes [Abstract]

Income Taxes

7.  Income Taxes

For the nine months ended September 30, 2015, our effective tax rate was 7.7% compared to 0.9% for the nine months ended September 30, 2014. The effective tax rates for each period differ from the expected federal statutory rate of 35.0% as a result of state and foreign income taxes; certain non-deductible expenses; and changes in our valuation allowances in the U.S. and state jurisdictions within the U.S. In the U.S. and state jurisdictions within the U.S., we have historically experienced tax losses. As a result, we do not recognize a tax benefit in the U.S. or state jurisdictions within the U.S. when we incur taxable losses as realization of those tax benefits is not more likely than not. Conversely, in certain foreign jurisdictions we report earnings and recognize a tax expense or benefit on that income in accordance with the tax statutes of those jurisdictions.

We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more-likely-than not sustain the position following an audit. For tax positions meeting the more-likely-than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. During the nine months ended September 30, 2015, there were no additional uncertain tax positions. Interest and penalties related to uncertain tax positions are recognized in income tax expense. For each of the nine month periods ended September 30, 2015 and 2014, we recognized less than $0.1 million of interest or penalties related to uncertain tax positions in our financial statements. The changes in uncertain tax positions for the nine months ended September 30, 2015 and 2014 were as follows (in thousands):

	Nine Months Ended September 30,
	2015			2014
Balance at beginning of year	$	1,507		$	1,701
Changes for tax positions related to prior years		(13	)		362
Balance at end of period	$	1,494		$	2,063

If we reduced our reserve for uncertain tax positions, it would result in our recognition of a tax benefit.

As of September 30, 2015, we provided a valuation allowance against substantially all of our U.S. and state NOL carryforwards as ultimate realization of these NOLs was determined to be not more-likely-than not. Accordingly, we have NOL carryforwards available to us (should we have sufficient future taxable income to utilize them) that are not reflected in our consolidated balance sheets at September 30, 2015 and December 31, 2014.

We are subject to U.S. federal income tax, income tax from multiple foreign jurisdictions including Israel and the United Kingdom, and income taxes of multiple state jurisdictions. U.S. federal, state and local income tax returns for 2011 through 2014 remain open to examination. Israeli and United Kingdom income tax returns remain open to examination for 2010 through 2014 and 2009 through 2014, respectively. Prior to our Spin-Off, our operating results had been included in DG's U.S. federal and state tax returns or tax returns of non-U.S. jurisdictions. Subsequent to our Spin-Off, we file stand-alone income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various foreign jurisdictions. Prior to our Spin-Off, we entered into a tax matters agreement with DG that governs the parties' respective rights, responsibilities and obligations with respect to taxes. The tax matters agreement generally provides that the filing of tax returns, the control of audit proceedings, and the payment of any additional tax liability relative to DG and its consolidated subsidiaries for periods prior to February 8, 2014 is our responsibility.

We do not provide deferred taxes on the undistributed earnings of our non-U.S. subsidiaries in situations where our intention is to reinvest such earnings indefinitely. Furthermore, we believe our U.S. subsidiaries have significant net assets, liquidity, and other financial resources available to meet their operational and capital investment requirements such that we do not need to repatriate the undistributed earnings of our non-U.S. subsidiaries to the U.S.

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Geographical Information and Product Categories

9 Months Ended

Sep. 30, 2015

Geographical Information and Product Categories [Abstract]

Geographical Information and Product Categories

9.  Geographical Information and Product Categories

We have one operating segment. Our chief operating decision maker is considered to be our Chief Executive Officer. The chief operating decision maker allocates resources and assesses performance of the business and other activities at the operating segment level.

The following table summarizes our revenues by geographic area (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues:
United States	$	21.918	$	19,594	$	62,493	$	58,135
Europe, Middle East and Africa		10,783		10,522		31,954		36,149
Asia Pacific		5,609		6,506		16,680		18,918
Latin America		1,233		2,068		3,982		5,784
North America (excluding U.S.)		723		823		2,132		2,907
Total	$	40,266	$	39,513	$	117,241	$	121,893

For the nine months ended September 30, 2015, about 47% of our revenues were attributable to foreign jurisdictions. However, no one country other than the United States represented more than 10% of our consolidated revenues.

The following table summarizes our revenues by product category (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues:
Core products	$	28,727	$	25,337	$	82,151	$	76,426
Rich media		4,142		10,043		19,255		33,220
Programmatic managed services		7,397		4,133		15,835		12,247
Total	$	40,266	$	39,513	$	117,241	$	121,893

The following table summarizes our long-lived assets by country (in thousands):

	September 30, 2015		December 31, 2014
Long-Lived Assets:
Israel	$	30,710	$	24,818
United States		7,180		7,181
Other countries		1,747		2,037
Total	$	39,637	$	34,036

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General (Reclassifications From AOCI Or AOCL To Consolidated And Combined Statements Of Operations) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Affected Line Items in the Consolidated and Combined Statements of Operations [Line Items]
Cost of revenues	$ 17,031	$ 14,274	$ 45,183	$ 44,028
Selling and marketing	15,597	14,082	45,233	44,184
Research and development	3,816	3,300	10,393	10,041
General and administrative	5,005	4,276	14,298	17,464
Other, net	(58)	479	1,287	687
Loss before income taxes	(10,096)	(101,595)	(25,338)	(118,474)
Tax amounts	2,548	213	1,948	1,032
Net loss	(7,548)	(101,382)	(23,390)	(117,442)
Unrealized Gain (Loss) on Foreign Currency Derivatives [Member] | Foreign currency derivatives [Member] | Amounts Reclassified out of AOCI [Member]
Affected Line Items in the Consolidated and Combined Statements of Operations [Line Items]
Cost of revenues	(2)	$ 1	(7)	12
Selling and marketing	(1)		(3)	5
Research and development	(13)	$ 4	(47)	58
General and administrative	(4)	$ 1	(12)	16
Other, net	(4)		(2)	30
Loss before income taxes	(24)	$ 6	(71)	121
Tax amounts	2		7	(15)
Net loss	$ (22)	$ 6	$ (64)	$ 106

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Geographical Information and Product Categories (Long-Lived Assets By Country) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Geographical information [Line Items]
Long-Lived Assets	$ 39,637	$ 34,036
Israel [Member]
Geographical information [Line Items]
Long-Lived Assets	30,710	24,818
United States [Member]
Geographical information [Line Items]
Long-Lived Assets	7,180	7,181
Other countries [Member]
Geographical information [Line Items]
Long-Lived Assets	$ 1,747	$ 2,037

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Measurements [Abstract]

Schedule of assets and liabilities accounted for at fair value

		Fair Value Measurements at September 30, 2015
	Balance Sheet Location	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
Assets:
Money market funds	(a)	$	28,920	$	—	$	—	$	28,920
Revenue sharing arrangement	(b)		—		—		200		200
Marketable equity securities	(c)		1,186		—		—		1,186
Total		$	30,106	$	—	$	200	$	30,306
Liabilities:
Currency forward derivatives / options	(d)	$	—	$	130	$	—	$	130

		Fair Value Measurements at December 31, 2014
	Balance Sheet Location	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
Assets:
Money market funds	(a)	$	35,953	$	—	$	—	$	35,953
Revenue sharing arrangement	(b)		—		—		160		160
Marketable equity securities	(c)		1,596		—		—		1,596
Total		$	37,549	$	—	$	160	$	37,709
Liabilities:
Currency forward derivatives / options	(d)	$	—	$	113	$	—	$	113

(a) Included in cash and cash equivalents.

(b) Included in current assets of TV business.

(c) Included in other non-current assets.

(d) Included in accrued liabilities.

Schedule of reconciliation of changes in the fair values of Level 3 assets

	Revenue Sharing Arrangement
	Nine Months Ended September 30, 2015
Balance at beginning of year	$	160
Additions recognized in operating results	40
Balance at end of period	$	200

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Loss per Share (Tables)

9 Months Ended

Sep. 30, 2015

Loss per Share [Abstract]

Schedule of loss per common share

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net loss	$	(7,548	)	$	(101,382	)	$	(23,390	)	$	(117,442	)
Weighted average common shares outstanding — basic		29,567			30,399			29,633			30,399
Dilutive securities		—			—			—			—
Weighted average common shares outstanding - diluted		29,567			30,399			29,633			30,399
Basic and diluted loss per common share	$	(0.26	)	$	(3.34	)	$	(0.79	)	$	(3.86	)
Antidilutive securities not included:
Stock options and RSUs		862			847			979			847

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Geographical Information and Product Categories (Revenues By Geographic Area) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Geographical information [Line Items]
Revenues	$ 40,266	$ 39,513	$ 117,241	$ 121,893
Percentage of revenue attributable to foreign jurisdictions			47.00%
United States [Member]
Geographical information [Line Items]
Revenues	21,918	19,594	$ 62,493	58,135
Europe, Middle East and Africa [Member]
Geographical information [Line Items]
Revenues	10,783	10,522	31,954	36,149
Asia Pacific [Member]
Geographical information [Line Items]
Revenues	5,609	6,506	16,680	18,918
Latin America [Member]
Geographical information [Line Items]
Revenues	1,233	2,068	3,982	5,784
North America (excluding U.S.) [Member]
Geographical information [Line Items]
Revenues	$ 723	$ 823	$ 2,132	$ 2,907

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Acquisitions (Summary of Estimated Fair values of Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	May. 28, 2015	Dec. 31, 2014	Sep. 04, 2014	Aug. 11, 2014
Purchase Price Allocations
Goodwill	$ 51,288		$ 40,154
Strike Ad [Member]
Purchase Price Allocations
Cash		$ 100
Receivables		3,500
Other current assets		100
Customer relationships		1,100
Developed technology		4,300
Goodwill		11,100
Total assets acquired		20,200
Less liabilities assumed		(11,400)
Net assets acquired		$ 8,800
Pixel [Member]
Purchase Price Allocations
Cash
Receivables
Other current assets
Customer relationships
Developed technology
Goodwill				$ 500
Total assets acquired				$ 500
Less liabilities assumed
Net assets acquired				$ 500
Aerify [Member]
Purchase Price Allocations
Cash
Receivables
Other current assets
Customer relationships					$ 400
Developed technology					2,100
Goodwill					3,800
Total assets acquired					$ 6,300
Less liabilities assumed
Net assets acquired					$ 6,300

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CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE LOSS [Abstract]
Net loss	$ (7,548)	$ (101,382)	$ (23,390)	$ (117,442)
Other comprehensive loss:
Unrealized loss on derivatives, net of tax	(381)	(24)	(7)	(116)
Unrealized loss on available for sale securities, net of tax	(176)	(157)	(410)	(121)
Foreign currency translation adjustment	(805)	(989)	(1,029)	(517)
Total other comprehensive loss	(1,362)	(1,170)	(1,446)	(754)
Total comprehensive loss	$ (8,910)	$ (102,552)	$ (24,836)	$ (118,196)

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Fair Value Measurements

9 Months Ended

Sep. 30, 2015

Fair Value Measurements [Abstract]

Fair Value Measurements

3. Fair Value Measurements

ASC 820, Fair Value Measurement, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.

ASC 820 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

• Level 1—Quoted prices in active markets for identical assets or liabilities.

• Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

We have classified our assets and liabilities that are measured at fair value on a recurring basis (at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.

The tables below set forth by level, assets and liabilities that were accounted for at fair value as of September 30, 2015 and December 31, 2014. The carrying values of our accounts receivable and accounts payable approximate their respective fair values due to the short-term nature of these financial instruments. The tables do not include cash on hand or assets and liabilities that are measured at historical cost or any basis other than fair value (in thousands).

		Fair Value Measurements at September 30, 2015
	Balance Sheet Location	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
Assets:
Money market funds	(a)	$	28,920	$	—	$	—	$	28,920
Revenue sharing arrangement	(b)		—		—		200		200
Marketable equity securities	(c)		1,186		—		—		1,186
Total		$	30,106	$	—	$	200	$	30,306
Liabilities:
Currency forward derivatives / options	(d)	$	—	$	130	$	—	$	130

		Fair Value Measurements at December 31, 2014
	Balance Sheet Location	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
Assets:
Money market funds	(a)	$	35,953	$	—	$	—	$	35,953
Revenue sharing arrangement	(b)		—		—		160		160
Marketable equity securities	(c)		1,596		—		—		1,596
Total		$	37,549	$	—	$	160	$	37,709
Liabilities:
Currency forward derivatives / options	(d)	$	—	$	113	$	—	$	113

(a) Included in cash and cash equivalents.

(b) Included in current assets of TV business.

(c) Included in other non-current assets.

(d) Included in accrued liabilities.

The fair value of our money market funds was determined based upon quoted market prices. The currency forward derivatives/options are derivative instruments whose value is based upon quoted market prices from various market participants. We have a zero cost basis in these derivative instruments. Our marketable equity securities relate to a single issuer and have a cost basis of $0.3 million.

In connection with our Spin-Off from DG, DG contributed a revenue sharing asset to us that resulted from DG's sale of its Springbox unit. We are entitled to a percentage of the revenues collected by the business for three years after the closing date (June 1, 2012). Revenue sharing payments are generally made once a year. We have estimated the future revenues of Springbox based on the historical revenues and certain other factors, discounted to their present value. The following table provides a reconciliation of changes in the fair values of our Level 3 assets (in thousands):

	Revenue Sharing Arrangement
	Nine Months Ended September 30, 2015
Balance at beginning of year	$	160
Additions recognized in operating results	40
Balance at end of period	$	200

In connection with an acquisition of a business, we sometimes include a contingent consideration component of the purchase price based on (i) future revenues or (ii) future revenues and operating results (e.g., adjusted EBITDA), that require minimum thresholds be met before any earnout payment becomes due. Accordingly, there can be significant volatility in the earnout liability. Each reporting period, we review our estimates of the performance indicators (e.g., revenue, adjusted EBITDA) and the corresponding earnout levels achieved, discounted to their present values. The change in fair value is recorded in cost of revenues in the accompanying statements of operations.

In connection with our acquisition of Republic Project, we agreed to make additional payments to the sellers if Republic's 2014 or 2015 revenues and adjusted EBITDA exceeded certain levels. As of September 30, 2015, we do not expect to make any payments with respect to the Republic Project contingent consideration arrangement.

Abakus Convertible Notes

In May 2014, we purchased $1.0 million of Abakus convertible promissory notes ("Convertible Notes") for $1.0 million. The Convertible Notes are due 90 days after written notice after the earlier of (i) May 30, 2016 or (ii) an occurrence of an Event of Default (as defined in the Convertible Notes). Abakus is a small private company that has developed a digital attribution software solution. The Convertible Notes bear interest at 5% per annum payable at maturity. The Convertible Notes are convertible into Abakus Series A Preferred Stock ("Series A Preferred") as follows:

a) Automatic conversion if Abakus sells $2.0 million of Series A Preferred ("Qualified Financing"), whereupon the Convertible Notes shall be converted, at Sizmek's option, at either (i) 75% of the share price in the Qualified Financing, or (ii) the quotient of $7.0 million divided by the number of shares outstanding upon exercise of all dilutive securities, or

b) Optional conversion at Sizmek's election if Abakus completes an Equity Financing (as defined in the Convertible Notes) that is not a Qualified Financing, whereupon the Convertible Notes shall be converted at 75% of the share price in the Equity Financing.

In addition, upon a Change in Control, as defined in the Convertible Notes, the Convertible Notes shall be paid off at the greater of (i) the outstanding balance, or (ii) the amount the holder would have received upon conversion of the Convertible Notes. The Convertible Notes are considered held-to-maturity securities and are carried at amortized cost. The fair value of the Convertible Notes is not readily determinable. We are not aware of a market for the Convertible Notes. The Convertible Notes are included in other non-current assets.

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Geographical Information and Product Categories (Tables)

9 Months Ended

Sep. 30, 2015

Geographical Information and Product Categories [Abstract]

Schedule of revenues by geographic area

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues:
United States	$	21.918	$	19,594	$	62,493	$	58,135
Europe, Middle East and Africa		10,783		10,522		31,954		36,149
Asia Pacific		5,609		6,506		16,680		18,918
Latin America		1,233		2,068		3,982		5,784
North America (excluding U.S.)		723		823		2,132		2,907
Total	$	40,266	$	39,513	$	117,241	$	121,893

Schedule of revenues by product category

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues:
Core products	$	28,727	$	25,337	$	82,151	$	76,426
Rich media		4,142		10,043		19,255		33,220
Programmatic managed services		7,397		4,133		15,835		12,247
Total	$	40,266	$	39,513	$	117,241	$	121,893

Schedule of long-lived assets by country

	September 30, 2015		December 31, 2014
Long-Lived Assets:
Israel	$	30,710	$	24,818
United States		7,180		7,181
Other countries		1,747		2,037
Total	$	39,637	$	34,036

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Fair Value Measurements (Reconciliation Of Changes In Fair Values Of Level 3 Assets) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($)
Fair Value Measurements [Line Items]
Cost basis of currency forward derivative/options	$ 0
Marketable equity securities, cost basis	300
Revenue Sharing Arrangement [Member]
Reconciliation of changes in fair value of Level 3 assets
Balance at beginning of period	160
Additions recognized in operating results	40
Balance at end of period	$ 200

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General (Tables)

9 Months Ended

Sep. 30, 2015

General [Abstract]

Schedule of DG's assets and liabilities outstanding

Description	September 30,  2015		December 31,  2014
Current assets of television business:
Income tax receivables	$	748	$	1,943
Trade accounts receivable	9		367
Springbox revenue sharing	200		160
Total	$	957	$	2,470
Current liabilities of television business:
Trade accounts payable	$	—	$	165
Accrued liabilities	420		230
Total	$	420	$	395
Non-current liabilities of television business:
Uncertain tax positions	$	273	$	260

Schedule of gains and losses recognized in consolidated results of operations due to hedging activities

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
Hedging gain (loss) recognized in operations	$	(24	)	$	6	$	(71	)	$	121

Schedule of components of accumulated other comprehensive income (loss) ("AOCI" or "AOCL"), net of tax

	Three Months Ended September 30, 2015
	Foreign Currency Translation			Unrealized Gains (Losses) on Foreign Currency Derivatives			Unrealized Gains (Losses) on Available for Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at June 30, 2015	$	(2,896	)	$	276		$	1,021		$	(1,599	)
Other comprehensive loss before reclassifications		(805	)		(403	)		(176	)		(1,384	)
Amounts reclassified out of AOCL		—			22			—			22
Net current period activity		(805	)		(381	)		(176	)		(1,362	)
Balance at September 30, 2015	$	(3,701	)	$	(105	)	$	845		$	(2.961	)

	Nine Months Ended September 30, 2015
	Foreign Currency Translation			Unrealized Gains (Losses) on Foreign Currency Derivatives			Unrealized Gains (Losses) on Available for Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2014	$	(2,672	)	$	(98	)	$	1,255		$	(1,515	)
Other comprehensive loss before reclassifications		(1,029	)		(71	)		(410	)		(1,510	)
Amounts reclassified out of AOCL		—			64			—			64
Net current period activity		(1,029	)		(7	)		(410	)		(1,446	)
Balance at September 30, 2015	$	(3,701	)	$	(105	)	$	845		$	(2,961	)

	Three Months Ended September 30, 2014
	Foreign Currency Translation			Unrealized Gains (Losses) on Foreign Currency Derivatives			Unrealized Gains (Losses) on Available for Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at June 30, 2014	$	(726	)	$	24		$	1,800		$	1,098
Other comprehensive loss before reclassifications		(989	)		(18	)		(157	)		(1,164	)
Amounts reclassified out of AOCI		—			(6	)		—			(6	)
Net current period activity		(989	)		(24	)		(157	)		(1,170	)
Balance at September 30, 2014	$	(1,715	)	$	—		$	1,643		$	(72	)

	Nine Months Ended September 30, 2014
	Foreign Currency Translation			Unrealized Gains (Losses) on Foreign Currency Derivatives			Unrealized Gains (Losses) on Available for Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2013	$	(1,198	)	$	116		$	1,764		$	682
Other comprehensive loss before reclassifications		(517	)		(10	)		(121	)		(648	)
Amounts reclassified out of AOCI		—			(106	)		—			(106	)
Net current period activity		(517	)		(116	)		(121	)		(754	)
Balance at September 30, 2014	$	(1,715	)	$	—		$	1,643		$	(72	)

Summary of reclassifications from accumulated other comprehensive income (loss) to the consolidated and combined statements of operations

	Amounts Reclassified out of AOCI or AOCL
	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014		Affected Line Items in the Consolidated and Combined Statements of Operations
Gains (losses) on cash flow hedges:
Foreign currency derivatives	$	(2	)	$	1	Cost of revenues
Foreign currency derivatives		(1	)		—	Selling and marketing
Foreign currency derivatives		(13	)		4	Research and development
Foreign currency derivatives		(4	)		1	General and administrative
Foreign currency derivatives		(4	)		—	Other, net
Total before taxes		(24	)		6
Tax amounts		2			—
Income (loss) after tax	$	(22	)	$	6

	Amounts Reclassified out of AOCI or AOCL
	Nine Months Ended September 30, 2015			Nine Months Ended September 30, 2014			Affected Line Items in the Consolidated and Combined Statements of Operations
Gains (losses) on cash flow hedges:
Foreign currency derivatives	$	(7	)	$	12		Cost of revenues
Foreign currency derivatives		(3	)		5		Selling and marketing
Foreign currency derivatives		(47	)		58		Research and development
Foreign currency derivatives		(12	)		16		General and administrative
Foreign currency derivatives		(2	)		30		Other, net
Total before taxes		(71	)		121
Tax amounts		7			(15	)
Income (loss) after tax	$	(64	)	$	106

Summary of merger, integration and other expenses

	Three Months Ended September 30,					Nine Months Ended September 30,
Description	2015		2014			2015		2014
Merger and Spin-Off (1)	$	—	$	471		$	—	$	5,209
Severance		1		504			467		1,062
Integration and restructuring costs		1,057		912			2,127		1,867
Acquisition, legal and due diligence fees		33		153			763		191
Write-off (recovery) of TV business net assets (2)		356		(1,819	)		94		(1,819	)
Total	$	1,447	$	221		$	3,451	$	6,510

(1) - See discussion of Merger and Spin-Off under “Separation from Digital Generation, Inc.” in Note 1.

(2) - Represents an increase (reduction) in expense due to realizing less (more) TV business net assets than originally estimated at the time of the Spin-Off.