DRS/A

Confidential draft No. 2 as confidentially submitted to the Securities and Exchange Commission on September 5, 2013

This draft registration statement has not been publicly filed with the Securities and Exchange Commission

and all information herein remains strictly confidential

Registration No. 333-            

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

BARRACUDA NETWORKS, INC.

(Exact name of registrant as specified in its charter)

Delaware	3577	83-0380411
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

3175 S. Winchester Blvd

Campbell, California 95008

(408) 342-5400

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

William D. “BJ” Jenkins, Jr.

Chief Executive Officer

Barracuda Networks, Inc.

3175 S. Winchester Blvd

Campbell, California 95008

(408) 342-5400

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Jeffrey D. Saper Allison B. Spinner Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, California 94304 (650) 493-9300 Diane C. Honda Vice President and General Counsel Barracuda Networks, Inc. 3175 S. Winchester Blvd Campbell, California 95008 (408) 342-5400 Gordon K. Davidson Jeffrey R. Vetter William L. Hughes Fenwick & West LLP 801 California Street Mountain View, California 94041 (650) 988-8500

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box:  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

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. (Check one):

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

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee
Common Stock, $0.001 par value per share	$	$

(1) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2) Includes the aggregate offering price of additional shares that the underwriters have the option to purchase to cover over-allotments, if any.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we and the selling stockholders are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS (Subject to Completion)

Issued                     , 2013

                Shares

COMMON STOCK

Barracuda Networks, Inc. is offering                 shares of its common stock and the selling stockholders are offering                 shares. We will not receive any proceeds from the sale of shares by the selling stockholders. This is our initial public offering, and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $         and $         per share.

We intend to apply to list our common stock on the                 under the symbol “CUDA”.

We are an “emerging growth company” under the federal securities laws and are subject to reduced public company reporting requirements. Investing in our common stock involves risks. See the section titled “Risk Factors” beginning on page 13.

PRICE $             A SHARE

	Price to Public	Underwriting Discounts and Commissions(1)	Proceeds to Barracuda Networks	Proceeds to Selling Stockholders
Per Share	$	$	$	$
Total	$	$	$	$

(1) See the section titled “Underwriting” for a description of the compensation payable to the underwriters.

We, and the selling stockholders, have granted the underwriters the right to purchase up to                  additional shares of common stock to cover over-allotments.

The Securities and Exchange Commission and any state securities regulators have not approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares of common stock to purchasers on                     , 2013.

MORGAN STANLEY	J.P. MORGAN	BofA MERRILL LYNCH
WILLIAM BLAIR	LAZARD CAPITAL MARKETS	PACIFIC CREST SECURITIES

                    , 2013

TABLE OF CONTENTS

	Page
Prospectus Summary		1
Risk Factors		13
Special Note Regarding Forward-Looking Statements		41
Market and Industry Data		43
Use of Proceeds		44
Dividend Policy		44
Capitalization		45
Dilution		47
Selected Consolidated Financial Data		49
Management’s Discussion and Analysis of Financial Condition and Results of Operations		55
Business		88

	Page
Management		108
Executive Compensation		115
Certain Relationships and Related Party Transactions		124
Principal and Selling Stockholders		129
Description of Capital Stock		131
Shares Eligible for Future Sale		136
Material U.S. Federal Income Tax Consequences to Non-U.S. Holders		139
Underwriting		143
Legal Matters		151
Experts		151
Additional Information		151
Index to Consolidated Financial Statements		F-1

Neither we, the selling stockholders, nor the underwriters have authorized anyone to provide any information or make any representations other than those contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the selling stockholders are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common stock.

Through and including                     , 2013 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

For investors outside of the United States: Neither we, the selling stockholders, nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about, and to observe any restrictions relating to, this offering and the distribution of this prospectus outside of the United States.

i

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing in this prospectus, including “Risk Factors,” “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and our consolidated financial statements and related notes before deciding whether to purchase shares of our common stock. Unless the context otherwise requires, the terms “Barracuda Networks,” “Barracuda,” “the company,” “we,” “us” and “our” in this prospectus refer to Barracuda Networks, Inc., and its subsidiaries. Our fiscal year end is February 28/29, and our fiscal quarters end on May 31, August 30, November 30 and February 28/29. Our fiscal years ended February 28, 2010, February 28, 2011, February 29, 2012 and February 28, 2013 are referred to herein as fiscal 2010, 2011, 2012 and 2013, respectively.

BARRACUDA NETWORKS, INC.

Overview

Barracuda designs and delivers powerful yet easy-to-use security and storage solutions. We offer cloud-connected solutions that help our customers address security threats, improve network performance and protect and store their data. Our solutions are designed to simplify IT operations for our customers, allowing them to enhance their return on technology investment. Our business model is built on the core values of speed and agility, which we apply to all aspects of our approach, including our technology innovations, the delivery and deployment of our solutions and responses to customer inquiries. This model has enabled us to be highly scalable in reaching a large number of potential customers. Since inception, we have sold our solutions to more than 150,000 customers located in more than 100 countries.

Our security and storage solutions are connected to our cloud services which enable continuous software updates, offsite redundancy and distributed capacity, and are offered on a subscription basis. Our solutions are delivered as cloud-connected appliances and virtual appliances, as well as cloud-only solutions. Our security solutions are designed to protect and optimize the performance of the most critical points within our customers’ IT infrastructures, including email servers, web applications, data centers and core networks. Our storage solutions are designed to backup and archive business-critical data and make such data accessible for purposes such as compliance, disaster recovery and business intelligence. Our storage solutions also allow users to securely and quickly access, share, synchronize and sign files from Internet-connected devices. Our solutions can be managed centrally in any size or type of deployment through integrated, easy-to-use web interfaces that support configuration, monitoring and reporting.

We design our solutions specifically for IT professionals in resource-constrained environments who seek to benefit from current and emerging trends in information technology such as the rapid growth in cloud computing, adoption of virtualization, proliferation of mobile devices and the associated explosion of data. Our customers work in all types of organizations, from mid-market businesses, governments and educational institutions, to departments or divisions within Fortune 2000 enterprises.

We nurture a culture that delivers value through simplicity to optimize our customers’ experiences. From the design of our solutions to our sales processes, customer support, manufacturing and delivery, we strive to make our solutions easy to purchase, install, maintain and update. We believe that Barracuda has become a highly visible and recognizable brand as a trusted IT partner. We design our solutions to be easy to use and to deploy without the need for special expertise or external support from IT specialists, and also to provide powerful capabilities that can be optimized to meet the requirements of resource-constrained environments. We employ

1

a high-velocity sales model that incorporates a 30-day right to return, real-time order fulfillment and a simple, low-cost entry point to make our customers’ purchase decisions and deployments seamless, easy and efficient. Through our recurring subscription services, we provide our customers with up-to-date features, functionality and real-time security protection, eliminating the need for costly upgrades or additional software purchases. We answer our phones live 24x7x365, and endeavor to treat every customer call with the same high priority. Central to our culture is a focus on the long-term customer experience, including an ongoing dialogue with our customers to enhance our features and solutions. Our development and fulfillment processes rapidly deliver new services and functionality to our customers, enabling them to improve their time to value and return on technology investment through low total cost of ownership, easy integration and accelerated deployment of our security and storage solutions.

For fiscal 2011, 2012 and 2013, and for the three months ended May 31, 2013, our gross billings were $191.3 million, $233.2 million, $264.2 million and $74.9 million, respectively. For fiscal 2011, 2012 and 2013, and for the three months ended May 31, 2013, our total revenue was $142.1 million, $160.9 million, $198.9 million and $56.3 million, respectively. We believe that the subscription nature of our solutions provides us with enhanced financial visibility. Subscription revenue for fiscal 2011, 2012 and 2013 and for the three months ended May 31, 2013 represented approximately 63%, 73%, 70% and 69% of our total revenue, respectively. For fiscal 2011, 2012 and 2013, and for the three months ended May 31, 2013, net income (loss) to Barracuda was $3.0 million, $0.6 million, $(7.4) million and $(2.4) million, respectively. For fiscal 2011, 2012 and 2013, and for the three months ended May 31, 2013, our free cash flow, adjusted for acquisition costs and other non-recurring charges, was $34.4 million, $35.4 million, $41.1 million and $1.6 million, respectively.

Industry Background

Modern IT Trends Offer Attractive Benefits to All Organizations

Organizations are looking to take advantage of important technology trends, particularly the rapid growth of cloud computing, proliferation of mobile devices, widespread use of web applications like Facebook, LinkedIn, Twitter and YouTube and increased adoption of virtualization and software defined networking, or SDN. These advanced technology trends can be exploited by organizations to gain significant competitive advantages and to support core business operations, enable dramatic efficiency gains and open up new go-to-market channels and revenue opportunities.

The Confluence of IT Trends Creates a Set of Obstacles that IT Professionals Must Address

IT trends are significantly changing the way that IT infrastructures are designed, deployed and secured, creating a complex and rapidly evolving set of challenges that need to be addressed by IT professionals.

• Escalating Security Threat Environment. Organizations face security threats from a variety of attackers that can result in organizational disruption, as well as the theft of sensitive information, and can cause financial and reputational damage. Organizations of all sizes are being forced to reexamine their security risks and technology investments as security threats evolve and increase in number, complexity, variety and severity.

• Productivity and Security Challenges Posed by Web Applications. Organizations can benefit greatly from popular web applications, such as Facebook, LinkedIn, Twitter and YouTube, which enable new channels to communicate and collaborate with customers and business partners, as well as a means to market their products and recruit employees. In order to take advantage of these benefits, organizations need to safely enable the use of these applications within a secure infrastructure, such that only the right individuals are using the right set of applications for their business functions.

• Explosion of Data and Increased Storage Consumption. The volume of digital information created and replicated worldwide is growing, and organizations are increasingly dependent on the availability

2

of this information at all times. As a result, organizations cannot afford to lose access to business critical data and need a cost effective and scalable way to ensure that their data is being stored safely and can be recovered rapidly.

• Constrained IT Budgets. Macroeconomic conditions have kept IT budgets under significant pressure and, despite recent innovations in the industry, security and storage infrastructures increasingly require greater investments to implement, run and manage. As a result, there is a need for security and storage environments to become vastly more efficient against the backdrop of constrained IT budgets.

Organizations Need a New Approach to IT in Resource-Constrained Environments

Rapidly changing dynamics in today’s IT landscape are forcing organizations of all sizes to evolve their IT strategies. Fortune 500 companies are better positioned to address these challenges as they typically have core IT departments that can comprise a significant number of highly skilled and specialized computer scientists and engineers, as well as IT budgets that can be in the billions of dollars. We believe that there are millions of underserved organizations without these resources. These organizations include small and mid-market businesses, governments, educational institutions and departments or divisions within Fortune 2000 enterprises. IT professionals within these organizations seek powerful yet easy-to-use solutions to address the challenges posed by these trends.

We believe most traditional software and hardware vendors have designed their products and business operations to cater primarily to the largest companies. These solutions typically fail to meet the needs of resource-constrained organizations in several key ways:

• Complex to Deploy and Use. Traditional IT solutions often are difficult to install, require significant configuration and necessitate specialized services and technical support to get the systems up and running.

• Marketing Optimized for Large Organizations. Traditional IT solution vendors tend to focus marketing efforts primarily on high-touch, senior level interactions with a smaller number of large customers. As a result, IT professionals within resource-constrained organizations are frequently challenged to work effectively with these vendors to identify the products they require to solve their problems.

• Lengthy, High-Touch Sales Cycle. The complexity of traditional IT solutions and the requirement for customers to tailor traditional IT solutions to their needs lead to longer sales cycles, prolonging the period of time before customers can solve their problems.

• Lengthy Manufacturing and Fulfillment. Solutions from traditional IT vendors often have long delivery and installation times. In addition, vendors periodically experience delivery delays due to the inability of their supply chain to meet quality and delivery requirements consistently.

• Lack of Investment Protection. To meet increasing performance and solution requirements, customers often are forced to perform “forklift” system upgrades or purchase new software licenses.

• Inadequate Customer Support. Traditional IT solution vendors often rely heavily on self-service telephone support and outsourced customer support staff located in remote geographies. This approach can lead to an inadequate and frustrating customer support experience and lengthy time to resolution.

Our Market Opportunity

We operate in a number of established, multi-billion dollar segments across the security and storage markets that we estimate were approximately $30 billion in 2012, based on market data from established third-party market research firms. We define our security market as the web access management, secure email gateway,

3

secure web gateway, intrusion prevention systems equipment, secure socket layer virtual private network, or VPN, equipment, VPN/firewall equipment and application delivery controllers segments. According to Gartner, estimated spending on these security segments was $14.6 billion worldwide in 2012. We define our storage market as the archival disk-based storage, archiving software, purpose-built backup appliances and data protection software and hardware segments. According to IDC, estimated spending on these storage segments was $15.9 billion worldwide in 2012. The market for the above security and storage segments for companies with less than 5,000 employees was $14.8 billion in 2012, according to a study we commissioned from Compass Intelligence. Compass Intelligence further estimates there were 20.8 million companies worldwide with less than 5,000 employees in 2012.

Our Business Model

Since our founding, we have designed our solutions, established our culture and built our business model to cater specifically to the needs of IT professionals in resource-constrained environments. We maintain control of the value chain across our solutions, marketing efforts, sales processes, manufacturing, delivery and customer support. This integrated model enables us to tailor the customer experience to deliver powerful yet easy-to-use security and storage solutions and high-value, recurring subscriptions to IT professionals in the way that works best for their organizations.

Key elements of our business model include:

• Powerful, Easy-to-Use Cloud-Connected Solutions. Our solutions are purpose-built to be easy to use and to deploy without the need for special expertise or external support from IT specialists. We believe that whether a solution is an entry-level or company-wide deployment, it should provide  powerful functionality and be easy to use. 

• Trusted Brand and Innovative Marketing. We believe partners and customers alike have come to rely on Barracuda as a  trusted IT partner.  The principal focus of our marketing programs is to reach IT professionals within resource-constrained organizations and elevate their awareness of our comprehensive portfolio of security and storage solutions.

4

• High-Velocity Sales. We believe our  “product often sells itself”  based on its breadth of functionality, ease of use and simple pricing. With our global partner network of more than 5,000 distributors and value added resellers and our solutions and sales specialists, we offer straightforward, competitive pricing and a 30-day right to return, making our solutions easier to purchase.

• Efficient Manufacturing and Fulfillment. We manage our operations through customized, streamlined processes, using our backend logistics software system that enables efficient manufacturing and physical and digital distribution of our solutions. This gives us the  speed and agility  to facilitate quick and precise responses to customer needs.

• High-Value, Recurring Subscriptions. Our recurring subscription services provide our customers with  up-to-date features, functionality and real-time security protection,  as well as eliminate the need for future “forklift” system upgrades or additional software purchases.

• Proactive, Live, “Insourced” Customer Support. We provide our customers with high-quality, proactive customer support, including remote support, preventative diagnostics and a direct line to Barracuda support technicians available 24x7x365—with  no phone trees —to answer customer calls and quickly and efficiently respond to their needs.

By offering a portfolio of solutions that includes cloud-connected appliances and virtual appliances, as well as cloud-only solutions, we are able to engineer functionality to align with, and take advantage of, the benefits of each form factor. This alignment increases overall value for our customers through more integrated solutions, and for our business through lower infrastructure and fewer materials costs. Our high-velocity sales model enables faster adoption of our solutions by customers and benefits our business by enabling us to improve our return on investment in sales and marketing. Our efficient manufacturing and fulfillment enables fast delivery of our solutions to customers and benefits our business through our ability to maintain low inventory levels and minimal overhead expenses. Our customer support proactively resolves customer issues and, we believe, results in higher renewal rates and new cross-sell opportunities for us. Our subscription model provides our customers with continuous and transparent access to the latest functionality enhancements and a highly visible, recurring revenue stream for our business.

Our Competitive Strengths

We believe we have a number of competitive advantages that will enable us to maintain and extend our leadership position including:

• Vertically-Integrated Approach. Our vertically-integrated approach, in which we control the value chain across our solutions, enables us to tailor the customer experience to deliver powerful yet easy-to-use security and storage solutions to organizations in the way that works best for IT professionals in resource-constrained environments.

• Hybrid, Cloud-Connected Solution Design. By offering a portfolio of solutions and multiple deployment options, we are able to engineer functionality optimally to align with the benefits of each form factor, thereby increasing overall value for our customers.

• Large, Engaged Customer Base. Our broad customer base and solution portfolio provide us with a platform from which we can cross-sell solutions to our existing customers.

• Leadership and Dedicated Focus. Since our founding, we have demonstrated our ability to execute our innovative business model successfully and establish a leadership position across multiple markets.

• Innovative Technology and Intellectual Property. We continue to invest in research and development to ensure our solutions are powerful yet easy to use. Additionally, as of May 31, 2013, we had 43 issued patents and 50 patent applications pending in the United States.

5

• Strong Brand. We have built our brand with IT professionals in mind, and our brand is at the core of our business model. We believe Barracuda is widely recognized as a trusted IT partner who combines leading technology solutions with highly responsive customer service in order to simplify IT for IT professionals.

Our Strategy

Our goal is to maintain and extend our leadership position as a global provider of solutions that simplify complex IT problems for IT professionals in resource-constrained organizations. Key elements of our growth strategy include:

• Increase Sales to New Customers. We plan to continue to engage with IT professionals through our differentiated business model in order to expand our customer base.

• Increase Our Solution and Deployment Footprint within Our Existing Customer Base. We plan to pursue cross-sell opportunities with our diverse, worldwide customer base, especially as these customers look to consolidate IT suppliers to reduce overall IT spending.

• Apply Our Business Model to New Technologies and Markets. We intend to focus on developing and acquiring technologies that fit within our business model and can address the needs of IT professionals.

• Expand and Optimize Our Worldwide Channel and Partner Network. We intend to continue driving operating leverage by expanding our distributor and value added reseller network, especially in international regions where we can benefit from the local expertise of our partners.

Risks Affecting Us

Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this prospectus summary. These risks include, but are not limited to, the following:

• we must increase sales of our solutions to new customers and sell additional solutions to our existing customers;

• we rely significantly on revenue from subscriptions, which may decline;

• we experienced net losses on a GAAP basis in recent periods and may not achieve or maintain profitability in the future;

• we must successfully continue to develop, manufacture and market solutions that respond promptly to meet our customers’ needs;

• we may not gain broad market acceptance for new solutions;

• we must generate significant volumes of sales leads;

• our quarterly and annual operating results may vary and be unpredictable;

• if we fail to cost-effectively promote or protect our brand, our business may be harmed;

• we face intense competition; and

• if we fail to comply with governmental laws and regulations, our business could be harmed.

Corporate Information

We were incorporated in 2003 in the State of California under the name Barracuda Networks, Inc. and in 2004 reincorporated in the State of Delaware. Our principal executive offices are located at 3175 S. Winchester

6

Blvd., Campbell, California 95008, and our telephone number is (408) 342-5400. Our website is www.barracuda.com. Information contained on, or that can be accessed through, our website is not incorporated by reference into this prospectus, and you should not consider information on our website to be part of this prospectus.

Our design logos and the marks “Barracuda,” “Barracuda Networks,” “Copy” and “SignNow” are the property of Barracuda Networks, Inc. This prospectus contains additional trade names, trademarks and service marks of other companies. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. We will remain an emerging growth company until the earlier of the last day of the fiscal year following the fifth anniversary of the completion of this offering, the last day of the fiscal year in which we have total annual gross revenue of at least $1.0 billion, the date on which we are deemed to be a large accelerated filer (this means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the second quarter of that fiscal year), or the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

7

THE OFFERING

Common stock offered by us	shares
Common stock offered by the selling stockholders	shares
Total common stock offered	shares
Over-allotment option	shares
Common stock to be outstanding after this offering	shares
Use of proceeds	The principal purposes of this offering are to increase our capitalization and financial flexibility, create a public market for our common stock, thereby enabling access to public equity markets by our stockholders and employees, facilitate an orderly distribution of shares for the selling stockholders and increase our visibility in the marketplace. We intend to use the net proceeds we receive from this offering primarily for capital expenditures and general corporate purposes, including working capital, sales and marketing activities, product development and general and administrative matters. We also may use a portion of the net proceeds from this offering to make complementary acquisitions or investments. However, we do not have agreements or commitments for any specific acquisitions or investments at this time. See the section titled “Use of Proceeds.”
Proposed              symbol	“CUDA”

The number of shares of our common stock to be outstanding after this offering is based on 137,267,637 shares of our common stock outstanding as of May 31, 2013, and excludes:

• 15,371,672 shares of common stock issuable upon the exercise of options outstanding as of May 31, 2013, with a weighted-average exercise price of $3.70 per share;

• 3,508,828 shares of common stock issuable upon the vesting of restricted stock units, or RSUs, outstanding as of May 31, 2013; and

• 2,707,540 shares of common stock reserved for future issuance under our 2012 Equity Incentive Plan and shares that become available under our 2012 Equity Incentive Plan, pursuant to provisions thereof that automatically increase the share reserves under the plans each year, as more fully described in the section titled “Executive Compensation—Employee Benefit Plans.”

Except as otherwise indicated, all information in this prospectus assumes:

• the effectiveness of our amended and restated certificate of incorporation upon the completion of this offering;

• the automatic conversion of all shares of our redeemable convertible preferred stock outstanding as of May 31, 2013 into an aggregate of 52,878,666 shares of common stock immediately prior to the completion of this offering;

• no exercise of outstanding options or vesting of outstanding RSUs subsequent to May 31, 2013; and

• no exercise of the underwriters’ over-allotment option.

8

SUMMARY CONSOLIDATED FINANCIAL DATA

We have derived the summary consolidated statements of operations data for our fiscal years ended February 28, 2011, February 29, 2012 and February 28, 2013 from our audited consolidated financial statements included elsewhere in this prospectus. We have derived the summary consolidated statements of operations data for the three months ended May 31, 2012 and 2013 and the summary consolidated balance sheet data as of May 31, 2013 from our unaudited consolidated financial statements included elsewhere in this prospectus. Our unaudited consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and, in the opinion of management, include all adjustments, which consist only of normal recurring adjustments, necessary for the fair presentation of those unaudited consolidated financial statements. Our historical results are not necessarily indicative of the results that may be expected in the future, and the results for the three months ended May 31, 2013 are not necessarily indicative of operating results to be expected for the fiscal year ending February 28, 2014 or any other period. You should read the following summary consolidated financial data together with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements, related notes and other financial information included elsewhere in this prospectus.

	Year Ended February 28/29,								Three Months Ended May 31,
	2011		2012			2013			2012			2013
	(in thousands, except per share data)
Consolidated Statements of Operations Data:
Revenue:
Appliance	$	52,477	$	43,258		$	59,528		$	13,318		$	17,503
Subscription		89,655		117,662			139,403			32,691			38,774
Total revenue		142,132		160,920			198,931			46,009			56,277
Cost of revenue(1)		31,972		34,966			45,088			10,274			13,074
Gross profit		110,160		125,954			153,843			35,735			43,203
Operating expenses:
Research and development(1)		23,979		27,824			35,167			7,656			10,842
Sales and marketing(1)		69,963		84,885			102,329			24,027			28,836
General and administrative(1)		13,021		14,428			28,777			6,420			6,678
Total operating expenses		106,963		127,137			166,273			38,103			46,356
Income (loss) from operations		3,197		(1,183	)		(12,430	)		(2,368	)		(3,153	)
Other income (expense), net		282		476			(839	)		(1,074	)		(457	)
Income (loss) before income taxes and non-controlling interest		3,479		(707	)		(13,269	)		(3,442	)		(3,610	)
Provision (benefit) for income taxes		1,136		(453	)		(5,084	)		(902	)		(1,047	)
Consolidated net income (loss)		2,343		(254	)		(8,185	)		(2,540	)		(2,563	)
Net loss attributable to non-controlling interest		620		859			794			206			159
Net income (loss) attributable to Barracuda Networks, Inc.	$	2,963	$	605		$	(7,391	)	$	(2,334	)	$	(2,404	)
Net income (loss) attributable to common stockholders	$	2,281	$	466		$	(9,203	)	$	(2,334	)	$	(2,404	)
Net income (loss) per share attributable to common stockholders:
Basic	$	0.02	$	0.00		$	(0.10	)	$	(0.02	)	$	(0.03	)
Diluted	$	0.02	$	0.00		$	(0.10	)	$	(0.02	)	$	(0.03	)

9

	Year Ended February 28/29,							Three Months Ended May 31,
	2011		2012		2013			2012		2013
	(in thousands, except per share data)
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
Basic		100,890		101,488		96,094			101,385		84,301
Diluted		134,943		136,066		96,094			101,385		84,301
Pro forma net income (loss) per share attributable to common stockholders:
Basic and diluted					$	(0.05	)			$	(0.02	)
Pro forma weighted-average shares outstanding used to compute net income (loss) per share attributable to common stockholders:
Basic and diluted						135,461					137,180

(1) Includes stock-based compensation expense as follows:

	Year Ended February 28/29,						Three Months Ended May 31,
	2011		2012		2013		2012		2013
	(in thousands)
Cost of revenue	$	84	$	51	$	146	$	21	$	45
Research and development		848		766		2,059		284		630
Sales and marketing		627		527		1,182		185		334
General and administrative		417		527		5,400		2,751		1,488
Total stock-based compensation	$	1,976	$	1,871	$	8,787	$	3,241	$	2,497

	May 31, 2013
	Actual			Pro Forma(1)			Pro Forma as  Adjusted(2)
	(in thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents and marketable securities	$	21,953		$	21,953		$
Working capital (deficit)		(68,963	)		(68,963	)
Total assets		216,549			216,549
Deferred revenue, current and non-current		274,444			274,444
Note payable, current and non-current		5,038			5,038
Redeemable convertible preferred stock		167,554			—
Common stock, including additional paid-in capital		25,395			192,949
Total stockholders’ deficit		(260,278	)		(92,724	)

(1) The pro forma column gives effect to the automatic conversion of all outstanding shares of our redeemable convertible preferred stock into 52,878,666 shares of common stock and the effectiveness of our amended and restated certificate of incorporation which will occur immediately prior to the completion of this offering, as if such conversion had occurred and our amended and restated certificate of incorporation had become effective on May 31, 2013.

(2) The pro forma as adjusted column gives effect to the pro forma adjustments and the sale of shares of common stock by us in this offering, based on an assumed initial public offering price of $             per share, the midpoint of the estimated price range reflected on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

10

Key Metrics

We monitor the following key metrics to help us evaluate growth trends, establish budgets and assess operational efficiencies. In addition to our results determined in accordance with U.S. generally accepted accounting principles, or GAAP, we believe the following non-GAAP and operational measures are useful in evaluating our operating performance.

	Year Ended February 28/29,									Three Months Ended May 31,
	2011			2012			2013			2012			2013
	(in thousands, except percentages and active subscribers)
Gross billings	$	191,306		$	233,211		$	264,225		$	65,362		$	74,865
Year-over-year percentage increase					22	%		13	%					15	%
Year-over-year percentage increase on a constant currency basis(1)					22	%		17	%					16	%
Adjusted EBITDA	$	46,200		$	55,251		$	49,095		$	14,110		$	12,053
Adjusted EBITDA as a percentage of total revenue		33	%		34	%		25	%		31	%		21	%
Free cash flow	$	34,422		$	35,416		$	41,085		$	9,866		$	1,607
Free cash flow as a percentage of total revenue		24	%		22	%		21	%		21	%		3	%
Active subscribers at period end		134,807			156,976			179,952			161,998			184,232

(1) In order to determine how our business performed exclusive of the effect of foreign currency fluctuations, we compare the percentage change in our gross billings from one period to another using a constant currency. To present this gross billings information, the current and comparative prior period results for entities that operate in other than U.S. dollars are converted into U.S. dollars at constant exchange rates. For example, the rates in effect at February 28, 2013, which was the last day of our prior fiscal year, were used to convert current and comparable prior period gross billings rather than the actual exchange rates in effect during the respective period.

Gross billings. We define gross billings as total revenue plus the change in deferred revenue and other adjustments, which primarily reflect returns and reserves with respect to the 30-day right to return we provide to our customers, as well as rebates for certain channel partner activities, during a particular period. We use gross billings as a performance measurement and a leading indicator of our future revenue, based on our business model of invoicing our customers at the time of sale of our solutions and recognizing revenue ratably over subsequent periods. Accordingly, we believe gross billings provide valuable insight into the sales of our solutions and the performance of our business. The gross billings we record in any period reflect sales to new customers plus renewals and additional sales to existing customers adjusted for returns, rebates and other offsets. In many cases, these returns, rebates and other offsets occur in periods different from the period of sale, and are unrelated to the marketing efforts leading to the initial sale, and therefore by adjusting for such offsets, we believe our computation of gross billings better reflects the effectiveness of our sales and marketing efforts.

Adjusted EBITDA. We define adjusted EBITDA as net income (loss) plus non-cash and non-operating charges, which includes acquisition and other non-recurring charges. Because of our business model, where revenue from gross billings is deferred and recognized ratably over subsequent periods, substantially all of our gross billings increase deferred revenue. Therefore, we believe that adjusting net income (loss) for increases in deferred revenue and increases in the associated deferred costs provides another indication of profitability from our operations. We use adjusted EBITDA to measure our performance, prepare our budgets and establish metrics for variable compensation. Because adjusted EBITDA excludes certain non-cash and non-operating charges, this measure enables us to eliminate the impact of items we do not consider indicative of our core operating performance and to better measure our performance on a consistent basis from period to period.

Free cash flow. We define free cash flow as cash provided by operating activities, less purchases of property and equipment plus acquisition and other non-recurring charges. We consider free cash flow to be a useful

11

liquidity measure that considers the investment in cloud and corporate infrastructure required to support our business and the impact of acquisition related expenses and other non-recurring charges. We use free cash flow to assess our business performance and evaluate the amount of cash generated by our business after adjusting for purchases of property and equipment and acquisition and other non-recurring charges.

Active subscribers. We define an active subscriber as a discrete appliance, virtual appliance or cloud-only service that has at least one valid subscription that has not been terminated. We monitor the total number of active subscribers as a measure of the growth in our installed base, the success of our sales and marketing activities and the value that our solutions bring to our customers.

See “Selected Consolidated Financial Data—Key Metrics” for more information and reconciliations of gross billings to revenue, adjusted EBITDA to net income (loss), and free cash flow to cash flow provided by (used in) operating activities. Each of these metrics has been reconciled to the most directly comparable financial measure calculated and presented in accordance with GAAP.

12

RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this prospectus, including our consolidated financial statements and the related notes thereto, before making a decision to invest in our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that affect us. If any of the following risks occur, our business, financial condition, operating results and prospects could be materially and adversely affected. In that event, the price of our common stock could decline, and you could lose part or all of your investment.

Risks Related to Our Business and Our Industry

If we are unable to increase sales of our solutions to new customers and sell additional solutions to our existing customers, our future revenue and operating results will be harmed.

Our future success depends on our ability to increase sales of our solutions to new customers as well as to increase sales of additional solutions to our existing customers. The rate at which new and existing customers purchase solutions depends on a number of factors, including those outside of our control, such as customers’ perceived need for security and storage solutions and general economic conditions. If our efforts to sell our solutions to new customers and additional solutions to our existing customers are not successful, our business and operating results may suffer.

Furthermore, customers that purchase our subscriptions have no contractual obligation to renew their contracts after the initial contract period, which typically ranges from one to five years, and we may not maintain our historical subscription renewal rates. The substantial majority of our subscriptions are for one-year periods. If renewal subscriptions decline, our revenue or revenue growth may decline and our business may suffer.

A substantial majority of our billings in any particular period are derived from sales to customers with whom we began to engage during that same period and therefore our sales may be variable and difficult to predict. Given this unpredictability, we may be unable to accurately forecast our sales in any given period. A failure to accurately predict the level of demand for our solutions may adversely impact our future revenue and operating results, and we are unlikely to forecast such effects with any certainty in advance.

We rely significantly on revenue from subscriptions, which may decline, and, because we recognize revenue from subscriptions over the term of the relevant subscription period, downturns or upturns in sales are not immediately reflected in full in our operating results.

Our subscription revenue accounted for approximately 70% and 69% of our total revenue for fiscal 2013 and the three months ended May 31, 2013, respectively. Customers that purchase our subscriptions have no contractual obligation to renew their contracts after the initial contract period, which typically ranges from one to five years, and we may not maintain our historical subscription renewal rates. The substantial majority of our subscriptions are for one-year periods. New or renewal subscriptions may decline or fluctuate as a result of a number of factors, including our customers’ level of satisfaction with our solutions and our customer support, the frequency and severity of subscription outages, our solution functionality and performance, the timeliness and success of product enhancements and introductions by us and those of our competitors, the prices of our solutions, the prices of solutions offered by our competitors or reductions in our customers’ spending levels. If new or renewal subscriptions decline, our revenue or revenue growth may decline, and our business may suffer. In addition, we recognize subscription revenue ratably over the term of the relevant subscription period, which typically ranges from one to five years. As a result, much of the revenue we report each quarter is the recognition of billings from subscriptions entered into during previous quarters. Consequently, a decline in new or renewal subscriptions in any one quarter will not be fully reflected in revenue in that quarter, but will negatively affect

13

our revenue in future quarters. Accordingly, the effect of significant downturns in new or renewed sales of our solutions would not be reflected in full in our results of operations until future periods.

We have experienced net losses on a GAAP basis in recent periods and may not achieve or maintain profitability in the future.

We have not been profitable on a quarterly or annual basis in recent periods. We experienced net losses on a GAAP basis for fiscal 2013 and the three months ended May 31, 2012 and May 31, 2013, respectively. While we have experienced revenue growth over these same periods, we may not be able to sustain or increase our growth or achieve profitability in the future or on a consistent basis. Over the past year, we have spent substantial amounts of time and money to develop new security and storage solutions and enhanced versions of our existing security and storage solutions to position us for future growth. Additionally, we have incurred substantial expenses and expended significant resources upfront to market, promote and sell our solutions. In fiscal 2013, we incurred substantial costs in connection with our CEO transition and other non-recurring charges. We also expect to continue to invest for future growth. In addition, as a public company, we will incur significant accounting, legal and other expenses that we did not incur as a private company.

As a result of our increased expenditures, we will have to generate and sustain increased revenue to achieve future profitability. Achieving profitability will require us to increase revenues, manage our cost structure and avoid significant liabilities. Revenue growth may slow, revenue may decline, or we may incur significant losses in the future for a number of possible reasons, including general macroeconomic conditions, increasing competition, a decrease in the growth of the markets in which we operate, or if we fail for any reason to continue to capitalize on growth opportunities. Additionally, we may encounter unforeseen operating expenses, difficulties, complications, delays and other unknown factors that may result in losses in future periods. If these losses exceed our expectations or our revenue growth expectations are not met in future periods, our financial performance will be harmed and our stock price could be volatile or decline.

If we cannot successfully execute on our strategy and continue to develop, manufacture and market solutions that respond promptly to meet our customers’ needs, our business and operating results may suffer.

The security and storage markets are characterized by constant change and innovation, and we expect them to continue to evolve rapidly. Moreover, many of our customers operate in markets characterized by rapidly changing technologies and business models, which require them to develop and manage increasingly complex enterprise networks, incorporating a variety of hardware, software applications, operating systems and networking protocols. Our historical success has been based on our ability to identify common customer needs and design solutions to address complex IT problems in email security and web security, and more recently in backup. To the extent we are not able to continue to identify IT challenges and execute our business model to timely and effectively design and market solutions to address these challenges, our business, operating results and financial condition will be adversely affected.

Although the market expects rapid introduction of new solutions or enhancements to respond to new threats and address evolving customer needs, the development of these solutions is difficult, and the timetable for commercial release and availability is uncertain as there are periods of delay between releases and the availability of new solutions. We may experience delays in the development and availability of new solutions and fail to timely meet customer needs. If we do not respond to the rapidly changing and rigorous needs of our customers by developing and making available on a timely basis new solutions or enhancements that can respond adequately to new security threats and address evolving customer needs, our competitive position and business prospects will be harmed.

Additionally, the process of developing new technology is complex and uncertain, and if we fail to accurately predict customers’ changing needs and emerging technological trends or if we fail to achieve the benefits expected from our investments, our business could be harmed. We believe that we must continue to

14

dedicate a significant amount of resources to our research and development efforts to maintain our competitive position and we must commit significant resources to developing new solutions before knowing whether our investments will result in solutions the market will accept. Our new solutions or solution enhancements could fail to attain sufficient market acceptance for many reasons, including:

• delays in releasing our new solutions or enhancements to the market;

• failure to accurately predict market demand or customer demands;

• inability to protect against new types of attacks or techniques used by hackers;

• defects, errors or failures in their design or performance;

• negative publicity about their performance or effectiveness;

• introduction or anticipated introduction of competing solutions by our competitors;

• poor business conditions for our customers, causing them to delay IT purchases;

• the perceived value of our solutions or enhancements relative to their cost;

• easing of regulatory requirements around security or storage; and

• reluctance of customers to purchase solutions incorporating open source software.

There can be no assurance that we will successfully identify new opportunities, develop and bring new solutions to market on a timely basis or achieve market acceptance of our solutions, or that solutions and technologies developed by others will not render our solutions or technologies obsolete or noncompetitive, all of which could adversely affect our business and operating results. If our new solutions or enhancements do not achieve adequate acceptance in the market, or if our new solutions do not result in increased subscriptions, our competitive position will be impaired, our revenue will be diminished and the negative impact on our operating results may be particularly acute because of the upfront research, development, marketing, sales and other expenses we incurred in connection with the new solution or enhancement.

We have recently introduced, and will continue to introduce, new security and storage solutions, and we may not gain broad market acceptance for these new solutions.

Over the past year, we have released several new security and storage solutions and enhanced versions of our existing security and storage solutions to incorporate additional features, improve functionality or deliver other enhancements in order to meet our customers’ rapidly evolving demands. The return on our investments in these development efforts may be lower, or may develop more slowly, than we expect. Further, given their recent introduction, we cannot assure you that these solutions will gain broad market acceptance and that they will prove to be profitable in the longer term. Additionally, we intend to continue introducing new security and storage solutions to respond to the needs of our customers. If we fail to achieve high levels of market acceptance for these solutions or if market acceptance is delayed, we may fail to justify the amount of our investment in developing and bringing them to market, and our business, operating results and financial performance could be adversely affected.

If we are unable to generate significant volumes of sales leads from Internet search engines, traffic to our websites and our revenue may decrease.

We generate a substantial portion of our sales leads through visits to our websites by potential customers interested in our solutions. Many of these potential customers find our websites by searching for security and storage solutions through Internet search engines, particularly Google. A critical factor in attracting potential customers to our websites is how prominently our websites are displayed in response to search inquiries. If we are listed less prominently or fail to appear in search result listings for any reason, visits to our websites by customers and potential customers could decline significantly and we may not be able to replace this traffic. Furthermore, if the costs of search engine marketing services, such as Google AdWords, increase we may be required to increase our sales and marketing expenses, which may not be offset by additional revenue, and our business and operating results could be adversely affected.

15

Our quarterly and annual operating results and key metrics may vary and be unpredictable, which may cause our stock price to fluctuate.

Our quarterly and annual operating results and key metrics have varied from period to period in the past, and we expect that they may continue to fluctuate as a result of a number of factors, many of which are outside of our control, including:

• the timing and success of introductions of our new solutions;

• changes in the growth rate of the security and storage markets;

• changes in renewal rates for our subscriptions and our ability to cross-sell additional solutions in a period;

• the timing of orders from our customers;

• the timing of our marketing expenditures;

• the mix of solutions sold;

• fluctuations in demand for our products and services, particularly seasonal variations in customer spending patterns in more than one of our addressable markets;

• our ability to control costs, including operating expenses, the costs of hardware and software components, and other manufacturing costs;

• the budgeting cycles and purchasing priorities of our customers;

• the timing of payments of sales commissions, bonuses or performance earnouts;

• the timing and potential provision of valuation allowances against our deferred tax assets;

• the level of perceived threats to network security, which may fluctuate from period to period;

• government regulations and customer requirements surrounding data storage and protection;

• fines, penalties or changes or increases in liabilities for regulatory actions, litigation or warranty claims, including our current voluntary disclosures to the U.S. Commerce Department, Bureau of Industry and Security, or BIS, and the U.S. Treasury Department, Office of Foreign Assets Control, or OFAC, as described in greater detail below;

• deferral of orders from customers in anticipation of new solutions or solution enhancements announced by us or our competitors;

• any significant changes in the competitive environment, including the entry of new competitors and increased price competition;

• disruption in our supply chain and the availability of the components of our appliances;

• levels of solution returns, particularly in connection with our 30-day right to return;

• the timing of revenue recognition for our sales, which may be affected by the term of subscriptions;

• increases or decreases caused by fluctuations in foreign currency exchange rates, since a significant portion of our revenues are received, and our expenses are incurred and paid, in currencies other than U.S. dollars;

• general economic conditions, both domestically and in our foreign markets, which impact purchasing patterns of customers; and

• future accounting pronouncements or changes in our accounting policies.

Any one of the factors above, or the cumulative effect of some of the factors referred to above, may result in significant fluctuations in our quarterly or annual operating results, including fluctuations in our key financial

16

metrics. This variability and unpredictability could result in our failing to meet our revenue, billings or operating results expectations or those of securities analysts or investors for any period. In addition, a significant percentage of our operating expenses are fixed in nature and based on forecasted revenue trends. Accordingly, in the event of revenue shortfalls, we are generally unable to mitigate the negative impact on operating results in the short term. If we fail to meet or exceed such expectations for these or any other reasons, our business and stock price could be materially adversely affected and we could face costly lawsuits, including securities class action suits.

If we fail to cost-effectively promote or protect our brand, our business may be harmed.

We believe that cost-effectively promoting and maintaining awareness and integrity of our company and our brand are vital to achieving widespread acceptance of our existing and future solutions and are important elements in attracting new customers and retaining our existing customers, particularly as we seek to expand internationally. We believe that the importance of brand recognition will increase as competition in our market further intensifies. We have invested and expect to continue to invest substantial resources to promote and maintain our brand and generate sales leads, both domestically and internationally, but there is no guarantee that our brand development strategies will enhance the recognition of our brand or lead to increased sales. For example, we use signs and billboards in key locations such as airports where target customers often travel and vehicles wrapped in highly-visible branding. We also engage in activities such as promotional events and attending trade shows. Some of our existing and potential competitors have well-established brands with equal or greater recognition than we have. If our efforts to cost-effectively promote and maintain our brand are not successful, our operating results and our ability to attract and retain customers may be adversely affected. In addition, even if our brand recognition and loyalty increases, this may not result in increased use of our solutions or higher revenue. Moreover, if we fail to generate a sufficient volume of leads from these various activities, they may not be offset by revenues and our business and operating results could be adversely affected.

In addition, independent industry analysts often provide reviews of our solutions, as well as those of our competitors, and perception of our solutions in the marketplace may be significantly influenced by these reviews. We have no control over what these industry analysts report, and because industry analysts may influence current and potential customers, our brand could be harmed if they do not provide a positive review of our solutions or view us as a market leader.

We face intense competition in our market, which is characterized by constant change and innovation, and we may lack sufficient financial or other resources to maintain or improve our competitive position.

The markets for security and storage solutions are intensely competitive and are characterized by constant change and innovation, and we expect competition to increase in the future from larger, well-established competitors and new market entrants. Changes in the application, threat and technology landscape result in evolving customer requirements. Our main competitors in these markets fall into two categories:

• Independent network security, storage and application delivery vendors such as Blue Coat Systems, Inc., Check Point Software Technologies, Ltd., CommVault Systems, Inc., EMC Corporation, F5 Networks, Inc., Fortinet, Inc., Imperva, Inc., Juniper Networks, Inc., Palo Alto Networks, Inc. and Symantec Corporation that offer competing solutions.

• Diversified IT suppliers such as Cisco Systems, Inc., Dell Inc., Hewlett-Packard Company, the McAfee division of Intel Corporation, or Intel, and International Business Machines that have acquired large security specialist vendors in recent years, that have software- or hardware-based storage solutions or that have the technical and financial resources to bring competitive solutions to the market.

In addition, we compete with companies that offer point solutions that compete with some of the features present in our platform. As our market grows, we believe it will attract more highly specialized vendors as well as larger vendors that may continue to acquire or bundle their solutions more effectively.

17

Many of our existing competitors have, and some of our potential competitors could have, substantial competitive advantages such as:

• substantially greater financial, technical and other resources;

• greater name recognition, stronger reputations and longer operating histories;

• larger sales and marketing budgets;

• broader distribution and established relationships with distribution partners and customers;

• lower labor and development costs;

• greater customer support resources;

• larger and more mature intellectual property portfolios; and

• greater resources to make acquisitions.

In addition, our larger competitors have substantially broader solution offerings and leverage their relationships based on other solutions or incorporate functionality into existing solutions to gain business in a manner that discourages customers and potential customers from purchasing our solutions, including through selling at low or negative margins, product bundling or closed technology platforms. Potential customers may also prefer to purchase from their existing suppliers rather than a new supplier regardless of solution performance, price or features. These larger competitors often have broader product lines and market focus and will therefore not be as susceptible to downturns in our markets, thereby reducing their overall risk profile as compared to ours. Many of our smaller competitors that specialize in providing protection from a single type of network security threat are often able to deliver these specialized network security solutions to the market more quickly than we can, which could reduce the addressable market for our new solutions or enhancements to existing solutions. Conditions in our market could change rapidly and significantly as a result of technological advancements, partnering by our competitors or continuing market consolidation. New start-up companies that innovate and large competitors that are making significant investments in research and development may invent similar or superior solutions and technologies that compete with our solutions and technology. Our current and potential competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their ability to compete.

Some of our competitors have made acquisitions of businesses that may allow them to offer more directly competitive and comprehensive solutions than they had previously offered, such as Intel’s acquisition of McAfee. As a result of such acquisitions, our current or potential competitors might be able to adapt more quickly to new technologies and customer needs, devote greater resources to the promotion or sale of their solutions and services, initiate or withstand substantial price competition, take advantage of acquisition or other opportunities more readily, or develop and expand their solution offerings more quickly than we do.

Organizations may be more willing to incrementally add solutions to their existing IT infrastructure from competitors than to replace it with our solutions. These competitive pressures in our market or our failure to compete effectively may result in price reductions, fewer orders, reduced revenue and gross margins and loss of market share. Any failure to meet and address these factors could seriously harm our business and operating results.

Adverse economic conditions or reduced security and storage solution spending may adversely impact our business and operating results.

Our business depends on the overall demand for security and storage solutions. In addition, the purchase of our solutions is often discretionary. Weak global economic conditions, or a reduction in security and storage solution spending even if economic conditions improve, could adversely impact our business, financial condition and operating results in a number of ways, including longer sales cycles, lower prices for our solutions, higher

18

default rates among our customers and channel partners, reduced subscription renewals and lower our sales levels. Market and financial uncertainty and instability in the United States and Europe could intensify or spread further, particularly if ongoing stabilization efforts prove insufficient. Deterioration of economic conditions, as well as economic uncertainty in the United States and Europe, may harm our business and operating results in the future.

We have made significant investments in recent periods to support our growth, and these investments may achieve delayed or lower than expected benefits, which could harm our operating results. Furthermore, if we do not effectively manage any future growth, or are unable to improve our systems and processes, our operating results will be adversely affected.

We continue to increase the breadth and scope of our offerings and, correspondingly, the breadth and scope of our operations. To support this growth, and to manage any future growth effectively, we must continue to improve and expand our information technology and financial infrastructure, our operating and administrative systems and our ability to manage headcount, capital and processes in an efficient manner. We have incurred, and will continue to incur, expenses as we invest in international operations and infrastructure such as the expansion of our sales and marketing presence in Asia Pacific and Japan, the addition of higher touch sales and marketing field resources to liaise with our channel partners as we continue to grow our sales both domestically and internationally and investments in software systems and additional data center resources to keep pace with the growth in the cloud and cloud-based solutions markets. In fiscal 2013, we made significant incremental investments in product development, corporate infrastructure and broadened distribution, including hiring a new chief executive officer and a number of other key executives across our organization, and we intend to continue to invest in development of our solutions, our infrastructure and sales and marketing. We are likely to recognize the costs associated with these investments earlier than some of the anticipated benefits, and the return on these investments may be lower, or may develop more slowly, than we expect. If we do not achieve the benefits anticipated from these investments, or if the achievement of these benefits is delayed, our operating results may be adversely affected.

We may be subject to fines or other penalties for potential past violations of U.S. export control and economic sanctions laws.

In late 2011, following a voluntary internal review of our compliance with U.S. export control and sanctions laws, our management team became aware that certain of our physical appliances had been sold indirectly into embargoed countries via our distributors and resellers, potentially in violation of U.S. export control and economic sanctions laws. These laws restrict or prohibit the sale of certain products, including our solutions, into certain countries, including Iran, Sudan and Syria. In addition, certain of our solutions incorporate encryption components and may be exported from the U.S. only with the required approvals; in the past, we may have exported products prior to receiving these required authorizations. We believe that these potential violations were inadvertent and occurred because we and certain of our resellers did not have sufficient compliance procedures in place to prevent the transactions at issue. As a result, we were unable to preclude certain of our channel partners and resellers from selling our solutions into countries subject to a U.S. embargo until late 2011.

Commencing in late 2011, we took a series of corrective actions intended to remediate the effect of any unauthorized past actions, including actions to permanently disable appliances located in sanctioned countries and termination of certain distributors and resellers. In addition, we believe that we have implemented systematic and process changes to our sales and distribution processes to block and prohibit sale or use of our solutions in sanctioned countries or to denied parties.

After completion of a comprehensive internal investigation conducted by outside counsel, we submitted voluntary disclosures regarding these matters to BIS and to OFAC. These disclosures summarized potential violations of export controls and economic sanctions laws, including reexports by third parties and provision of services to end users in embargoed countries including Iran, Sudan and Syria. The voluntary disclosures also

19

summarized the remedial actions we have taken, including those described above, as well as the hiring of an export compliance manager and a general counsel with export controls experience, and the enhancement of employee training programs, periodic notices to our resellers and company-wide policies and procedures designed to help us comply with these laws.

The reviews of our voluntary disclosures by BIS and OFAC are still pending and in the early stages, and their reviews of our voluntary disclosures may continue for a long period of time. BIS and OFAC may conclude that our actions resulted in violations of U.S. export control and economic sanctions laws and warrant the imposition of penalties that could include fines, termination of our ability to export our products and/or referral for criminal prosecution. Any such penalties may be material to our financial results in the period in which they are imposed and could significantly affect our quarterly operating results for that quarter. The penalties may be imposed against us and/or our management. Also, disclosure of our conduct and any fines or other action relating to this conduct could harm our reputation and indirectly have a material adverse effect on our business, operating results and financial condition. We cannot predict when BIS and OFAC will complete their reviews or make determinations regarding the imposition of possible penalties. We also cannot assure you that additional violations will not be discovered or that our policies and procedures will be effective to prevent future violations.

Failure to comply with governmental laws and regulations could harm our business.

Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, product safety, environmental laws, consumer protection laws, anti-bribery laws, import/export controls, federal securities laws and tax laws and regulations. In certain foreign jurisdictions, these regulatory requirements may be more stringent than those in the United States. Noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, operating results, and financial condition could be materially adversely affected. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees. Enforcement actions and sanctions could harm our business, operating results and financial condition.

We generate a significant amount of revenue from sales outside of North America, and we are therefore subject to a number of risks associated with international sales and operations.

Sales outside of North America represented approximately 26% and 27% of our total revenue for fiscal 2013 and the three months ended May 31, 2013, respectively. As a result, we must continue to hire and train experienced personnel to staff and manage our foreign operations. To the extent that we experience difficulties in recruiting, training, managing and retaining an international staff, and specifically staff related to sales management and sales personnel, we may experience difficulties in sales productivity in foreign markets. If we are not able to maintain successful channel partner and distributor relationships internationally or recruit additional companies to enter into strategic channel partner and distributor relationships, our future success in these international markets could be limited.

Additionally, our international sales and operations are subject to a number of risks, including the following:

• greater difficulty in enforcing contracts and accounts receivable collection and longer collection periods;

• increased expenses incurred in establishing and maintaining office space and equipment for our international operations;

• greater costs and expenses associated with international sales and operations;

• management communication and integration problems resulting from cultural and geographic dispersion;

20

• risks associated with trade restrictions and foreign legal requirements, including the importation, certification and localization of our solutions required in foreign countries;

• greater risk of unexpected changes in regulatory practices, tariffs and tax laws and treaties;

• the uncertainty of protection for intellectual property rights in some countries;

• greater risk of a failure of foreign employees to comply with both U.S. and foreign laws, including export and antitrust regulations, the U.S. Foreign Corrupt Practices Act and any trade regulations ensuring fair trade practices;

• heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements;

• the potential for political unrest, terrorism, hostilities or war; and

• multiple and possibly overlapping tax structures.

In addition, the expansion of our existing international operations and entry into additional international markets have required and will continue to require significant management attention and financial resources. These factors and other factors could harm our ability to gain future international revenues and, consequently, materially impact our business, operating results and financial condition.

We may acquire other businesses which could require significant management attention, disrupt our business, dilute stockholder value and adversely affect our operating results.

As part of our business strategy, we have in the past made, and may in the future make, acquisitions or investments in complementary companies, solutions and technologies that we believe fit within our business model and can address the needs of IT professionals. With respect to our previous acquisitions, we cannot ensure that we will be able to successfully integrate the technology and resources to increase subscriptions and grow revenue derived from these acquisitions. In the future, we may not be able to acquire and integrate other companies, solutions or technologies in a successful manner. We may not be able to find suitable acquisition candidates, and we may not be able to complete such acquisitions on favorable terms, if at all. Furthermore, we may not be able to find suitable acquisition candidates that enhance our subscription offerings. If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, including increases in subscriptions, and any acquisitions we complete could be viewed negatively by our customers, investors and industry analysts.

Future acquisitions may reduce our cash available for operations and other uses and could result in an increase in amortization expense related to identifiable assets acquired. We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could adversely affect our financial condition or the value of our common stock. The sale of equity or issuance of debt to finance any such acquisitions could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations. In addition, our future operating results may be impacted by performance earnouts or contingent bonuses. Furthermore, acquisitions may require large one-time charges and can result in increased debt or contingent liabilities, adverse tax consequences, additional stock-based compensation expense and the recording and subsequent amortization of amounts related to certain purchased intangible assets, any of which items could negatively impact our future results of operations. We may also record goodwill in connection with an acquisition and incur goodwill impairment charges in the future.

In addition, if we are unsuccessful at integrating such acquisitions, or the technologies associated with such acquisitions, into our company, the revenue and operating results of the combined company could be adversely affected. Any integration process may result in unforeseen operating difficulties and require significant time and

21

resources, and we may not be able to manage the process successfully. In particular, we may encounter difficulties assimilating or integrating the companies, solutions, technologies, personnel or operations we acquire, particularly if the key personnel are geographically dispersed or choose not to work for us. Acquisitions may also disrupt our core business, divert our resources and require significant management attention that would otherwise be available for development of our business. We may not successfully evaluate or utilize the acquired technology or personnel, or accurately forecast the financial impact of an acquisition transaction, including accounting charges. If we fail to properly evaluate, execute or integrate acquisitions or investments, the anticipated benefits may not be realized, we may be exposed to unknown or unanticipated liabilities, and our business and prospects could be harmed.

Defects, errors or vulnerabilities in our solutions, the failure of our solutions to block a virus or prevent a security breach or a false detection of applications, viruses, spyware, vulnerability exploits, data patterns or URL categories could harm our reputation and adversely impact our operating results.

Because our solutions are complex, they have contained and may in the future contain design or manufacturing defects or errors that are not detected until after their commercial release and deployment by our customers. For example, from time to time, certain of our customers have reported defects in our solutions related to performance, functionality and compatibility that were not detected before shipping the solution. Additionally, defects may cause our solutions to be vulnerable to security attacks, cause them to fail to help secure networks or temporarily interrupt customers’ networking traffic. Because the techniques used by computer hackers to access or sabotage networks change frequently and generally are not recognized until launched against a target, our solutions may not be able to protect our customers’ networks. Our security solutions may also fail to detect or prevent viruses, worms or similar threats due to a number of reasons such as the evolving nature of such threats and the continual emergence of new threats that we may fail to add to our threat intelligence database or other virus databases in time to protect our customers’ networks. In addition, defects or errors in our subscription updates or our solutions could result in a failure to effectively update customers’ solutions and thereby leave our customers vulnerable to attacks. Our data centers and networks may experience technical failures and downtime, may fail to distribute appropriate updates, or may fail to meet the increased requirements of a growing customer base, any of which could temporarily or permanently expose our customers’ networks, leaving their networks unprotected against the latest security threats. Any defects, errors or vulnerabilities in our solutions could result in:

• expenditure of significant financial and product development resources in efforts to analyze, correct, eliminate or work-around errors or defects or to address and eliminate vulnerabilities;

• loss of existing or potential customers;

• delayed or lost revenue;

• delay or failure to attain market acceptance;

• negative publicity, which will harm our reputation and brand;

• an increase in warranty claims compared with our historical experience, or an increased cost of servicing warranty claims, either of which would adversely affect our operating results; and

• litigation, regulatory inquiries, or investigations that may be costly and harm our reputation and brand.

Furthermore, our security solutions may falsely detect applications, content or threats that do not actually exist based on our classifications of application type, virus, malware, vulnerability exploits, data or URL categories. This risk is increased by the inclusion of “heuristics” analysis in our solutions, which attempts to identify threats not based on any known signatures but based on characteristics or anomalies which indicate that a particular item may be a threat. These false positives, while typical in our industry, may impair the perceived reliability of our solutions and may therefore adversely affect market acceptance of our solutions. Also, our anti-spam and anti-malware solutions may falsely identify emails or programs as unwanted spam or potentially

22

unwanted programs, or alternatively fail to properly identify unwanted emails or programs, particularly as spam emails or malware are often designed to circumvent anti-spam or anti-malware solutions. Parties whose emails or programs are blocked by our solutions may seek redress against us for labeling them as spammers or malware or for interfering with their business. In addition, false identification of emails or programs as unwanted spam or potentially unwanted programs may reduce the adoption of our solutions. If our solutions restrict important files or applications based on falsely identifying them as malware or some other item that should be restricted, this could adversely affect customers’ systems and cause material system failures. Any such false identification of important files or applications could result in damage to our reputation, negative publicity, loss of customers and sales, increased costs to remedy any problem and risk of litigation.

If our security measures are breached or unauthorized access to customer data is otherwise obtained or our customers experience data losses, our brand, reputation and business could be harmed and we may incur significant liabilities.

Our customers rely on our security and storage solutions to secure and store their data, which may include financial records, credit card information, business information, customer information, health information, other personally identifiable information or other sensitive personal information. A breach of our network security and systems or other events that cause the loss or public disclosure of, or access by third parties to, our customers’ stored files or data could have serious negative consequences for our business, including possible fines, penalties and damages, reduced demand for our solutions, an unwillingness of our customers to use our solutions, harm to our brand and reputation, and time-consuming and expensive litigation. The techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, often are not recognized until launched against a target, and may originate from less regulated or remote areas around the world. As a result, we may be unable to proactively prevent these techniques, implement adequate preventative or reactionary measures, or enforce the laws and regulations that govern such activities. In addition, because of the large amount of data that we store for our customers, it is possible that hardware failures, human errors or errors in our systems could result in data loss or corruption, or cause the information that we collect to be incomplete or contain inaccuracies that our customers regard as significant. If our customers experience any data loss, or any data corruption or inaccuracies, whether caused by security breaches or otherwise, our brand, reputation and business could be harmed. Moreover, if a high profile security breach occurs with respect to another provider of cloud services, our clients and potential clients may lose trust in the security of the cloud business model generally, which could adversely impact our ability to retain existing clients or attract new ones.

If an actual or perceived breach of network security occurs in our internal systems, our services may be perceived as not being secure and clients may curtail or stop using our solutions.

As a provider of network security solutions, we are a high profile target and our networks and solutions may have vulnerabilities that may be targeted by hackers and could be targeted by attacks specifically designed to disrupt our business and harm our reputation. We will not succeed unless the marketplace continues to be confident that we provide effective network and security protection. If an actual or perceived breach of network security occurs in our internal systems it could adversely affect the market perception of our solutions. We may not be able to correct any security flaws or vulnerabilities promptly, or at all. In addition, such a security breach could impair our ability to operate our business, including our ability to provide subscription and support services to our customers. If this happens, our business and operating results could be adversely affected.

Because our solutions could be used to collect and store personal information of our customers’ employees or customers, privacy concerns could result in additional cost and liability to us or inhibit sales of our solutions.

Personal privacy has become a significant issue in the United States and in many other countries where we offer our solutions. The regulatory framework for privacy issues worldwide is currently complex and evolving, and it is likely to remain uncertain for the foreseeable future. Many federal, state and foreign government bodies and agencies have adopted or are considering adopting laws and regulations regarding the collection, use and

23

disclosure of personal information. In the United States, these include rules and regulations promulgated under the authority of the Federal Trade Commission, the Health Insurance Portability and Accountability Act of 1996 and state breach notification laws. Internationally, virtually every jurisdiction in which we operate has established its own data security and privacy legal framework with which we or our customers must comply, including the Data Protection Directive established in the European Union, or the EU, and the Federal Data Protection Act recently passed in Germany.

In addition to government regulation, privacy advocacy and industry groups may propose new and different self-regulatory standards that either legally or contractually apply to us. Because the interpretation and application of privacy and data protection laws are still uncertain, it is possible that these laws may be interpreted and applied in a manner that is in conflict with one another, and is inconsistent our existing data management practices or the features of our solutions. If so, in addition to the possibility of fines, lawsuits and other claims, we could be required to fundamentally change our business activities and practices or modify our software, which could have an adverse effect on our business. Any inability to adequately address privacy concerns, even if unfounded, or comply with applicable privacy or data protection laws, regulations and policies, could result in additional cost and liability to us, damage our reputation, inhibit sales and harm our business.

Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of our customers may limit the use and adoption of, and reduce the overall demand for, our solutions. Privacy concerns, whether valid or not valid, may inhibit market adoption of our solutions particularly in certain industries and foreign countries.

Our business is subject to the risks of warranty claims, appliance returns and product liability claims.

Our solutions have contained and may contain undetected defects or errors, especially when first introduced or when new versions are released. Defects or errors could affect the performance of our solutions and could delay the development or release of new solutions or new versions of solutions, adversely affect our reputation and our customers’ willingness to buy solutions from us and adversely affect market acceptance or perception of our offerings. Any such errors or delays in releasing new solutions or new versions of solutions or allegations of unsatisfactory performance could cause us to lose revenue or market share, increase our service costs, cause us to incur substantial costs in redesigning the solutions, cause us to lose significant customers, subject us to liability for damages and divert our resources from other tasks, any one of which could materially and adversely affect our business, operating results and financial condition. Furthermore, we offer customers a 30-day right to return for many of our solutions which is integral to our sales model. If we experience appliance defects, or if we experience increased frequency of returns, our sales cycles, operating results and financial performance may be adversely affected.

In addition, the occurrence of hardware or software errors which resulted in increase warranty or support claims could result in increased expenses or require us to maintain greater warranty reserves which would have an adverse effect on our business and financial performance.

Our ability to increase sales of our solutions is highly dependent on the quality of our customer support, and our failure to offer high-quality support would have an adverse effect on our business, reputation and operating results.

Our solutions are designed to be deployed by customers in resource-constrained IT environments. Our customers depend on our support services to assist them with questions as they implement our solutions within their IT infrastructure, and after deployment, our customers depend on our support organization to quickly resolve any issues relating to those solutions. A significant level of high-quality support is critical to ensure high rates of renewals and cross-selling of our solutions. If we do not effectively assist our customers in deploying our solutions, succeed in helping them quickly resolve post-deployment issues or provide effective ongoing support,

24

it could adversely affect our ability to sell our solutions to existing customers, decrease our subscription renewal rates and harm our reputation with potential new customers, all of which would have an adverse effect on our business, reputation and operating results.

If we are unable to hire, retain, train and motivate qualified personnel and senior management, or if our senior management team is unable to perform effectively, our business could suffer.

Our future success depends, in part, on our ability to continue to attract and retain highly skilled personnel and the continued services of our senior management and other key personnel to execute on our business plan and to identify and pursue new opportunities and solution innovations. The loss of the services of our senior management or any of our key personnel, the inability to attract or retain qualified personnel, or delays in hiring required personnel, particularly in engineering and sales and marketing, could significantly delay or prevent the achievement of our development and strategic objectives, and may adversely affect our business, financial condition and operating results. Although we have entered into employment offer letters with our key personnel, these agreements have no specific duration and constitute at-will employment. In addition, many members of our management team have only joined us in the last year as part of our investment in the expansion of our business, including our chief executive officer, William D. Jenkins, Jr. Our productivity and the quality of our solutions may be adversely affected if we do not integrate and train our new employees quickly and effectively. Furthermore, if we are not effective in retaining our key personnel, our business could be adversely impacted and our operating results and financial condition could be harmed.

Competition for highly skilled personnel is often intense, especially in the San Francisco Bay Area where we have a substantial presence and need for highly skilled personnel. We may not be successful in attracting, integrating or retaining qualified personnel to fulfill our current or future needs. Also, to the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited, or that they have divulged proprietary or other confidential information, or that their former employers own their inventions or other work product.

We may be unsuccessful in managing or expanding our operations, which could adversely affect our operating results.

We have office locations throughout the United States and in various international locations, including Austria, India and the United Kingdom. If we are unable to effectively manage a large and geographically dispersed group of employees or to anticipate our future growth and personnel needs, our business may be adversely affected. As we expand our business, we add complexity to our organization and must expand and adapt our operational infrastructure and effectively coordinate throughout our organization. For example, we recently leased additional office space in San Jose, California, and intend to hire new employees and to relocate certain employees to this location from our headquarters in Campbell, California. We also plan to relocate our manufacturing to this new facility. As a result, we expect to incur additional expense and the additional location may disrupt our operations and distract our management team. Failure to manage any future growth effectively could result in increased costs, negatively impact our customers’ satisfaction with our solutions, and harm our operating results.

Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity and teamwork fostered by our culture, and our business may be harmed.

We believe that a critical contributor to our success has been our corporate culture, which we believe fosters innovation, creativity, a customer-centric focus, collaboration and loyalty. As we grow and change, we may find it difficult to maintain these important aspects of our corporate culture, which could limit our ability to innovate and operate effectively. Any failure to preserve our culture could also negatively affect our ability to retain and recruit personnel, continue to perform at current levels or execute on our business strategy.

25

We rely on third-party distributors and channel partners to fulfill substantially all of our sales orders. If our distributors and reseller channel partners fail to perform, our ability to sell our solutions will be limited, and, if we fail to optimize our distributor and reseller channel partner model going forward, our operating results will be harmed.

Substantially all of our sales orders are fulfilled by our channel partners, which include distributors and resellers. We also depend upon our channel partners to manage the customer sales process and to generate sales opportunities. To the extent our channel partners are unsuccessful in fulfilling our sales, managing the sales process or selling our solutions, or we are unable to enter into arrangements with, and retain a sufficient number of high-quality, motivated channel partners in each of the regions in which we sell our offerings, our ability to sell our solutions and operating results will be harmed.

We provide our channel partners with specific programs to assist them in selling our solutions, but there can be no assurance that these programs will be effective. In addition, our channel partners may be unsuccessful in marketing, selling and supporting our solutions. Our channel partners do not have minimum purchase requirements. They may also market, sell and support solutions that are competitive with ours, and may devote more resources to the marketing, sales and support of such solutions. Our agreements with our channel partners may generally be terminated for any reason by either party with advance written notice and our channel partners may stop selling our solutions at any time. We cannot assure you that we will retain these channel partners, that channel partners will sell our solutions effectively or that we will be able to secure additional or replacement channel partners. The loss of one or more of our significant channel partners or a decline in the number or size of orders from them could harm our operating results. In addition, our channel partner sales structure could subject us to lawsuits, potential liability, and reputational harm if, for example, any of our channel partners misrepresent the functionality of our solutions to customers or violate laws or our corporate policies.

We are exposed to fluctuations in currency exchange rates, which could negatively affect our financial condition and operating results.

Given our volume of international sales, a substantial portion of our total revenue is subject to foreign currency risk. As an example, during fiscal 2013 and the three months ended May 31, 2013, approximately 30% and 32% of our total revenue was generated from sales to customers located outside of the United States, respectively. Additionally, a strengthening of the U.S. dollar could increase the real cost of our solutions to our customers outside of the United States, which could adversely affect our financial condition and operating results. In addition, an increasing portion of our operating expenses is incurred outside of the United States, is denominated in foreign currencies, and is subject to fluctuations due to changes in foreign currency exchange rates. If we are not able to successfully manage or hedge against the risks associated with currency fluctuations, our financial condition and operating results could be adversely affected.

We rely on a single source or a limited number of sources for some of our components. Insufficient supply and inventory may result in lost sales opportunities or delayed revenue, while excess inventory may harm our gross margins.

Our inventory management systems and related supply chain visibility tools may be inadequate to enable us to forecast accurately and effectively manage the supply of our components. Additionally, we carry very little inventory of our appliances or components, and we rely on our suppliers to deliver necessary components in a timely manner. Insufficient supply levels may lead to shortages that result in delayed revenue or loss of sales opportunities altogether as potential customers turn to competitors’ solutions that could be more readily available. Additionally, any increases in the time required to manufacture our solutions could adversely affect our business, brand, sales cycle and reputation. If we are unable to effectively manage our supply and inventory, our operating results could be adversely affected.

We currently depend on a single source or a limited number of sources for certain components used in the manufacture of our solutions. We are therefore subject to the risk of shortages in supply of these components and

26

the risk that component suppliers discontinue or modify components used in our solutions. If these suppliers were to discontinue production of a necessary part or component, we would be required to expend resources and time in locating and integrating replacement parts or components from another vendor. In addition, the introduction by component suppliers of new versions of their components, particularly if not anticipated by us, could require us to expend resources to incorporate these new components into our solutions. Our reliance on a single source or a limited number of suppliers involves a number of additional risks, including risks related to:

• supplier capacity constraints;

• price increases;

• timely delivery;

• component quality;

• failure of a key supplier to remain in business and adjust to market conditions;

• delays in, or the inability to execute on, a supplier roadmap for components and technologies; and

• natural disasters.

In addition, for certain components, we are subject to potential price increases and limited availability as a result of market demand for these components. In the past, unexpected demand for computer and network products has caused worldwide shortages of certain electronic parts. If similar shortages occur in the future, our business could be adversely affected. We rely on purchase orders rather than long-term contracts with these suppliers, and as a result we might not be able to secure sufficient components, even if they were available, at reasonable prices or of acceptable quality to build appliances in a timely manner and, therefore, might not be able to meet customer demands for our solutions, which would have a material and adverse effect on our business, operating results and financial condition.

Assertions by third parties of infringement or other violations by us of their intellectual property rights, or other lawsuits brought against us, could result in significant costs and substantially harm our business and operating results.

Patent and other intellectual property disputes are common in the IT markets in which we compete. Some companies in the IT markets in which we compete, including some of our competitors, own large numbers of patents, copyrights, trademarks and trade secrets, which they may use to assert claims of infringement, misappropriation or other violations of intellectual property rights against us. There also is a market for intellectual property rights and a competitor, or other entity, could acquire intellectual property rights and assert similar claims based on the acquired intellectual property. They may also assert such claims against our customers or channel partners. As the number of patents and competitors in our market increase and overlaps occur, claims of infringement, misappropriation and other violations of intellectual property rights may increase. From time to time, we face allegations that we, our customers or our channel partners have infringed, misappropriated and violated intellectual property rights, including allegations made by our competitors or by non-practicing entities. For example, on August 13, 2013, Parallel Networks, LLC, which we believe is a non-practicing entity, filed a lawsuit against us alleging that our appliances infringe two of their patents as more fully described in the section titled “Business—Legal Proceedings.” Our broad solution portfolio and the number of network and IT markets in which we compete further exacerbate this risk. Any claim of infringement, misappropriation or other violation of intellectual property rights by a third party, even those without merit, could cause us to incur substantial costs defending against the claim and could distract our management from our business.

In addition, future assertions of patent rights by third parties, and any resulting litigation, may involve non-practicing entities or other adverse patent owners who have no relevant revenue and against whom our own patents may therefore provide little or no deterrence or protection. We cannot assure you that we are not infringing or otherwise violating any third-party intellectual property rights.

27

An adverse outcome of a dispute may require us to pay substantial damages including treble damages if we are found to have willfully infringed a third party’s patents or copyrights; cease making, using, selling, licensing, importing or otherwise commercializing solutions that are alleged to infringe or misappropriate the intellectual property of others; expend additional development resources to attempt to redesign our solutions or otherwise to develop non-infringing technology, which may not be successful; enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies or intellectual property rights or have royalty obligations imposed by a court; and indemnify our customers, partners and other third parties. Furthermore, we have agreed in certain instances to defend our channel partners against third-party claims asserting infringement of certain intellectual property rights, which may include patents, copyrights, trademarks or trade secrets, and to pay judgments entered on such claims. Any damages or royalty obligations we may become subject to, any prohibition against our commercializing our solutions and any third-party indemnity we may need to provide, as a result of an adverse outcome could harm our operating results.

Our use of open source technology could impose limitations on our ability to commercialize our solutions.

We use open source software in our solutions, and although we monitor our use of open source software to avoid subjecting our solutions to conditions we do not intend, the terms of many open source licenses have not been interpreted by U.S. courts. As a result, there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our solutions. In such an event, we could be required to seek licenses from third parties to continue offering our solutions, to make our proprietary code generally available in source code form, to re-engineer our solutions or to discontinue the sale of our solutions if re-engineering could not be accomplished on a timely basis, any of which could adversely affect our business, operating results and financial condition.

Failure to protect our proprietary technology and intellectual property rights could substantially harm our business and operating results.

The success of our business depends on our ability to protect and enforce our patents, trademarks, copyrights, trade secrets and other intellectual property rights. We attempt to protect our intellectual property under patent, trademark, copyright and trade secret laws, and through a combination of confidentiality procedures, contractual provisions and other methods, all of which offer only limited protection.

As of May 31, 2013, we had 43 issued patents in the United States, but this number is relatively small in comparison to some of our competitors and potential competitors. Additionally, as of May 31, 2013, we had 50 pending U.S. patent applications, and may file additional patent applications in the future. The process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. We may choose not to seek patent protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions. Furthermore, it is possible that our patent applications may not issue as granted patents, that the scope of our issued patents will be insufficient or not have the coverage originally sought, that our issued patents will not provide us with any competitive advantages, and that our patents and other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. In addition, issuance of a patent does not guarantee that we have an absolute right to practice the patented invention, or that we have the right to exclude others from practicing the claimed invention. As a result, we may not be able to obtain adequate patent protection or to enforce our issued patents effectively.

In addition to patented technology, we rely on our unpatented proprietary technology and trade secrets. Despite our efforts to protect our proprietary technology and trade secrets, unauthorized parties may attempt to misappropriate, reverse engineer or otherwise obtain and use them. The contractual provisions that we enter into with employees, consultants, partners, vendors and customers may not prevent unauthorized use or disclosure of our proprietary technology or intellectual property rights and may not provide an adequate remedy in the event of unauthorized use or disclosure of our proprietary technology or intellectual property rights. Moreover, policing

28

unauthorized use of our technologies, solutions and intellectual property is difficult, expensive and time-consuming, particularly in foreign countries where the laws may not be as protective of intellectual property rights as those in the United States and where mechanisms for enforcement of intellectual property rights may be weak. We may be unable to determine the extent of any unauthorized use or infringement of our solutions, technologies or intellectual property rights.

From time to time, legal action by us may be necessary to enforce our patents and other intellectual property rights, to protect our trade secrets, to determine the validity and scope of the intellectual property rights of others or to defend against claims of infringement or invalidity. Such litigation could result in substantial costs and diversion of resources and could negatively affect our business, operating results, financial condition and cash flows. If we are unable to protect our intellectual property rights, we may find ourselves at a competitive disadvantage to others who need not incur the additional expense, time and effort required to create the innovative solutions that have enabled us to be successful to date.

We rely on the availability of third-party licenses for some of our solutions.

Some of our solutions include software or other intellectual property licensed from third parties. It may be necessary in the future to renew licenses relating to various aspects of these solutions or to seek new licenses for existing or new solutions. There can be no assurance that the necessary licenses will be available on acceptable terms, if at all. The inability to obtain certain licenses or other rights or to obtain such licenses or rights on favorable terms, could result in delays in solution releases until equivalent technology can be identified, licensed or developed, if at all, and integrated into our solutions and may have a material adverse effect on our business, operating results and financial condition. In addition, third parties may allege that additional licenses are required for our use of their software or intellectual property, and we may be unable to obtain such licenses on commercially reasonable terms or at all. Moreover, the inclusion in our solutions of software or other intellectual property licensed from third parties on a nonexclusive basis could limit our ability to differentiate our solutions from those of our competitors.

As a result of becoming a public company, we will be obligated to develop and maintain proper and effective internal control over financial reporting. We may not complete our analysis of our internal control over financial reporting in a timely manner, or these internal controls may not be determined to be effective, which may adversely affect investor confidence in our company and, as a result, the value of our common stock.

Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. We are in the very early stages of the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404 of the Sarbanes-Oxley Act. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal controls are effective.

If we are unable to assert that our internal control over financial reporting is effective, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common stock to decline, and we may be subject to investigation or sanctions by the SEC.

We will be required, pursuant to Section 404 of the Sarbanes-Oxley Act to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting as of the end of our fiscal year 2014. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting.

We will be required to disclose changes made in our internal control and procedures on a quarterly basis. However, our independent registered public accounting firm will not be required to report on the effectiveness of

29

our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until the later of the year following our first annual report required to be filed with the SEC, or the date we are no longer an “emerging growth company” as defined in the JOBS Act if we take advantage of the exemptions contained in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating. Our remediation efforts may not enable us to avoid a material weakness in the future.

Additionally, to comply with the requirements of being a public company, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff, which may adversely affect our operating results and financial condition.

There are limitations on the effectiveness of controls, and the failure of our control systems may materially and adversely impact us.

We do not expect that disclosure controls or internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Failure of our control systems to prevent error or fraud could materially and adversely impact us.

Significant developments in IT infrastructure deployments, particularly cloud computing and other alternative IT infrastructure technologies, may materially adversely affect the demand for our products.

Developments or changes in IT infrastructure, such as the emergence of hosted cloud storage, software as a service and mobile data access are driving significant changes in storage and compute architectures and solution requirements as well as presenting significant challenges in the security market, which may materially and adversely affect our business and prospects in ways we do not currently anticipate. The impact of these trends on overall long-term growth patterns is uncertain, especially in resource-constrained environments. The emergence of cloud computing and other alternative IT infrastructure technologies, in which technology services are provided on a remote-access basis, may have a significant impact on the market for security and storage solutions and may result in rapid changes in customer demands. This could be the case even if such advances do not deliver all of the benefits of our solutions. If alternative models gain traction, any failure by us to develop new or enhanced technologies or processes, or to react to changes or advances in existing technologies, could adversely affect our business and operating results.

If our solutions do not interoperate with our end-customers’ infrastructure, sales of our solutions could be negatively affected, which would harm our business.

Our solutions must interoperate with our end-customers’ existing infrastructure, which often have different specifications, utilize multiple protocol standards, deploy products from multiple vendors, and contain multiple generations of products that have been added over time. As a result, when problems occur in a network, it may be difficult to identify the sources of these problems. Any delays in identifying the sources of problems or in providing necessary modifications to our software or hardware could have a negative impact on our reputation and our customers’ satisfaction with our solutions, and our ability to sell solutions could be adversely affected. In addition, customers may require our solutions to comply with certain security or other certifications and standards. If our solutions are late in achieving or fail to achieve compliance with these certifications and standards, or our competitors achieve compliance with these certifications and standards, we may be disqualified from selling our solutions to such end-customers, or at a competitive disadvantage, which would harm our business, operating results and financial condition.

30

If our solutions fail to help our customers achieve and maintain compliance with government regulations and industry standards, our business and operating results could be materially adversely affected.

We generate a portion of our revenues from our solutions because they help organizations achieve and maintain compliance with government regulations and industry standards. For example, many of our customers purchase our security and storage solutions to help them comply with the security standards developed and maintained by the Payment Card Industry Security Standards Council, or the PCI Council, which apply to companies that process or store credit card information. Industry organizations like the PCI Council may significantly change their security standards with little or no notice, including changes that could make their standards more or less onerous for businesses. Governments may also adopt new laws or regulations, or make changes to existing laws or regulations, that could impact whether our solutions enable our customers to demonstrate, maintain or audit their compliance. If we are unable to adapt our solutions to changing regulatory standards in a timely manner, or if our solutions fail to expedite our customers’ compliance initiatives, our customers may lose confidence in our solutions and could switch to solutions offered by our competitors. In addition, if regulations and standards related to data security are changed in a manner that makes them less onerous, our customers may view government and industry regulatory compliance as less critical to their businesses, and our customers may be less willing to purchase our solutions. In either case, our business, financial condition and operating results may suffer.

Our sales to government entities are subject to a number of challenges and risks.

We sell to state and local governmental agency customers, particularly schools, and we may in the future increase sales to government entities. Sales to government entities are subject to a number of challenges and risks. Selling to government entities can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale. Government certification requirements for solutions like ours may change and in doing so restrict our ability to sell into the federal government sector until we have attained the revised certification. Government demand and payment for our solutions may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our solutions. Government entities may have statutory, contractual or other legal rights to terminate contracts with our distributors and resellers for convenience or due to a default, and any such termination may adversely impact our future operating results.

Our failure to generate the significant capital necessary to expand our operations and invest in new solutions could reduce our ability to compete and could harm our business.

We may need to raise additional funds in the future, and we may not be able to obtain additional debt or equity financing on favorable terms, if at all. If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests and the per share value of our common stock could decline. Furthermore, if we engage in debt financing, the holders of debt would have priority over the holders of our common stock, and we may be required to accept terms that restrict our ability to incur additional indebtedness. We may also be required to take other actions that would otherwise be in the interests of the debt holders and force us to maintain specified liquidity or other ratios, any of which could harm our business, operating results and financial condition. If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other things:

• develop or enhance our solutions;

• continue to expand our sales and marketing and research and development organizations;

• acquire or invest in complementary businesses, solutions or technologies;

• expand operations in the United States or internationally;

• hire, train and retain employees; or

• respond to competitive pressures or unanticipated working capital requirements.

31

Our failure to do any of these things could adversely affect our business, financial condition and operating results.

The terms of our existing credit facility with Silicon Valley Bank and future indebtedness could restrict our operations, particularly our ability to respond to changes in our business or to take specified actions.

Our existing credit facility with Silicon Valley Bank, or SVB, contains, and any future indebtedness would likely contain, a number of restrictive covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to take actions that may be in our best interests. Our credit facility requires us to satisfy specified financial covenants. Our ability to meet those financial covenants can be affected by events beyond our control, and we may not be able to continue to meet those covenants. A breach of any of these covenants or the occurrence of other events specified in the credit facility could result in an event of default under the credit facility. Upon the occurrence of an event of default, SVB could elect to declare all amounts outstanding under the credit facility to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, SVB could proceed against the collateral granted to them to secure such indebtedness. We have pledged all of our assets, including our intellectual property, as collateral under the credit facility. If SVB accelerates the repayment of borrowings, if any, we may not have sufficient funds to repay our existing debt.

We are exposed to the credit risk of some of our distributors, resellers and customers and to credit exposure in weakened markets, which could result in material losses.

Most of our sales are on an open credit basis. Although we have programs in place that are designed to monitor and mitigate these risks, and our broad customer base and channel partner network mitigate these risks, we cannot assure you these programs will be effective in reducing our credit risks, especially as we expand our business internationally. If we are unable to adequately control these risks, our business, operating results and financial condition could be adversely affected.

If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our operating results could fall below expectations of securities analysts and investors, resulting in a decline in our stock price.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as discussed in greater detail in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” 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. Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in our stock price. Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, stock-based compensation, valuation of inventory, warranty liabilities and accounting for income taxes.

Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition.

We are subject to income taxes in the United States and various foreign jurisdictions, and our domestic and international tax liabilities will be subject to the allocation of expenses in differing jurisdictions. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

• changes in the valuation of our deferred tax assets and liabilities;

• expected timing and amount of the release of tax valuation allowances;

32

• expiration of, or detrimental changes in, research and development tax credit laws;

• tax effects of stock-based compensation;

• costs related to intercompany restructurings;

• changes in tax laws, regulations, accounting principles or interpretations thereof; or

• future earnings being lower than anticipated in countries where we have lower statutory tax rates and higher than anticipated earnings in countries where we have higher statutory tax rates.

In addition, we may be subject to audits of our income and sales taxes by the Internal Revenue Service and other foreign and state tax authorities. Outcomes from these audits could have an adverse effect on our operating results and financial condition.

Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported results of operations.

Changes in financial accounting standards or practices can have a significant effect on our reported results and may even affect our reporting of transactions completed before the change is effective. New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may occur in the future. Changes to existing rules or the questioning of current practices may adversely affect our business and financial results.

Our business is subject to the risks of earthquakes, fire, power outages, floods and other catastrophic events and to interruption by man-made problems such as terrorism.

A significant natural disaster, such as an earthquake, fire, flood or significant power outage could have a material adverse impact on our business, operating results and financial condition. Both our corporate headquarters and the location where our solutions are manufactured are located in the San Francisco Bay Area, a region known for seismic activity. In addition, natural disasters could affect our supply chain, manufacturing vendors, logistics providers’ or data center hosting providers’ ability to provide materials and perform services on a timely basis. In the event our or our service providers’ IT systems or manufacturing or logistics abilities are hindered by any of the events discussed above, shipments could be delayed, and our solutions could become unavailable resulting in missed financial targets, such as revenue and shipment targets, for a particular quarter. In addition, acts of terrorism and other geo-political unrest could cause disruptions in our business or the business of our supply chain, manufacturers, logistics providers, partners or customers or the economy as a whole. Any disruption in the business of our supply chain, manufacturers, logistics providers, data center hosting partners or customers that impacts sales at the end of a fiscal quarter could have a significant adverse impact on our quarterly results. All of the aforementioned risks may be further increased if the disaster recovery plans for us and our suppliers prove to be inadequate. To the extent that any of the above should result in delays or cancellations of customer orders, or the delay in the manufacture, deployment or shipment of our solutions, our business, financial condition and operating results would be adversely affected.

If we fail to comply with environmental requirements, our business, financial condition, operating results and reputation could be adversely affected.

We are subject to various environmental laws and regulations including laws governing the hazardous material content of our solutions and laws relating to the collection of and recycling of electrical and electronic equipment. Examples of these laws and regulations include the EU Restrictions of Hazardous Substances Directive, or RoHS, and the EU Waste Electrical and Electronic Equipment Directive, or WEEE, as well as the implementing legislation of the EU member states. Similar laws and regulations have been passed or are pending in China, South Korea, Norway and Japan and may be enacted in other regions, including in the United States, and we are, or may in the future be, subject to these laws and regulations.

33

The EU RoHS and the similar laws of other jurisdictions ban the use of certain hazardous materials such as lead, mercury and cadmium in the manufacture of electrical equipment, including our solutions. Currently, we and other manufacturers of our hardware appliances and major component part suppliers comply with the EU RoHS requirements. However, if there are changes to this or other laws (or their interpretation) or if new similar laws are passed in other jurisdictions, we may be required to re-engineer our solutions to use components compatible with these regulations. This re-engineering and component substitution could result in additional costs to us or disrupt our operations or logistics.

The WEEE Directive requires electronic goods producers to be responsible for the collection, recycling and treatment of such solutions. Changes in interpretation of the directive may cause us to incur costs or have additional regulatory requirements to meet in the future in order to comply with this directive, or with any similar laws adopted in other jurisdictions.

Our failure to comply with past, present and future similar laws could result in reduced sales of our solutions, inventory write-offs, reputational damage, penalties and other sanctions, any of which could harm our business and financial condition. We also expect that our solutions will be affected by new environmental laws and regulations on an ongoing basis. To date, our expenditures for environmental compliance have not had a material impact on our results of operations or cash flows, and although we cannot predict the future impact of such laws or regulations, they will likely result in additional costs and may increase penalties associated with violations or require us to change the content of our solutions or how they are manufactured, which could have a material adverse effect on our business, operating results and financial condition.

New regulations related to conflict minerals may cause us to incur additional expenses and could limit the supply and increase the costs of certain metals used in the manufacturing of our appliances.

As a public company, we will be subject to new requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, that will require us to diligence, disclose and report whether or not our appliances contain conflict minerals. The implementation of these new requirements could adversely affect the sourcing, availability and pricing of the materials used in the manufacture of components used in our solutions. In addition, we will incur additional costs to comply with the disclosure requirements, including costs related to conducting diligence procedures to determine the sources of conflict minerals that may be used or necessary to the production of our appliances and, if applicable, potential changes to appliances, processes or sources of supply as a consequence of such verification activities. It is also possible that we may face reputational harm if we determine that certain of our appliances contain minerals not determined to be conflict free or if we are unable to alter our appliances, processes or sources of supply to avoid such materials.

Risks Related to this Offering, the Securities Markets and Ownership of Our Common Stock

An active trading market for our common stock may never develop or be sustained.

We cannot assure you that an active trading market for our common stock will develop on that exchange or elsewhere or, if developed, that any market will be sustained. Accordingly, we cannot assure you of the likelihood that an active trading market for our common stock will develop or be maintained, the liquidity of any trading market, your ability to sell your shares of common stock when desired or the prices that you may obtain for your shares.

Our share price may be volatile, and you may be unable to sell your shares at or above the offering price.

Prior to this offering, there has been no public market for shares of our common stock. Technology stocks have historically experienced high levels of volatility. The trading price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond

34

our control and may not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our common stock. Factors that may cause the market price of our common stock to fluctuate include:

• price and volume fluctuations in the overall stock market from time to time;

• significant volatility in the market price and trading volume of technology companies in general, and of companies in our industry;

• actual or anticipated changes in our results of operations or fluctuations in our operating results;

• whether our operating results meet the expectations of securities analysts or investors;

• actual or anticipated changes in the expectations of investors or securities analysts;

• actual or anticipated developments in our competitors’ businesses or the competitive landscape generally;

• developments or disputes concerning our intellectual property or other proprietary rights;

• litigation or investigations involving us, our industry or both;

• regulatory developments in the United States, foreign countries or both;

• general economic conditions and trends;

• major catastrophic events;

• the expiration of market stand-offs or contractual lock-up agreements;

• sales of large blocks of our stock; or

• major changes in our board of directors or management or departures of key personnel.

In addition, if the market for technology stocks or the stock market in general experience a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, operating results or financial condition. The trading price of our common stock might also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us.

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. If our stock price is volatile, we may become the target of securities litigation. Securities litigation could result in substantial costs and divert our management’s attention and resources from our business, and this could have a material adverse effect on our business, operating results and financial condition.

Sales of outstanding shares of our common stock into the market in the future could cause the market price of our common stock to drop significantly.

If our existing stockholders sell, or indicate an intent to sell, substantial amounts of our common stock in the public market after the contractual lock-up and other legal restrictions on resale lapse, the trading price of our common stock could decline. After this offering, approximately                 shares of common stock will be outstanding. Of these shares, the             shares of our common stock to be sold in this offering will be freely tradable, unless such shares are held by “affiliates,” as that term is defined in Rule 144 of the Securities Act of 1933, as amended, or the Securities Act.

Our directors, officers and holders of substantially all of our capital stock and securities convertible into capital stock are subject to a 180-day market stand-off or contractual lock-up agreements that prevents them from selling their shares prior to the expiration of the 180-day period. Morgan Stanley & Co. LLC. may, in its sole discretion, permit shares subject to the lock-up to be sold prior to its expiration. See the section titled “Shares Eligible for Future Sale—Lock-Up Agreements” for additional information.

35

After the market stand-offs and lock-up agreements pertaining to this offering expire, up to an additional                 shares will be eligible for sale in the public market,             of which are, based on the number of shares outstanding as of May 31, 2013 and after giving effect to the exercise of options and the sale of shares by the selling stockholders in connection with the completion of this offering, held by directors, executive officers and other affiliates and will be subject to volume limitations under Rule 144 under the Securities Act and various vesting agreements.

In addition, following the completion of this offering, we intend to file a registration statement to register all shares subject to options outstanding or reserved for future issuance under our equity compensation plans. If these additional shares are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline. See the section titled “Shares Eligible for Future Sale” for additional information.

If you purchase shares of our common stock in this offering, you will experience substantial and immediate dilution.

If you purchase shares of our common stock in this offering, you will experience substantial and immediate dilution of $         per share, based on an assumed initial public offering price of $         per share, which is the midpoint of the range as reflected on the cover page of this prospectus, because the price that you pay will be substantially greater than the net tangible book value per share of the common stock that you acquire. This dilution is due in large part to the fact that our founders and earlier investors paid substantially less than the initial public offering price when they purchased their shares of our capital stock. In addition, investors who purchase shares in this offering will contribute approximately     % of the total amount of equity capital raised by us through the date of this offering, but will only own approximately     % of our outstanding shares. In addition, we have issued options to acquire our common stock at prices significantly below the expected initial public offering price and we have unvested RSUs outstanding. To the extent outstanding options are ultimately exercised and RSUs vest, there will be further dilution to investors in this offering.

If securities analysts do not publish research or reports about our business, or if they downgrade our stock, the price of our stock could decline.

The trading market for our common stock could be influenced by any research and reports that securities or industry analysts publish about us or our business. We do not currently have, and may never obtain, research coverage by securities analysts. If no securities analysts commence coverage of our company, the trading price for our stock would be negatively impacted. In the event securities analysts cover our company and one or more of these analysts downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

The concentration of ownership among our existing directors, executive officers and principal stockholders will provide them, collectively, with substantial control over us after this offering, which could limit your ability to influence the outcome of key transactions, including a change of control.

Our directors, executive officers and each of our stockholders who own greater than 5% of our outstanding common stock and their affiliates, in the aggregate, will own approximately     % of the outstanding shares of our common stock after this offering, based on the number of shares outstanding as of May 31, 2013 and after giving effect to the sale of shares by the selling stockholders in connection with this offering. As a result, these stockholders, if acting together, will be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentration of ownership may have the effect of delaying,

36

preventing or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock.

We have broad discretion in the use of the net proceeds from our initial public offering and may not use them effectively.

We cannot specify with any certainty the particular uses of the net proceeds that we will receive from our initial public offering. Our management will have broad discretion in the application of the net proceeds, including working capital, possible acquisitions, and other general corporate purposes, and we may spend or invest these proceeds in a way with which our stockholders disagree. The failure by our management to apply these funds effectively could harm our business and financial condition, which could cause our stock price to decline. Pending their use, we may invest the net proceeds from our initial public offering in a manner that does not produce income or that loses value.

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain executive management and qualified board members.

As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the             and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company,” as defined in the JOBS Act. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. Although we have already hired additional employees to comply with these requirements, we may need to hire more employees in the future or engage outside consultants, which will increase our costs and expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, and our business may be adversely affected.

However, for as long as we remain an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a

37

nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.”

We would cease to be an “emerging growth company” upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of this offering, (ii) the first fiscal year after our annual gross revenues are $1.0 billion or more, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities or (iv) as of the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year.

We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

As a result of disclosure of information in this prospectus and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business and operating results.

We are an “emerging growth company,” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

As an “emerging growth company” we have also chosen to take advantage of certain provisions of the JOBS Act that allow us to provide you with less information in this prospectus than would otherwise be required if we are not an “emerging growth company.” As a result, this prospectus includes less information about us than would otherwise be required if we were not an “emerging growth company” within the meaning of the JOBS Act, which may make it more difficult for you to evaluate an investment in our company.

38

We do not intend to pay dividends for the foreseeable future.

We anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors. In addition, our existing credit facility restricts and any future indebtedness may restrict our ability to pay dividends. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. Investors seeking cash dividends should not purchase our common stock.

We will incur increased costs as a result of being a public company.

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, rules implemented by the SEC and the             require changes in corporate governance practices of public companies. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. We will also incur additional costs associated with our public company reporting requirements. We expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified people to serve on our board of directors or as executive officers.

Provisions in our certificate of incorporation and bylaws and under Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.

Upon the completion of this offering, our amended and restated certificate of incorporation and amended and restated bylaws will contain provisions that could depress the trading price of our common stock by acting to discourage, delay or prevent a change of control of our company or changes in our management that the stockholders of our company may deem advantageous. These provisions:

• establish a classified board of directors so that not all members of our board of directors are elected at one time;

• authorize the issuance of “blank check” preferred stock that our board of directors could issue to increase the number of outstanding shares to discourage a takeover attempt;

• prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;

• prohibit stockholders from calling a special meeting of our stockholders;

• provide that the board of directors is expressly authorized to make, alter or repeal our bylaws;

• establish advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and

• provide that a state or federal court located within the State of Delaware will be the exclusive forum for any derivative action brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising under the Delaware General Corporation Law and certain other claims.

Additionally, we will be subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder and which may discourage, delay or prevent a change of control of our company.

39

The provisions of our amended and restated certificate of incorporation and amended and restated bylaws may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. The provisions of our certificate of incorporation and bylaws or Delaware law may also have the effect of delaying or deterring a change in control, which could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

40

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus, including the sections entitled “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business” contains forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning the following:

• our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses including changes in research and development, sales and marketing and general and administrative expenses, and our ability to achieve, and maintain, future profitability;

• our business plan and our ability to effectively manage our growth and associated investments;

• anticipated trends, growth rates and challenges in our business and in the markets in which we operate;

• market acceptance of recently introduced security and storage solutions;

• beliefs and objectives for future operations;

• our ability to increase sales of our solutions and renewals of our subscriptions;

• our ability to attract and retain customers;

• our ability to cross-sell to our existing customers;

• maintaining and expanding our customer base and our relationships with our channel partners;

• our ability to timely and effectively scale and adapt our existing solutions;

• our ability to develop new solutions and bring them to market in a timely manner;

• our ability to maintain, protect and enhance our brand and intellectual property;

• our ability to continue to expand internationally;

• the effects of increased competition in our markets and our ability to compete effectively;

• sufficiency of cash to meet cash needs for at least the next 12 months;

• future acquisitions or investments;

• our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business both in the United States and internationally;

• economic and industry trends or trend analysis;

• the attraction and retention of qualified employees and key personnel;

• the estimates and estimate methodologies used in preparing our consolidated financial statements and determining option exercise prices; and

• the future trading prices of our common stock.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” and elsewhere in this prospectus. Moreover, we operate in very competitive and rapidly changing environments, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur, and actual results could differ materially and adversely from those anticipated or implied in our forward-looking statements.

41

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances described in the forward-looking statements will be achieved or occur. Moreover, neither we, nor any other person, assume responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations, except as required by law.

You should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

42

MARKET AND INDUSTRY DATA

Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market size, is based on information from various sources, including reports from Compass Intelligence, or Compass, Gartner, Inc., or Gartner, International Data Corporation, or IDC, and International Data Group, or IDG, on assumptions we have made based on such data and other similar sources and on our knowledge of the markets for our solutions. While we are not aware of any misstatements regarding any third-party information presented in this prospectus, estimates of third parties, particularly as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties, and are subject to change based on various factors, including those described in the section titled “Risk Factors” and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in the estimates made by the third parties and by us.

The Gartner Reports described herein (the “Gartner Reports”), represent data, research opinion or viewpoints published as part of a syndicated subscription service, by Gartner, and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this prospectus) and the opinions expressed in the Gartner Reports are subject to change without notice. The Gartner Reports consist of:

(1) Gartner, Competitive Landscape: Next-Generation Firewall Appliance Market, Worldwide, 2013, dated April 3, 2013, by Eric Ahlm.

(2) Gartner, Forecast: Enterprise Network Equipment by Market Segment, Worldwide, 2010-2017, 2Q13, by Christian Canales, Naresh Singh, Joe Skorupa and Severine Real.

(3) Gartner, Forecast: Information Security, Worldwide, 2011-2017, 1Q13 Update, by Ruggero Contu, Christian Canales and Lawrence Pingree.

43

USE OF PROCEEDS

We estimate that the net proceeds from our sale of                 shares of common stock in this offering at an assumed initial public offering price of $         per share, the midpoint of the price range reflected on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $         million, or $         million if the underwriters exercise their over-allotment option in full. A $1.00 increase (decrease) in the assumed initial public offering price would increase (decrease) the net proceeds to us from this offering by $         million, assuming the number of shares offered by us, as reflected on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions. We will not receive any proceeds from the sale of common stock by the selling stockholders.

The principal purposes of this offering are to increase our capitalization and financial flexibility, create a public market for our stock, thereby enabling access to the public equity markets by our stockholders and employees, facilitate an orderly distribution of shares for the selling stockholders and increase our visibility in the marketplace. We intend to use the net proceeds received from this offering primarily for capital expenditures and general corporate purposes, including working capital, sales and marketing activities, product development and general and administrative matters. At this time, we cannot quantify the amounts we intend to expend on any of these activities. However, with respect to capital expenditures, we expect to continue to invest in data center infrastructure to enable us to expand our cloud-based services and to invest to improve and expand our corporate headquarters and other domestic and worldwide facilities as well as continue to invest in our IT infrastructure. With respect to sales and marketing activities, we intend to continue to invest in our brand development and customer-focused marketing initiatives, including advertising and event marketing. We also may use a portion of the net proceeds from this offering to make complementary acquisitions or investments. However, we do not have agreements or commitments for any specific acquisitions or investments at this time.

We will have broad discretion over the uses of the net proceeds of this offering. Pending these uses, we intend to invest the net proceeds from this offering in short-term, investment-grade interest-bearing securities such as money market accounts, certificates of deposit, commercial paper and guaranteed obligations of the U.S. government, as well as equity investments in marketable securities.

DIVIDEND POLICY

In October 2012, in connection with our recapitalization, we declared $130.0 million of cash dividends. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—The Recapitalization” for additional information. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any dividends on our common stock in the foreseeable future, if at all. Additionally, our ability to pay dividends on our common stock is limited by restrictions on our ability to pay dividends or make distributions, under the terms of our existing credit facility. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our board of directors may deem relevant.

44

CAPITALIZATION

The following table sets forth our cash, cash equivalents and marketable securities and capitalization as of May 31, 2013 on:

• an actual basis;

• a pro forma basis, giving effect to the automatic conversion of all outstanding shares of our redeemable convertible preferred stock into 52,878,666 shares of common stock and the effectiveness of our amended and restated certificate of incorporation which will occur immediately prior to the completion of this offering, as if such conversion had occurred and our amended and restated certificate of incorporation had become effective on May 31, 2013; and

• a pro forma as adjusted basis, giving effect to the pro forma adjustments and the sale of                 shares of common stock by us in this offering, based on an assumed initial public offering price of $         per share, the midpoint of the estimated price range reflected on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The pro forma as adjusted information set forth in the table below is illustrative only and will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing.

You should read this table together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited and unaudited consolidated financial statements and related notes included elsewhere in this prospectus.

	May 31, 2013
	Actual			Pro Forma			Pro Forma  as Adjusted(1)
	(in thousands, except share and per share data)
Cash, cash equivalents and marketable securities	$	21,953		$	21,953		$
Note payable, current and non-current	$	5,038		$	5,038		$
Redeemable convertible preferred stock, $0.001 par value; 52,878,666 shares authorized, issued and outstanding, actual; no shares authorized, issued and outstanding, pro forma and pro forma as adjusted		167,554			—
Stockholders’ deficit:
Preferred stock, par value $0.001; no shares authorized, issued and outstanding, actual;                  shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted		—			—
Common stock, $0.001 par value; 160,000,000 shares authorized, 84,388,971 shares issued and outstanding, actual;                  shares authorized, 137,267,637 shares issued and outstanding, pro forma;                  shares authorized,                  shares issued and outstanding, pro forma as adjusted		84			137
Additional paid-in capital		25,311			192,812
Accumulated other comprehensive loss		(1,494	)		(1,494	)
Accumulated deficit		(281,535	)		(281,535	)
Total stockholders’ deficit, controlling interest		(257,634	)		(90,080	)
Total stockholders’ deficit, non-controlling interest		(2,644	)		(2,644	)
Total stockholders’ deficit		(260,278	)		(92,724	)
Total capitalization	$	(87,686	)	$	(87,686	)	$

45

(1) The pro forma as adjusted information set forth above is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing. Each $1.00 increase or decrease in the assumed initial public offering price of $         per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase or decrease each of cash and cash equivalents, additional paid-in capital, total stockholders’ deficit and total capitalization by approximately $         million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions. Similarly, each increase or decrease of one million shares in the number of shares offered by us would increase or decrease, as applicable, cash and cash equivalents, additional paid-in capital, total stockholders’ deficit and total capitalization by approximately $         million, assuming an initial public offering price of $         per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions. The pro forma as adjusted information discussed above is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing.

The number of shares of our common stock set forth in the table above is based on 137,267,637 shares of our common stock outstanding as of May 31, 2013, and excludes:

• 15,371,672 shares of common stock issuable upon the exercise of options outstanding as of May 31, 2013, with a weighted-average exercise price of $3.70 per share;

• 3,508,828 shares of common stock issuable upon the vesting of RSUs outstanding as of May 31, 2013; and

• 2,707,540 shares of common stock reserved for future issuance under our 2012 Equity Incentive Plan and shares that become available under our 2012 Equity Incentive Plan, pursuant to provisions thereof that automatically increase the share reserves under the plans each year, as more fully described in the section titled “Executive Compensation—Employee Benefit Plans.”

46

DILUTION

If you invest in our common stock, your interest will be diluted to the extent of the difference between the amount per share paid by purchasers of shares of common stock in this offering and the pro forma as adjusted net tangible book value per share of common stock immediately after the completion of this offering.

As of May 31, 2013, our pro forma net tangible book value was approximately $         million, or $         per share of common stock. Our pro forma net tangible book value per share represents the amount of our total tangible assets reduced by the amount of our total liabilities and divided by the total number of shares of our common stock outstanding as of May 31, 2013, assuming the conversion of all outstanding shares of our redeemable convertible preferred stock into shares of our common stock.

After giving effect to our sale in this offering of             shares of our common stock, at an assumed initial public offering price of $         per share, the estimated midpoint of the estimated price range reflected on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma net tangible book value as of May 31, 2013 would have been approximately $         million, or $         per share of our common stock. This represents an immediate increase in pro forma net tangible book value of $         per share to our existing stockholders and an immediate dilution of $         per share to investors purchasing shares in this offering.

The following table illustrates this dilution:

Assumed initial public offering price per share		$
Decrease in book value per share attributable to conversion of redeemable convertible preferred stock	$
Pro forma net tangible book value per share as of May 31, 2013, before giving effect to this offering
Increase per share attributable to this offering
Pro forma net tangible book value, as adjusted to give effect to this offering		$
Dilution in pro forma net tangible book value per share to new investors purchasing shares in this offering		$

The dilution information discussed above is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing. Each $1.00 increase (decrease) in the assumed initial public offering price of $         per share, the midpoint of the price range reflected on the cover page of this prospectus, would increase (decrease) our pro forma net tangible book value, as adjusted to give effect to this offering, by $         per share, the increase (decrease) attributable to this offering by $         per share, and the dilution in pro forma as adjusted net tangible book value per share to new investors purchasing shares in this offering by $         per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions.

If the underwriters exercise their over-allotment option in full, the pro forma net tangible book value per share of our common stock after giving effect to this offering would be $         per share, and the dilution in net tangible book value per share to investors in this offering would be $         per share.

The following table summarizes, on a pro forma as adjusted basis as of May 31, 2013 after giving effect to (i) the automatic conversion of all of our redeemable convertible preferred stock into common stock, and (ii) the completion of this offering at an assumed initial public offering price of $         per share, the estimated midpoint of the estimated price range reflected on the cover page of this prospectus, the difference between existing

47

stockholders and new investors with respect to the number of shares of common stock purchased from us, the total consideration paid to us, and the average price per share paid, before deducting estimated underwriting discounts and commissions and estimated offering expenses:

	Shares Purchased				Total Consideration				Average Price Per Share
	Number	Percent			Amount	Percent
Existing stockholders				%	$			%	$
New public investors
Total			100.0	%	$		100.0	%

The information discussed above is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing. Each $1.00 increase (decrease) in the assumed initial public offering price of $        per share, the midpoint of the price range reflected on the cover page of this prospectus, would increase (decrease) total consideration paid by new investors and total consideration paid by all stockholders by approximately $        million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

To the extent that our outstanding options are exercised or RSUs vest, investors will experience further dilution.

Except as otherwise indicated, the above discussion and tables assume no exercise of the underwriters’ over-allotment option. If the underwriters exercise their over-allotment option in full, our existing stockholders would own     % and our new investors would own     % of the total number of shares of our common stock outstanding upon the completion of this offering.

The number of shares of our common stock set forth in the table above is based on 137,267,637 shares of our common stock outstanding as of May 31, 2013, and excludes:

• 15,371,672 shares of common stock issuable upon the exercise of options outstanding as of May 31, 2013, with a weighted-average exercise price of $3.70 per share;

• 3,508,828 shares of common stock issuable upon the vesting of RSUs outstanding as of May 31, 2013; and

• 2,707,540 shares of common stock reserved for future issuance under our 2012 Equity Incentive Plan and shares that become available under our 2012 Equity Incentive Plan, pursuant to provisions thereof that automatically increase the share reserves under the plans each year, as more fully described in the section titled “Executive Compensation—Employee Benefit Plans.”

48

SELECTED CONSOLIDATED FINANCIAL DATA

We have derived the selected consolidated statements of operations data for our fiscal years ended February 28, 2011, February 29, 2012 and February 28, 2013 and the selected consolidated balance sheet data as of February 29, 2012 and February 28, 2013 from our audited consolidated financial statements included elsewhere in this prospectus. We have derived the selected consolidated statements of operations data for the fiscal years ended February 28, 2009 and 2010 and the selected consolidated balance sheet data as of February 28, 2009, 2010 and 2011 from our audited consolidated financial statements not included in this prospectus. We have derived the selected consolidated statements of operations data for the three months ended May 31, 2012 and 2013 and the selected consolidated balance sheet data as of May 31, 2013 from our unaudited consolidated financial statements included elsewhere in this prospectus. Our unaudited consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and, in the opinion of management, include all adjustments, which consist only of normal recurring adjustments, necessary for the fair presentation of those unaudited consolidated financial statements. Our historical results are not necessarily indicative of the results that may be expected in the future, and the results for the three months ended May 31, 2013 are not necessarily indicative of operating results to be expected for the fiscal year ending February 28, 2014 or any other period. You should read the following selected consolidated financial data together with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements, related notes and other financial information included elsewhere in this prospectus.

	Year Ended February 28/29,												Three Months Ended May 31,
	2009		2010		2011		2012			2013			2012			2013
	(in thousands, except per share data)
Consolidated Statements of Operations Data:(1)
Revenue:
Appliance	$	46,584	$	55,965	$	52,477	$	43,258		$	59,528		$	13,318		$	17,503
Subscription		54,657		67,725		89,655		117,662			139,403			32,691			38,774
Total revenue		101,241		123,690		142,132		160,920			198,931			46,009			56,277
Cost of revenue(2)		19,826		25,315		31,972		34,966			45,088			10,274			13,074
Gross profit		81,415		98,375		110,160		125,954			153,843			35,735			43,203
Operating expenses:
Research and development(2)		13,022		19,691		23,979		27,824			35,167			7,656			10,842
Sales and marketing(2)		45,221		57,598		69,963		84,885			102,329			24,027			28,836
General and administrative(2)		15,748		12,104		13,021		14,428			28,777			6,420			6,678
Total operating expenses		73,991		89,393		106,963		127,137			166,273			38,103			46,356
Operating income (loss)		7,424		8,982		3,197		(1,183	)		(12,430	)		(2,368	)		(3,153	)
Other income (expense), net		1,211		1,067		282		476			(839	)		(1,074	)		(457	)
Income (loss) before income taxes and non-controlling interest		8,635		10,049		3,479		(707	)		(13,269	)		(3,442	)		(3,610	)
Provision (benefit) for income taxes		3,197		5,486		1,136		(453	)		(5,084	)		(902	)		(1,047	)
Consolidated net income (loss)		5,438		4,563		2,343		(254	)		(8,185	)		(2,540	)		(2,563	)
Net loss attributable to non-controlling interest		—		1,165		620		859			794			206			159
Net income (loss) attributable to Barracuda Networks, Inc.	$	5,438	$	5,728	$	2,963	$	605		$	(7,391	)	$	(2,334	)	$	(2,404	)
Net income (loss) attributable to common stockholders:	$	4,161	$	4,393	$	2,281	$	466		$	(9,203	)	$	(2,334	)	$	(2,404	)
Net income (loss) per share attributable to common stockholders:
Basic	$	0.04	$	0.04	$	0.02	$	0.00		$	(0.10	)	$	(0.02	)	$	(0.03	)
Diluted	$	0.04	$	0.04	$	0.02	$	0.00		$	(0.10	)	$	(0.02	)	$	(0.03	)
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
Basic		98,226		99,176		100,890		101,488			96,094			101,385			84,301
Diluted		131,039		133,064		134,943		136,066			96,094			101,385			84,301
Pro forma net income (loss) per share attributable to common stockholders:
Basic and diluted										$	(0.05	)				$	(0.02	)
Pro forma weighted-average shares outstanding used to compute net income (loss) per share attributable to common stockholders:
Basic and diluted											135,461						137,180

49

(1) Certain amounts in fiscal 2009 and fiscal 2010 have been reclassified to conform to the current year presentation.

(2) Includes stock-based compensation expense as follows:

	Year Ended February 28/29,										Three Months Ended May 31,
	2009		2010		2011		2012		2013		2012		2013
	(in thousands)
Cost of revenue	$	49	$	64	$	84	$	51	$	146	$	21	$	45
Research and development		420		597		848		766		2,059		284		630
Sales and marketing		321		514		627		527		1,182		185		334
General and administrative		306		327		417		527		5,400		2,751		1,488
Total stock-based compensation	$	1,096	$	1,502	$	1,976	$	1,871	$	8,787	$	3,241	$	2,497

	February 28/29,															May  31, 2013
	2009			2010			2011			2012			2013
	(in thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents and marketable securities	$	70,678		$	66,626		$	100,187		$	128,783		$	31,645		$	21,953
Working capital (deficit)		29,237			22,901			52,912			61,180			(67,797	)		(68,963	)
Total assets		128,378			173,591			218,655			283,899			212,248			216,549
Deferred revenue, current and non-current		99,975			122,882			160,699			217,209			261,243			274,444
Note payable, current and non-current		—			1,431			—			5,295			5,094			5,038
Redeemable convertible preferred stock		40,010			40,010			40,010			40,010			167,554			167,554
Common stock and additional paid-in capital		3,177			10,522			13,377			13,479			23,108			25,395
Total stockholders’ deficit		(25,688	)		(10,682	)		(4,984	)		(7,583	)		(259,620	)		(260,278	)

50

Key Metrics

We monitor the following key metrics to help us evaluate growth trends, establish budgets and assess operational efficiencies. In addition to our results determined in accordance with GAAP, we believe the following non-GAAP and operational measures are useful in evaluating our operating performance.

	Year Ended February 28/29,									Three Months Ended May 31,
	2011			2012			2013			2012			2013
	(in thousands, except active subscribers and percentages)
Gross billings	$	191,306		$	233,211		$	264,225		$	65,362		$	74,865
Year-over-year percentage increase					22	%		13	%					15	%
Year-over-year percentage increase on a constant currency basis(1)					22	%		17	%					16	%
Adjusted EBITDA	$	46,200		$	55,251		$	49,095		$	14,110		$	12,053
Adjusted EBITDA as a percentage of total revenue		33	%		34	%		25	%		31	%		21	%
Free cash flow	$	34,422		$	35,416		$	41,085		$	9,866		$	1,607
Free cash flow as a percentage of total revenue		24	%		22	%		21	%		21	%		3	%
Active subscribers as of period end		134,807			156,976			179,952			161,998			184,232

(1) In order to determine how our business performed exclusive of the effect of foreign currency fluctuations, we compare the percentage change in our gross billings from one period to another using a constant currency. To present this gross billings information, the current and comparative prior period results for entities that operate in other than U.S. dollars are converted into U.S. dollars at constant exchange rates. For example, the rates in effect at February 28, 2013, which was the last day of our prior fiscal year, were used to convert current and comparable prior period gross billings rather than the actual exchange rates in effect during the respective period.

Gross billings. We define gross billings as total revenue plus the change in deferred revenue and other adjustments which primarily reflect returns and reserves with respect to the 30-day right to return we provide to our customers, as well as rebates for certain channel partner activities, during a particular period. We use gross billings as a performance measurement and a leading indicator of our future revenue, based on our business model of invoicing our customers at the time of sale of our solutions and recognizing revenue ratably over subsequent periods. Accordingly, we believe gross billings provide valuable insight into the sales of our solutions and the performance of our business. The gross billings we record in any period reflect sales to new customers plus renewals and additional sales to existing customers adjusted for returns, rebates and other offsets. In many cases, these returns, rebates and other offsets occur in periods different from the period of sale, and are unrelated to the marketing efforts leading to the initial sale, and therefore by adjusting for such offsets, we believe our computation of gross billings better reflects the effectiveness of our sales and marketing efforts.

Adjusted EBITDA. We define adjusted EBITDA as net income (loss) plus non-cash and non-operating charges, which includes acquisition and other non-recurring charges. Because of our business model, where revenue from gross billings is deferred and recognized ratably over subsequent periods, substantially all of our gross billings increase deferred revenue. Therefore, we believe that adjusting net income (loss) for increases in deferred revenue and increases in the associated deferred costs provides another indication of profitability from our operations. We use adjusted EBITDA to measure our performance, prepare our budgets and establish metrics for variable compensation. Because adjusted EBITDA excludes certain non-cash and non-operating charges, this measure enables us to eliminate the impact of items we do not consider indicative of our core operating performance and to better measure our performance on a consistent basis from period to period.

Free cash flow. We define free cash flow as cash provided by operating activities, less purchases of property and equipment plus acquisition and other non-recurring charges. We consider free cash flow to be a useful liquidity measure that considers the investment in cloud and corporate infrastructure required to support our business and the impact of acquisition related expenses and other non-recurring charges. We use free cash flow

51

to assess our business performance and evaluate the amount of cash generated by our business after adjusting for purchases of property and equipment and acquisition and other non-recurring charges.

Active subscribers. We define an active subscriber as a discrete appliance, virtual appliance or cloud-only service that has activated at least one valid subscription that has not been terminated. We monitor the total number of active subscribers as a measure of the growth in our installed base, the success of our sales and marketing activities and the value that our solutions bring to our customers.

Acquisition and Other Non-Recurring Charges

In calculating adjusted EBITDA and free cash flow, we also adjust for acquisition and other charges that we do not expect to recur in our continuing operating results. We believe that adjusting for these charges allows us to better compare adjusted EBITDA and free cash flow from period to period in order to assess the ongoing operating results of our business. We refer to costs related to our CEO transition, export compliance, acquisitions and option holder bonuses as our “acquisition and other non-recurring charges” throughout this prospectus. These costs consist of the following:

CEO transition. CEO transition costs include severance payments made to our former chief executive officer and related legal expenses, as well as recruitment and other fees related to the hiring of our new chief executive officer. These costs also include costs and bonuses related to the office of the CEO and bonuses for certain executives paid in connection with the transition. These costs are classified primarily as general and administrative expenses in our consolidated statements of operations.

Export compliance. Export compliance costs include legal expenses incurred in connection with an internal investigation of our export controls compliance procedures and the submission of our voluntary self-disclosures to the U.S. government in this regard. These costs are classified as general and administrative expenses in our consolidated statements of operations.

Acquisition costs. Acquisition costs include legal expenses incurred in acquiring the remaining outstanding equity of phion AG as well as contingent consideration payments made under the terms of certain acquisition agreements. The phion AG related legal costs are classified as general and administrative expenses and the contingent consideration payments are primarily classified as research and development expenses in our consolidated statements of operations.

Option holder bonuses. Option holder bonus costs include bonus payments made in lieu of dividends to employees who held fully vested options to acquire our common stock at the time of our October 2012 recapitalization. These costs impacted our research and development, sales and marketing and general and administrative expenses in our consolidated statements of operations.

The following tables present the details of our acquisition and other non-recurring charges and their impact on adjusted EBITDA and free cash flow.

	Year Ended February  28/29,						Three Months Ended May 31,
	2011		2012		2013		2012		2013
	(in thousands)
Impact of acquisition and other non-recurring charges on adjusted EBITDA:
CEO transition	$	—	$	—	$	6,058	$	19	$	—
Export compliance		—		—		1,411		481		—
Option holder bonuses		—		—		1,420		—		—
Acquisition costs		—		—		904		261		190
Total acquisition and other non-recurring charges	$	—	$	—	$	9,793	$	761	$	190

52

	Year Ended February 28/29,						Three Months Ended May 31,
	2011		2012		2013		2012		2013
	(in thousands)
Impact of acquisition and other non-recurring charges on free cash flow:
CEO transition	$	—	$	—	$	4,108	$	19	$	1,946
Export compliance		—		—		—		—		940
Option holder bonuses		—		—		1,420		—		—
Acquisition costs		—		—		904		261		190
Total acquisition and other non-recurring charges	$	—	$	—	$	6,432	$	280	$	3,076

Reconciliation of Non-GAAP Financial Measures

Our non-GAAP measures have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of our results under GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. First, gross billings, adjusted EBITDA and free cash flow are not substitutes for total revenue, net income and cash provided by operating activities, respectively. Second, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Finally, adjusted EBITDA excludes some costs, namely, non-cash stock-based compensation and depreciation and amortization expense, which are recurring. Therefore adjusted EBITDA does not reflect the non-cash impact of stock-based compensation or working capital needs, that will continue for the foreseeable future.

The following tables reconcile the most directly comparable GAAP financial measure to each of these non-GAAP financial measures.

	Year Ended February 28/29,									Three Months Ended May 31,
	2011			2012			2013			2012			2013
	(in thousands)
Gross billings:
Total revenue	$	142,132		$	160,920		$	198,931		$	46,009		$	56,277
Total deferred revenue, end of period		160,699			217,209			261,243			231,131			274,444
Less: total deferred revenue, beginning of period		(122,882	)		(160,699	)		(217,209	)		(217,209	)		(261,243	)
Add: deferred revenue adjustments		11,357			15,781			21,260			5,431			5,387
Total change in deferred revenue and adjustments		49,174			72,291			65,294			19,353			18,588
Gross billings	$	191,306		$	233,211		$	264,225		$	65,362		$	74,865

53

	Year Ended February 28/29,									Three Months Ended May 31,
	2011			2012			2013			2012			2013
	(in thousands)
Adjusted EBITDA:
Net income (loss) attributable to Barracuda Networks, Inc.	$	2,963		$	605		$	(7,391	)	$	(2,334	)	$	(2,404	)
Total deferred revenue, end of period		160,699			217,209			261,243			231,131			274,444
Less: total deferred revenue, beginning of period		(122,882	)		(160,699	)		(217,209	)		(217,209	)		(261,243	)
Less: total deferred costs, end of period		(18,324	)		(29,254	)		(39,470	)		(32,904	)		(42,556	)
Total deferred costs, beginning of period		13,261			18,324			29,254			29,254			39,470
Other (income) expense, net		(282	)		(476	)		839			1,074			457
Provision (benefit) for income taxes		1,136			(453	)		(5,084	)		(902	)		(1,047	)
Depreciation and amortization		7,653			8,124			8,333			1,998			2,245
Stock-based compensation		1,976			1,871			8,787			3,241			2,497
Acquisition and other non-recurring charges		—			—			9,793			761			190
Adjusted EBITDA	$	46,200		$	55,251		$	49,095		$	14,110		$	12,053
	Year Ended February 28/29,									Three Months Ended May 31,
	2011			2012			2013			2012			2013
	(in thousands)
Free cash flow:
Cash provided by operating activities	$	36,909		$	43,926		$	39,375		$	10,195		$	194
Less: purchases of property and equipment		(2,487	)		(8,510	)		(4,722	)		(609	)		(1,663	)
Acquisition and other non-recurring charges		—			—			6,432			280			3,076
Free cash flow	$	34,422		$	35,416		$	41,085		$	9,866		$	1,607

54

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and related notes that are included elsewhere in this prospectus. The last day of our fiscal year is February 28/29. Our fiscal quarters end on May 31, August 30, November 30 and February 28/29. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth above in the section titled “Risk Factors” and elsewhere in this prospectus.

Overview

Barracuda designs and delivers powerful yet easy-to-use security and storage solutions. We offer cloud-connected solutions that help our customers address security threats, improve network performance and protect and store their data. Our solutions are designed to simplify IT operations for our customers, allowing them to enhance their return on technology investment. Our business model is built on the core values of speed and agility, which we apply to all aspects of our approach, including our technology innovations, the delivery and deployment of our solutions and responses to customer inquiries.

We were founded in 2003 with the vision to design industry-leading solutions to solve mainstream IT problems efficiently and cost effectively, with a high level of customer support. We have built our broad solution portfolio through organic product development as well as through selective technology acquisitions. We launched our first commercial product, the Barracuda Spam & Virus Firewall, in October 2003. Since then, we have invested a substantial amount of resources to rapidly design and develop new purpose-built solutions for our portfolio. We launched our Web Filter in 2005, our Load Balancer in 2006, our Message Archiver in 2007, our first virtual appliances and Barracuda Email Security Service in 2010 and our Copy service, Application Delivery Controller and Barracuda Firewall solutions in 2013. We have also identified, acquired and integrated a number of complementary technologies in order to expand our solution portfolio. We acquired our capabilities for web application security in 2007, secure virtual private network in 2008, backup, disaster recovery and deduplication in 2008, next generation firewall and cloud-based web security in 2009 and eSignature in 2013. We will continue to evaluate complementary acquisitions or investments, although we do not have agreements or commitments for any specific acquisitions or investments at this time.

We derive revenue from sales of appliances and subscriptions. Revenue from the sale of our appliances includes hardware and a perpetual license. Subscription revenue is generated primarily from our subscription services such as our Barracuda Energize Updates as well as our cloud solutions—Barracuda Email Security Service, Barracuda Web Security Service and Barracuda Backup. Subscription revenue also includes revenue from fixed term licenses of our virtual appliance software support and maintenance. Our subscription terms range from one to five years, the substantial majority of which are for one-year periods. Subscriptions are billed in advance of the purchased subscription period. Renewal rates from subscriptions, on a dollars basis, have been 89%, 90% and 93% in fiscal 2011, 2012 and 2013, respectively.

We have a differentiated operating model that enables rapid adoption of our solutions and enhanced time to value for our customers. We employ a high-velocity sales model that incorporates a 30-day right to return, real-time order fulfillment and a simple, low-cost entry point. Our product and sales specialists work closely with prospective customers to answer questions and guide them to participate in our evaluation program. We fulfill sales of our solutions through our global partner network of over 5,000 distributors and value added resellers. Customers typically receive our solutions and can deploy and begin to realize value within 24 hours. We believe our solutions are highly price competitive, and our pricing includes many of the features and services others charge separately for, greatly simplifying and expediting our customers’ purchasing process. We manage our

55

business with a culture and set of systems and processes that help us achieve a high degree of consistency and visibility, and focuses on sales productivity, marketing effectiveness and customer satisfaction.

Our customer base represents a broad range of industries including automotive, education, electronics, financial services, food service, government, industrial manufacturing, medicine, media, real estate, retail, software and telecommunications. In fiscal 2013 and for the three months ended May 31, 2013, one distribution partner accounted for 13% and 16% of our total revenue, respectively. No customer or distribution partner accounted for greater than 10% of our total revenue in fiscal 2011 or 2012.

To support our goal of sustainable, long-term growth, we have made and continue to make significant incremental investments in product development, corporate infrastructure and broadened distribution. For example, in fiscal 2013, we hired a new chief executive officer and a number of other key executives across our organization. We also maintained a level of investment in brand development that we believed would continue to help us expand our reach. We intend to continue to invest in development of our solutions, our infrastructure and sales and marketing to drive long-term growth.

The growth of our business and our future success depend on many factors, including our ability to continue to expand our customer base, pursue cross-sale opportunities and grow revenues from our existing customer base, expand our distribution channels, particularly internationally, and continue to develop new solutions to promptly respond to our customers’ needs. While these areas represent significant opportunities for us, they also pose risks and challenges that we must successfully address in order to sustain the growth of our business and improve our operating results.

Additionally, our quarterly and annual operating results and key metrics have varied from period to period in the past, and we expect that they may continue to fluctuate as a result of a number of factors, many of which are outside of our control, including the timing and success of introductions of our new solutions, changes in the growth rate of the security and storage markets, changes in renewal rates for our subscriptions and our ability to cross-sell additional solutions in a period, amongst others. This variability and unpredictability could result in our failing to meet our revenue, billings or operating results expectations or those of securities analysts or investors for any period.

Furthermore, our business depends on the overall demand for security and storage solutions. Weak global economic conditions, particularly market and financial uncertainty and instability in the United States and Europe, or a reduction in security and storage solution spending even if economic conditions improve, could adversely impact our business, financial condition and operating results in a number of ways. Additionally, we face significant competition across all of our market segments, and must continue to execute across all functions and add qualified personnel to succeed in these markets.

For fiscal 2011, 2012 and 2013, and for the three months ended May 31, 2013, our gross billings were $191.3 million, $233.2 million, $264.2 million and $74.9 million, respectively. For fiscal 2011, 2012 and 2013, and for the three months ended May 31, 2013, our total revenue was $142.1 million, $160.9 million, $198.9 million, and $56.3 million, respectively. We believe that the subscription nature of our solutions provides value to our customers and financial visibility to us. Subscription revenue for fiscal 2011, 2012 and 2013 and for the three months ended May 31, 2013 represented approximately 63%, 73%, 70% and 69% of our total revenue, respectively. For fiscal 2011, 2012 and 2013, and for the three months ended May 31, 2013, our net income (loss) to Barracuda was $3.0 million, $0.6 million, $(7.4) million and $(2.4) million, respectively. For fiscal 2011, 2012 and 2013, and for the three months ended May 31, 2013, our free cash flow, adjusted for acquisition costs and other non-recurring charges, was $34.4 million, $35.4 million, $41.1 million and $1.6 million, respectively.

56

Our Business Model

We invoice at the time of sale for the total price of the solutions we deliver, and we typically collect cash in 30 to 60 days. We refer to the total amount of invoices we issue in a period as gross billings. All of the gross billings we record are recognized as revenue ratably under GAAP, once all revenue recognition criteria have been met. Gross billings are initially recorded as deferred revenue, less reserves. The appliance component of our gross billings is recognized ratably as revenue over the estimated customer relationship period, which is typically three years, commencing upon the activation of the unit by the end customer. The subscription component of our gross billings is recognized ratably as revenue over the contractual period of the subscription. Because we bill in advance for the entire term, substantially all of our new and renewal gross billings increase our deferred revenue balance, which contributes significantly to our cash flow.

Key Metrics

We monitor the following key metrics to help us evaluate growth trends, establish budgets and assess operational efficiencies. In addition to our results determined in accordance with GAAP, we believe the following non-GAAP and operational measures are useful in evaluating our operating performance.

	Year Ended February 28/29,									Three Months Ended May 31,
	2011			2012			2013			2012			2013
	(in thousands, except active subscribers and percentages)
Gross billings	$	191,306		$	233,211		$	264,225		$	65,362		$	74,865
Year-over-year percentage increase					22	%		13	%					15	%
Year-over-year percentage increase on a constant currency basis (1)					22	%		17	%					16	%
Adjusted EBITDA	$	46,200		$	55,251		$	49,095		$	14,110		$	12,053
Adjusted EBITDA as a percentage of total revenue		33	%		34	%		25	%		31	%		21	%
Free cash flow	$	34,422		$	35,416		$	41,085		$	9,866		$	1,607
Free cash flow as a percentage of total revenue		24	%		22	%		21	%		21	%		3	%
Active subscribers at period end		134,807			156,976			179,952			161,998			184,232

(1) In order to determine how our business performed exclusive of the effect of foreign currency fluctuations, we compare the percentage change in our gross billings from one period to another using a constant currency. To present this gross billings information, the current and comparative prior period results for entities that operate in other than U.S. dollars are converted into U.S. dollars at constant exchange rates. For example, the rates in effect at February 28, 2013, which was the last day of our prior fiscal year, were used to convert current and comparable prior period gross billings rather than the actual exchange rates in effect during the respective period.

Gross billings. We define gross billings as total revenue plus the change in deferred revenue and other adjustments which primarily reflect returns and reserves with respect to the 30-day right to return we provide to our customers, as well as rebates for certain channel partner activities, during a particular period. We use gross billings as a performance measurement and a leading indicator of our future revenue, based on our business model of invoicing our customers at the time of sale of our solutions and recognizing revenue ratably over subsequent periods. Accordingly, we believe gross billings provide valuable insight into the sales of our solutions and the performance of our business. The gross billings we record in any period reflect sales to new customers plus renewals and additional sales to existing customers adjusted for returns, rebates and other offsets. In many cases, these returns, rebates and other offsets occur in periods different from the period of sale, and are unrelated to the marketing efforts leading to the initial sale, and therefore by adjusting for such offsets, we believe our computation of gross billings better reflects the effectiveness of our sales and marketing efforts.

Gross billings increased 22% from fiscal 2011 to 2012 and 13% from fiscal 2012 to 2013. In addition, in the three months ended May 31, 2013, gross billings increased 15% over the three months ended May 31, 2012. The increase in gross billings was primarily driven by our continued ability to cross-sell additional solutions to

57

existing customers and the growth in our renewal subscriptions as a result of our high level of customer retention. The increase was also due to continued investment in sales and marketing, which resulted in additional lead generation opportunities and associated new customer billings. When evaluating our gross billings from period to period, we also evaluate our gross billings for the two comparable periods using a fixed exchange rate, thereby excluding the effect of currency fluctuations.

Adjusted EBITDA. We define adjusted EBITDA as net income (loss) plus non-cash and non-operating charges, which includes acquisition and other non-recurring charges. Because of our business model, where revenue from gross billings is recognized ratably over subsequent periods, substantially all of our gross billings increase deferred revenue. Therefore, we believe that adjusting net income (loss) for increases in deferred revenue and increases in the associated deferred costs provides another indication of profitability from our operations. We use adjusted EBITDA to measure our performance, prepare our budgets and establish metrics for variable compensation. Because adjusted EBITDA excludes certain non-cash and non-operating charges, this measure enables us to eliminate the impact of items we do not consider indicative of our core operating performance and to better measure our performance on a consistent basis from period to period.

Adjusted EBITDA increased from $46.2 million in fiscal 2011 to $55.3 million fiscal 2012 and decreased to $49.1 million in fiscal 2013. In addition, adjusted EBITDA decreased from $14.1 million for three months ended May 31, 2012 to $12.1 million for the three months ended May 31, 2013. The fluctuations in adjusted EBITDA from period to period were based primarily upon changes in gross billings and our investments in research and development. Our adjusted EBITDA increased from fiscal 2011 to fiscal 2012 as a result of the growth in gross billings. Our adjusted EBITDA in fiscal 2013 decreased due to increased investment in research and development and sales and marketing. Specifically, in fiscal 2013, research and development headcount increased by 28% compared to fiscal 2012, and sales and marketing headcount increased 25% compared to fiscal 2012.

Free cash flow. We define free cash flow as cash provided by operating activities, less purchases of property and equipment plus acquisition and other non-recurring charges. We consider free cash flow to be a useful liquidity measure that considers the investment in cloud and corporate infrastructure required to support our business and the impact of acquisition related expenses and other non-recurring charges. We use free cash flow to assess our business performance and evaluate the amount of cash generated by our business after adjusting for purchases of property and equipment and acquisition and other non-recurring charges.

Free cash flow increased from $34.4 million in fiscal 2011 to $35.4 million fiscal 2012 and to $41.1 million in fiscal 2013. In addition, free cash flow decreased from $9.9 million for three months ended May 31, 2012 to $1.6 million for the three months ended May 31, 2013. The decrease in free cash flow in the three months ended May 31, 2013 was driven primarily by $3.6 million in federal and state tax payments and $1.1 million in capital expenditures to further expand our cloud infrastructure, as well as other changes in working capital.

Active subscribers. We define an active subscriber as a discrete appliance, virtual appliance or cloud-only service that has activated at least one valid subscription that has not been terminated. We monitor the total number of active subscribers as a measure of the growth in our installed base, the success of our sales and marketing activities and the value that our solutions bring to our customers. As of fiscal 2011, 2012 and 2013 and the three months ended May 31, 2013, we had 134,807, 156,976, 179,952 and 184,232 active subscribers, respectively. The increase in active subscribers over these periods is primarily related to the increase in the renewal rate of our subscriptions, which has increased on a dollar basis from 89% in fiscal 2011 to 93% in fiscal 2013, as well as our ability to attract and retain new customers.

Factors Affecting our Performance

We believe that our future success will be dependent on many factors, including our ability to increase sales of our solutions to new customers as well as to increase sales of additional solutions to our existing customers and to add incremental capabilities that will solve emerging customer issues. While these areas present

58

significant opportunity, they also present risks that we must manage to ensure successful results. See the section titled “Risk Factors.” Additionally, we face significant competition across all of our market segments and must continue to execute across all functions and add qualified personnel to succeed in these markets. If we are unable to address these challenges, our business could be adversely affected.

Investment in Sales and Marketing. In order to support future sales, we will need to continue to invest significant resources devoted to our sales force and global network of partners and resellers. We have made and plan to continue to make significant investments in expanding our sales teams and distribution programs with our channel partners and increasing our brand awareness. Any investments we make in our sales and marketing will occur in advance of our experiencing any benefits from such investments, and so it may be difficult for us to determine if we are efficiently allocating our resources in this area. We cannot assure that the investments we have made, or intend to make, to strengthen our sales and marketing efforts will result in an increase in revenue or an improvement in our results of operations.

Investment in Product Development. Our performance is significantly dependent on the investments we make in our research and development efforts, and in our ability to continue to innovate, improve functionality, adapt to new technologies or changes to existing technologies. Our investments in this area include an increase in our research and development headcount by 28% in fiscal 2013 and the resulting increases in overhead expenses. We intend to continue to invest in new solution development and enhancements to our existing solutions. We cannot be assured that we will realize increased revenues from our development initiatives.

Investment in Infrastructure. In order to support our operations, we have made and expect to continue to make substantial investments in our infrastructure in connection with enhancing and expanding our operations domestically and internationally. For example, we intend to continue to invest in our software systems and additional data center resources to keep pace with the growth in the cloud and cloud-based solutions markets. We also expect to make additional investments in our infrastructure as we continue to transition to operation as a public company, which will result in increased general and administrative expenses.

Renewal Rates. Our solutions include a required subscription to our Barracuda Energize Updates subscription service. Customers also purchase subscriptions to virtual appliance software, cloud services and enhanced support services. The renewal rate of our subscriptions will affect our gross billings and recognized revenue in future periods. Renewal rates from subscriptions, on a dollars basis, have been 89%, 90% and 93% in fiscal 2011, 2012 and 2013, respectively.

We believe the renewal rate is an important metric to measure long-term value of customer agreements and our ability to retain our customers. We calculate our renewal rate by comparing the actual dollar amount of contracts renewed in a period to the dollar amount of the expiring contracts in that period, less the value of the expiring contracts that are upgraded to a higher model of the same product in lieu of a renewal.

Cross-sell Opportunity. As our existing customers’ IT buying needs evolve, or as our customers realize the benefits of the solutions that they previously purchased, our portfolio of solutions provides us an opportunity to cross-sell additional solutions. We define a solution as a distinct product line that we offer, such as Web Filter or Message Archiver. Customers who successfully deploy more than one type of solution provide substantially more customer lifetime value to us, and can derive greater value from our solutions as they benefit from synergies in management, support and functionality. To support our cross-sell efforts, we intend to continue adding higher touch sales and marketing field resources to liaise with our channel partners as we continue to grow our sales both domestically and internationally.

59

Components of Results of Operations

Revenue

We generate revenue from the sales of our appliances and subscriptions.

• Appliance Revenue. Revenue from the sale of our appliances includes hardware and a perpetual license. We recognize appliance revenue over the estimated customer relationship period of three years, commencing with the end-user’s activation of the appliance and related subscription, provided all other criteria for the recognition of appliance revenue are met.

• Subscription Revenue. Subscription revenue is generated primarily from our subscription services such as our Barracuda Energize Updates as well as our cloud solutions—Barracuda Email Security Service, Barracuda Web Security Service and Barracuda Backup. Subscription revenue also includes revenue from fixed term licenses of our virtual appliance software support and maintenance. Our subscription terms range from one to five years, the substantial majority of which are for one-year periods. We recognize revenue from subscriptions and support and maintenance over the contractual service period.

Cost of Revenue

Cost of revenue consists of costs related to our appliance and subscription revenue. Such costs include hardware, manufacturing, shipping and logistics, customer support, warranty, personnel costs, data center costs and amortization of intangible assets related to acquired technology. We expect our cost of revenue to increase in absolute dollars, although it may fluctuate as a percentage of total revenue from period to period, as we continue to grow.

Gross Margin

Gross margin, or gross profit as a percentage of total revenue, has been and will continue to be affected by a variety of factors, including manufacturing costs, cost of technical support and the mix of our solutions sold. We expect our gross margins to fluctuate over time depending on the factors described above.

Operating Expenses

Our operating expenses consist of research and development, sales and marketing and general and administrative expenses. Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, bonuses, stock-based compensation and travel-related expenses. Operating expenses also include allocated overhead costs for facilities, IT and depreciation. We expect operating expenses to increase in absolute dollars, although they may fluctuate as a percentage of total revenue from period to period, as we continue to grow. In particular, we expect our stock-based compensation expense to increase in absolute dollars as a result of our existing stock-based compensation to be recognized as options and RSUs vest and as we issue additional stock-based awards to attract and retain employees.

• Research and development. Research and development expenses consist primarily of salaries, benefits and stock-based compensation for employees and executives on our engineering and technical teams who are responsible for increasing the functionality and enhancing the ease-of-use of our appliance and subscription services, as well as the development of new products. We expense our research and development costs as they are incurred. We expect research and development expenses to increase in absolute dollars as we continue to invest in our future solutions, although our research and development expenses may fluctuate as a percentage of total revenue.

• Sales and marketing. Our sales and marketing expenses consist primarily of advertising, as well as salaries, commissions, benefits and stock-based compensation for our employees and executives engaged in sales, sales support, marketing, business development and customer service functions. Our advertising expenses include the costs of cooperative marketing programs developed with our channel partners, other marketing programs such as online lead generation, promotional events and web

60

seminars. We market and sell our subscription services worldwide through our sales organization and distribution channels, such as strategic resellers and distributors. We capitalize and amortize the direct and incremental portion of our sales commissions over the period the related revenue is recognized. We expect sales and marketing expenses to continue to increase in absolute dollars as we increase the size of our sales and marketing organizations, although our sales and marketing expenses may fluctuate as a percentage of total revenue.

• General and administrative. Our general and administrative expenses consist primarily of salaries, benefits and stock-based compensation for our finance, legal, regulatory and compliance, human resources and other administrative employees and executives. In addition, general and administrative expenses include outside consulting, legal and accounting services, and facilities and other supporting overhead costs. We expect general and administrative expenses to increase in absolute dollars following the completion of this offering due to accounting, insurance, investor relations and other costs associated with being a public company, although our general and administrative expenses may fluctuate as a percentage of total revenue.

Other Income (Expense), Net

Other income (expense), net consists primarily of foreign exchange gains and losses, interest expense on our outstanding debt and interest income earned on our cash, cash equivalents and marketable securities. We expect interest income will vary each reporting period depending on our average investment balances during the period, types and mix of investments, and market interest rates.

Provision (Benefit) for Income Taxes

Our provision for income taxes consists primarily of federal and state income taxes in the United States and income taxes in foreign jurisdictions in which we conduct business. We estimate income taxes in each of the jurisdictions in which we operate. This process involves determining income tax expense together with calculating the deferred income tax expense related to temporary differences resulting from the differing treatment of items for tax and accounting purposes. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. These temporary differences result in deferred tax assets and liabilities, which are included within the consolidated balance sheets. Deferred tax assets are recognized for deductible temporary differences, along with net operating loss and credits carryforwards, if it is more likely than not that the tax benefits will be realized. As of February 28, 2013, we have a $7.0 million valuation allowance provided against our deferred tax assets primarily related to foreign net operating losses and California research credits acquired as part of our business acquisitions.

As of February 28, 2013, we had federal and state net operating loss carryforwards of approximately $1.1 million and $7.5 million, respectively, which will begin to expire at various dates beginning in fiscal 2019 and 2014, respectively. Additionally, as of February 28, 2013, we had foreign net operating loss carryforwards of approximately $22.9 million, of which approximately $19.1 million can be carried forward indefinitely, and the remaining amounts expire at various dates beginning in fiscal 2014. The Internal Revenue Code provides limitations on our ability to utilize net operating loss carryforwards and tax credit carryforwards, after an ownership change, as defined in Section 382 of the Internal Revenue Code. California has similar rules that may limit our ability to utilize our state net operating loss carryforwards. If we were to experience an ownership change in the future, this could limit our use of our net operating loss carryforwards.

61

Results of Operations

The following tables summarize our consolidated results of operations for the periods presented and as a percentage of our total revenue for those periods.

	Year Ended February 28/29,								Three Months Ended May 31,
	2011		2012			2013			2012			2013
									(unaudited)
	(in thousands)
Consolidated Statements of Operations Data:
Revenue:
Appliance	$	52,477	$	43,258		$	59,528		$	13,318		$	17,503
Subscription		89,655		117,662			139,403			32,691			38,774
Total revenue		142,132		160,920			198,931			46,009			56,277
Cost of revenue		31,972		34,966			45,088			10,274			13,074
Gross profit		110,160		125,954			153,843			35,735			43,203
Operating expenses:
Research and development		23,979		27,824			35,167			7,656			10,842
Sales and marketing		69,963		84,885			102,329			24,027			28,836
General and administrative		13,021		14,428			28,777			6,420			6,678
Total operating expenses		106,963		127,137			166,273			38,103			46,356
Operating income (loss)		3,197		(1,183	)		(12,430	)		(2,368	)		(3,153	)
Other income (expense), net		282		476			(839	)		(1,074	)		(457	)
Income (loss) before income taxes and non-controlling interest		3,479		(707	)		(13,269	)		(3,442	)		(3,610	)
Provision (benefit) for income taxes		1,136		(453	)		(5,084	)		(902	)		(1,047	)
Consolidated net income (loss)		2,343		(254	)		(8,185	)		(2,540	)		(2,563	)
Net loss attributable to non-controlling interest		620		859			794			206			159
Net income (loss) attributable to Barracuda Networks, Inc.	$	2,963	$	605		$	(7,391	)	$	(2,334	)	$	(2,404	)

62

	Year Ended February 28/29,									Three Months Ended May 31,
	2011			2012			2013			2012			2013
										(unaudited)
	(as a percentage of total revenue)
Revenue:
Appliance		37	%		27	%		30	%		29	%		31	%
Subscription		63			73			70			71			69
Total revenue		100			100			100			100			100
Cost of revenue		22			22			23			22			23
Gross profit		78			78			77			78			77
Operating expenses:
Research and development		17			17			18			17			19
Sales and marketing		49			53			51			52			51
General and administrative		9			9			14			14			12
Total operating expenses		75			79			83			83			82
Operating income (loss)		3			(1)			(6)			(5)			(5)
Other income (expense), net		—			1			(1)			(3)			(1)
Income (loss) before income taxes and non-controlling interest		3			—			(7)			(8)			(6)
Provision (benefit) for income taxes		1			—			(3)			(2)			(2)
Consolidated net income (loss)		2			—			(4)			(6)			(4)
Net loss attributable to non-controlling interest		—			—			—			1			—
Net income (loss) attributable to Barracuda Networks, Inc.		2	%		—	%		(4)	%		(5)	%		(4)	%

Comparison of the Three Month Periods Ended May 31, 2012 and 2013

Revenue

	Three Months Ended May 31,
	2012					2013					Change
	Amount		% of Total Revenue			Amount		% of Total Revenue			Amount		%
	(unaudited)
	(dollars in thousands)
Revenue:
Appliance	$	13,318		29	%	$	17,503		31	%	$	4,185		31	%
Subscription		32,691		71	%		38,774		69	%		6,083		19	%
Total revenue	$	46,009		100	%	$	56,277		100	%	$	10,268		22	%

Total revenue increased $10.3 million, or 22%, for the three months ended May 31, 2013 compared to the three months ended May 31, 2012. Subscription revenue increased by $6.1 million, or 19%, primarily due to an increase in active subscribers during the period of 22,234, or 14%, from 161,998 active subscribers as of May 31, 2012 to 184,232 active subscribers as of May 31, 2013. Total appliance revenue increased by $4.2 million, or 31% due to increased demand for our solutions. Appliance revenue was also impacted by the prospective adoption of new accounting standards effective beginning in fiscal 2011 whereby appliance revenue is recognized over the estimated customer relationship period of three years, rather than the contractual subscription period.

63

Cost of Revenue and Gross Margin

	Three Months Ended May 31,
	2012					2013					Change
	Amount		Gross Margin			Amount		Gross Margin			Amount		%
	(unaudited)
	(dollars in thousands)
Cost of revenue	$	10,274				$	13,074				$	2,800		27	%
Gross profit	$	35,735		78	%	$	43,203		77	%	$	7,468		21	%

Cost of revenue increased for the three months ended May 31, 2013 compared to the three months ended May 31, 2012 commensurate with the increase in appliance and subscription revenue for the comparable periods and included $1.4 million in amortization expense. Gross margin was comparable for the three months ended May 31, 2013 compared to the three months ended May 31, 2012.

Operating Expenses

	Three Months Ended May 31,
	2012					2013					Change
	Amount		% of Total Revenue			Amount		% of Total Revenue			Amount			%
	(unaudited)
	(dollars in thousands)
Operating expenses:
Research and development	$	7,656		17	%	$	10,842		19	%	$	3,186			42	%
Sales and marketing		24,027		52			28,836		51			4,809			20
General and administrative		6,420		14			6,678		12			258			4
Total operating expenses	$	38,103		83	%	$	46,356		82	%	$	8,253			22	%
Includes stock-based compensation of:
Research and development	$	284				$	630				$	346
Sales and marketing		185					334					149
General and administrative		2,751					1,488					(1,263	)
Total	$	3,220				$	2,452				$	(768	)

Research and development expense increased $3.2 million, or 42%, for the three months ended May 31, 2013 compared to the three months ended May 31, 2012, primarily due to a $2.0 million increase in personnel related costs resulting from a 30% increase in research and development headcount, as we continued to invest in our solutions to innovate and improve functionality, and a $0.3 million increase in stock-based compensation.

Sales and marketing expense increased $4.8 million, or 20%, for the three months ended May 31, 2013 compared to the three months ended May 31, 2012, primarily due to a $2.1 million increase in personnel related costs resulting from a 16% increase in sales and marketing headcount and a $1.7 million increase in marketing expenses associated with advertising and trade shows, as we increased our sales and marketing efforts to grow our revenue.

General and administrative expense increased $0.3 million, or 4%, for the three months ended May 31, 2013 compared to the three months ended May 31, 2012 primarily due to a $0.5 million increase in personnel related costs resulting from a 16% increase in general and administrative headcount, a $0.5 million increase in

64

other IT-related expense as we improved our infrastructure to support our growth and a $0.5 million increase in legal costs, partially offset by a $1.3 million decrease in stock-based compensation. In addition, general and administrative expense in the three months ended May 31, 2012 included $0.7 million of acquisition and other non-recurring charges.

Other Income (Expense), Net

	Three Months Ended May 31,
	2012			2013			Change
	Amount			Amount			Amount		%
	(dollars in thousands)
Other expense, net	$	(1,074	)	$	(457	)	$	617		(57	)%

The change in other expense, net was primarily due to a $0.7 million decrease in net foreign exchange losses during the three months ended May 31, 2013 compared to the three months ended May 31, 2012.

Provision (Benefit) for Income Taxes

	Three Months Ended May 31,
	2012			2013			Change
	Amount			Amount			Amount			%
	(dollars in thousands)
Benefit for income taxes	$	(902	)	$	(1,047	)	$	(145	)		16	%

We recorded an income tax benefit of $1.0 million for the three months ended May 31, 2013, based on our estimated taxable loss for the year. The difference between the income tax benefit that would be derived by applying the statutory rate to our loss before tax and the income tax benefit actually recorded is primarily due to the impact of non-deductible stock-based compensation expenses and other currently non-deductible items, and various discrete items. For the three months ended May 31, 2012, we recorded an income tax benefit of $0.9 million.

Comparison of the Fiscal Years Ended February 29, 2012 and February 28, 2013

Revenue

	Year Ended February 29/28,
	2012		2013		Change
	Amount		Amount		Amount		%
	(dollars in thousands)
Revenue:
Appliance	$	43,258	$	59,528	$	16,270		38	%
Subscription		117,662		139,403		21,741		18	%
Total revenue	$	160,920	$	198,931	$	38,011		24	%

Total revenue increased $38.0 million, or 24%, for fiscal 2013 compared to fiscal 2012. Subscription revenue increased by $21.7 million, or 18%, primarily due to a 22,976 increase in active subscribers, or 15%, from 156,976 active subscribers as of February 29, 2012 to 179,952 active subscribers as of February 28,

65

2013. Total appliance revenue increased by $16.3 million, or 38% due to increased demand for our solutions. Appliance revenue was also impacted by the prospective adoption of new accounting standards effective beginning in fiscal 2011 whereby appliance revenue is recognized over the estimated customer relationship period of three years, rather than the contractual subscription period.

Cost of Revenue and Gross Margin

	Year Ended February 29/28,
	2012					2013					Change
	Amount		Gross Margin			Amount		Gross Margin			Amount		%
	(dollars in thousands)
Cost of revenue	$	34,966				$	45,088				$	10,122		29	%
Gross profit	$	125,954		78	%	$	153,843		77	%	$	27,889		22	%

Cost of revenue increased for fiscal 2013 compared to fiscal 2012 commensurate with the increase in appliance and subscription revenue for the comparable periods and included $5.5 million in amortization expense in fiscal 2013 compared to $6.0 million in fiscal 2012. Gross margin was consistent, decreasing one percentage point for fiscal 2013 compared to fiscal 2012.

Operating Expenses

	Year Ended February 29/28,
	2012					2013					Change
	Amount		% of Total Revenue			Amount		% of Total Revenue			Amount		%
	(dollars in thousands)
Operating expenses:
Research and development	$	27,824		17	%	$	35,167		18	%	$	7,343		26	%
Sales and marketing		84,885		53			102,329		51			17,444		21
General and administrative		14,428		9			28,777		14			14,349		99
Total operating expenses	$	127,137		79	%	$	166,273		83	%	$	39,136		31	%
Includes stock-based compensation of:
Research and development	$	766				$	2,059				$	1,293
Sales and marketing		527					1,182					655
General and administrative		527					5,400					4,873
Total stock-based compensation	$	1,820				$	8,641				$	6,821

Research and development expense increased $7.3 million, or 26%, in fiscal 2013 compared to fiscal 2012 primarily due to a $3.5 million increase in personnel related costs as a result of a 28% increase in research and development headcount as we continued to invest in our solutions to innovate and improve functionality, $1.4 million of acquisition and other non-recurring charges, consisting of $0.6 million in option holder bonuses, $0.4 million in CEO transition costs and $0.4 million in acquisition costs, and a $1.3 million increase in stock-based compensation.

Sales and marketing expense increased $17.4 million, or 21%, in fiscal 2013 compared to fiscal 2012 primarily due to a $6.2 million increase in marketing expenses primarily associated with advertising and trade shows as we increased our sales and marketing efforts to grow our revenue, a $5.4 million increase in personnel related costs resulting from a 25% increase in sales and marketing headcount, a $1.5 million increase in

66

commission expense, $1.1 million in acquisition and other non-recurring charges, consisting of $0.7 million in option holder bonuses and $0.4 million in CEO transition costs, a $1.1 million increase in travel related expense and a $0.6 million increase in sales consulting expense.

General and administrative expense increased $14.3 million, or 99%, in fiscal 2013 compared to fiscal 2012 primarily due to $7.3 million in acquisition and other non-recurring charges, consisting of $5.3 million in CEO transition costs, $1.4 million in export compliance costs, $0.5 million in acquisition costs and $0.1 million in option holder bonuses, a $4.9 million increase in stock-based compensation and a $1.0 million increase in other IT-related expense as we improved our infrastructure to support our growth.

Other Income (Expense), Net

	Year Ended February 29/28,
	2012		2013			Change
	Amount		Amount			Amount			%
	(dollars in thousands)
Other income (expense), net	$	476	$	(839	)	$	(1,315	)		(276	)%

The change in other income (expense), net was due to an increase of $0.4 million in interest expense associated with our assumption of a note payable in December 2011, as we incurred a full year of interest expense during fiscal 2013. In addition, other income, net in fiscal 2012 included a $0.9 million gain on the sale of an investment.

Provision (Benefit) for Income Taxes

	Year Ended February 29/28,
	2012			2013			Change
	Amount			Amount			Amount			%
	(dollars in thousands)
Benefit for income taxes	$	(453	)	$	(5,084	)	$	(4,631	)		NM

We recorded an income tax benefit of $5.1 million for fiscal 2013. We recorded an income tax benefit of $0.5 million for fiscal 2012. The difference between the income tax benefit that would be derived by applying the statutory rate to our loss before tax and the income tax benefit actually recorded for fiscal 2013 and 2012 is primarily due to the impact of non-deductible stock-based compensation expenses and other currently non-deductible items, offset by the use of the tax credits and the tax benefit we received from manufacturing domestically.

Comparison of the Fiscal Years Ended February 28, 2011 and February 29, 2012

Revenue

	Year Ended February 28/29,
	2011		2012		Change
	Amount		Amount		Amount			%
	(dollars in thousands)
Revenue:
Appliance	$	52,477	$	43,258	$	(9,219	)		(18	)%
Subscription		89,655		117,662		28,007			31	%
Total revenue	$	142,132	$	160,920	$	18,788			13	%

67

Total revenue increased $18.8 million, or 13%, for fiscal 2012 compared to fiscal 2011. Subscription revenue increased by $28.0 million, or 31%, primarily due to an increase in active subscribers during the period of 22,169, of 16%, from 134,807 active subscribers as of February 28, 2011 to 156,976 active subscribers as of February 29, 2012. Appliance revenue decreased by $9.2 million, or 18%, principally due to the prospective adoption of new accounting standards effective beginning in fiscal 2011 whereby appliance revenue is recognized over the estimated customer relationship period of three years, rather than the contractual subscription period.

Cost of Revenue and Gross Margin

	Year Ended February 28/29,
	2011					2012					Change
	Amount		Gross Margin			Amount		Gross Margin			Amount		%
	(dollars in thousands)
Cost of revenue	$	31,972				$	34,966				$	2,994		9	%
Gross profit	$	110,160		78	%	$	125,954		78	%	$	15,794		14	%

Cost of revenue increased for fiscal 2012 compared to fiscal 2011 commensurate with the increase in appliance and subscription revenue for the comparable periods and included $6.0 million in amortization expense in each of fiscal 2012 and fiscal 2011. Gross margin was comparable for fiscal 2012 compared to fiscal 2011.

Operating Expenses

	Year Ended February 28/29,
	2011					2012					Change
	Amount		% of Total Revenue			Amount		% of Total Revenue			Amount			%
	(dollars in thousands)
Operating expenses:
Research and development	$	23,979		17	%	$	27,824		17	%	$	3,845			16	%
Sales and marketing		69,963		49			84,885		53			14,922			21
General and administrative		13,021		9			14,428		9			1,407			11
Total operating expenses	$	106,963		75	%	$	127,137		79	%	$	20,174			19	%
Includes stock-based compensation of:
Research and development	$	848				$	766				$	(82	)
Sales and marketing		627					527					(100	)
General and administrative		417					527					110
Total stock-based compensation	$	1,892				$	1,820				$	(72	)

Research and development expense increased $3.8 million, or 16%, in fiscal 2012 compared to fiscal 2011 primarily due to a $3.6 million increase in personnel-related costs as a result of a 27% increase in research and development headcount.

Sales and marketing expense increased $14.9 million, or 21%, in fiscal 2012 compared to fiscal 2011 primarily due to a $4.0 million increase in personnel related costs resulting from a 25% increase in sales and marketing headcount, a $5.8 million increase in marketing expenses primarily associated with advertising and trade shows as we increased our sales and marketing efforts to grow our revenue, a $1.5 million increase in travel-related expense, a $1.1 million increase in commission expense and a $0.6 million increase in amortization of intangibles.

68

General and administrative expense increased $1.4 million, or 11%, in fiscal 2012 compared to fiscal 2011 primarily due to a $0.6 million increase in personnel related costs resulting from a 25% increase in general and administrative headcount and a $0.3 million increase in other IT-related expense.

Other Income (Expense), net

	Year Ended February 28/29,
	2011		2012		Change
	Amount		Amount		Amount		%
	(dollars in thousands)
Other income, net	$	282	$	476	$	194		69%

The change in other income, net was due to a $0.9 million gain on the sale of an investment, partially offset by an increase in foreign exchange losses of $0.5 million and a decrease in interest income of $0.2 million during fiscal 2012 compared to fiscal 2011.

Provision (Benefit) for Income Taxes

	Year Ended February 28/29,
	2011		2012		Change
	Amount		Amount		Amount		%
	(dollars in thousands)
Provision (benefit) for income taxes	$	1,136	$	(453)	$	(1,589)		(140)%

We recorded an income tax benefit of $0.5 million for fiscal 2012. We recorded an income tax provision of $1.1 million for fiscal 2011. The difference between the income tax provision (benefit) that would be derived by applying the statutory rate to our income (loss) before tax and the income tax provision (benefit) actually recorded for fiscal 2012 and 2011 is primarily due to the impact of non-deductible stock-based compensation expenses and other currently non-deductible items, offset by the use of the tax credits and the tax benefit we received from manufacturing domestically.

69

Quarterly Results of Operations

The following tables set forth selected unaudited quarterly consolidated statements of operations data for each of the five quarters ended May 31, 2013, as well as the percentage that each line item represents of total revenue. The information for each of these quarters has been prepared on the same basis as the audited annual financial statements included elsewhere in this prospectus and, in the opinion of management, includes all adjustments, which includes only normal recurring adjustments, necessary for the fair presentation of the results of operations for these periods in accordance with GAAP. This data should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this prospectus.

	Three Months Ended
	May 31, 2012			Aug. 31, 2012			Nov. 30, 2012			Feb. 28, 2013			May 31, 2013
	(unaudited) (in thousands)
Consolidated Statements of Operations Data:
Revenue
Appliance	$	13,318		$	14,457		$	15,424		$	16,329		$	17,503
Subscription		32,691			34,567			36,003			36,142			38,774
Total revenue		46,009			49,024			51,427			52,471			56,277
Cost of revenue		10,274			11,012			11,394			12,408			13,074
Gross profit		35,735			38,012			40,033			40,063			43,203
Operating expenses
Research and development		7,656			8,434			8,925			10,152			10,842
Sales and marketing		24,027			25,275			25,471			27,556			28,836
General and administrative		6,420			6,462			9,198			6,697			6,678
Total operating expenses		38,103			40,171			43,594			44,405			46,356
Operating loss		(2,368	)		(2,159	)		(3,561	)		(4,342	)		(3,153	)
Other income (expense), net		(1,074	)		186			362			(313	)		(457	)
Loss before income taxes and non-controlling interest		(3,442	)		(1,973	)		(3,199	)		(4,655	)		(3,610	)
Benefit for income taxes		(902	)		(391	)		(1,076	)		(2,715	)		(1,047	)
Consolidated net loss		(2,540	)		(1,582	)		(2,123	)		(1,940	)		(2,563	)
Net loss attributable to non-controlling interest		206			256			150			182			159
Net loss attributable to Barracuda Networks, Inc.	$	(2,334	)	$	(1,326	)	$	(1,973	)	$	(1,758	)	$	(2,404	)

70

The following table presents the unaudited consolidated statement of operations data as a percentage of total revenue:

	Three Months Ended
	May 31, 2012			Aug. 31, 2012			Nov. 30, 2012			Feb. 28, 2013			May 31, 2013
Revenue
Appliance		29	%		29	%		30	%		31	%		31	%
Subscription		71			71			70			69			69
Total revenue		100			100			100			100			100
Cost of revenue		22			22			22			24			23
Gross profit		78			78			78			76			77
Operating expenses
Research and development		17			17			17			19			19
Sales and marketing		52			52			50			53			51
General and administrative		14			13			18			13			12
Total operating expenses		83			82			85			85			82
Operating loss		(5)			(4)			(7)			(9)			(5)
Other income (expense), net		(3)			—			1			—			(1)
Loss before income taxes and non-controlling interest		(8)			(4)			(6)			(9)			(6)
Benefit for income taxes		(2)			(1)			(2)			(5)			(2)
Consolidated net loss		(6)			(3)			(4)			(4)			(4)
Net loss attributable to non-controlling interest		1			—			—			1			—
Net loss attributable to Barracuda Networks, Inc.		(5)	%		(3)	%		(4)	%		(3)	%		(4)	%

Key Metrics

The following table presents key metrics for each of the five quarters ended May 31, 2013. In addition to our results determined in accordance with GAAP, we believe the following non-GAAP and operational measures are useful in evaluating our operating performance.

	Three Months Ended
	May 31, 2012			Aug. 31, 2012			Nov. 30, 2012			Feb. 28, 2013			May 31, 2013
	(in thousands, except active subscribers and percentages)
Gross billings	$	65,362		$	64,291		$	65,047		$	69,525		$	74,865
Period-over-period percentage increase					(2)	%		1	%		7	%		8	%
Adjusted EBITDA	$	14,110		$	11,682		$	10,499		$	12,804		$	12,053
Adjusted EBITDA as a percentage of total revenue		31	%		24	%		20	%		24	%		21	%
Free cash flow	$	9,866		$	6,225		$	14,865		$	10,129		$	1,607
Free cash flow as a percentage of total revenue		21	%		13	%		29	%		19	%		3	%
Active subscribers as of period end		161,998			167,674			173,484			179,952			184,232

71

The following table reconciles total revenue to gross billings:

	Three Months Ended
	May 31, 2012			Aug. 31, 2012			Nov. 30, 2012			Feb. 28, 2013			May 31, 2013
	(in thousands)
Gross billings:
Total revenue	$	46,009		$	49,024		$	51,427		$	52,471		$	56,277
Total deferred revenue, end of period		231,131			241,734			250,163			261,243			274,444
Less: total deferred revenue, beginning of period		(217,209	)		(231,131	)		(241,734	)		(250,163	)		(261,243	)
Add: deferred revenue adjustments		5,431			4,664			5,191			5,974			5,387
Total change in deferred revenue and adjustments		19,353			15,267			13,620			17,054			18,588
Gross billings	$	65,362		$	64,291		$	65,047		$	69,525		$	74,865

The following table reconciles net income (loss) to adjusted EBITDA:

	Three Months Ended
	May 31, 2012			Aug. 31, 2012			Nov. 30, 2012			Feb. 28, 2013			May 31, 2013
	(in thousands)
Adjusted EBITDA:
Net loss attributable to Barracuda Networks, Inc.	$	(2,334	)	$	(1,326	)	$	(1,973	)	$	(1,758	)	$	(2,404	)
Total deferred revenue, end of period		231,131			241,734			250,163			261,243			274,444
Less: total deferred revenue, beginning of period		(217,209	)		(231,131	)		(241,734	)		(250,163	)		(261,243	)
Less: total deferred costs, end of period		(32,904	)		(35,347	)		(37,299	)		(39,470	)		(42,556	)
Total deferred costs, beginning of period		29,254			32,904			35,347			37,299			39,470
Other (income) expense, net		1,074			(186	)		(362	)		313			457
Provision (benefit) for income taxes		(902	)		(391	)		(1,076	)		(2,715	)		(1,047	)
Depreciation and amortization		1,998			1,993			2,015			2,327			2,245
Stock-based compensation		3,241			1,393			1,723			2,430			2,497
Acquisition and other non-recurring charges(1)		761			2,039			3,695			3,298			190
Adjusted EBITDA	$	14,110		$	11,682		$	10,499		$	12,804		$	12,053

(1) The following table details the acquisition and other non-recurring charges affecting adjusted EBITDA:

	Three Months Ended
	May 31, 2012		Aug. 31, 2012		Nov. 30, 2012		Feb. 28, 2013		May 31, 2013
	(in thousands)
Impact of acquisition and other non-recurring charges on adjusted EBITDA:
CEO transition	$	19	$	1,393	$	3,281	$	1,365	$	—
Export compliance		481		403		265		262		—
Option holder bonuses		—		—		—		1,420		—
Acquisition costs		261		243		149		251		190
Total acquisition and other non-recurring charges	$	761	$	2,039	$	3,695	$	3,298	$	190

72

The following table reconciles cash provided by operating activities to free cash flow:

	Three Months Ended
	May 31, 2012			Aug. 31, 2012			Nov. 30, 2012			Feb. 28, 2013			May 31, 2013
	(in thousands)
Free cash flow:
Cash provided by operating activities	$	10,195		$	5,523		$	14,893		$	8,764		$	194
Less: purchases of property and equipment		(609	)		(934	)		(1,508	)		(1,671	)		(1,663	)
Acquisition and other non-recurring charges(1)		280			1,636			1,480			3,036			3,076
Free cash flow	$	9,866		$	6,225		$	14,865		$	10,129		$	1,607

(1) The following table details the acquisition and other non-recurring charges affecting free cash flow:

	Three Months Ended
	May 31, 2012		Aug. 31, 2012		Nov. 30, 2012		Feb. 28, 2013		May 31, 2013
	(in thousands)
Impact of acquisition and other non-recurring charges on free cash flow:
CEO transition	$	19	$	1,393	$	1,331	$	1,365	$	1,946
Export compliance		—		—		—		—		940
Option holder bonuses		—		—		—		1,420		—
Acquisition costs		261		243		149		251		190
Total acquisition and other non-recurring charges	$	280	$	1,636	$	1,480	$	3,036	$	3,076

Quarterly Revenue Trends

Our quarterly total revenue has increased sequentially for all periods presented. In our first quarter of fiscal 2014, our subscription revenue increased by $2.6 million, or 7%, from $36.1 million in the quarter ending February 28, 2013 to $38.8 million in the quarter ending May 31, 2013. This growth in our subscription rate was the result of an increase in active subscribers.

Our GAAP revenues have not been significantly impacted by seasonality.

Quarterly Gross Margin Trends

Gross profit increased sequentially, and total gross margin was consistently between 77% and 78% for all periods presented. Our cost of revenue has increased over the period as we have added technical support headcount in line with our gross billings growth. Our cost of revenue related to appliance fulfillment has increased over the period. This increase in appliance fulfillment costs is related to a product mix shift in gross billings towards solutions that have lower gross profit margins. This product mix shift was partially offset by increases in subscription revenue during the period. We expect continued pressures on the gross margin trends as a result of product mix, and as we continue our investment in cloud infrastructure delivery.

Quarterly Operating Expenses Trends

Total operating expenses increased sequentially for all periods presented primarily due to the addition of personnel in connection with the expansion of our business. The increase in research and development expense was primarily related to a 28% increase in headcount during fiscal 2013, and our sales and marketing expense increase was primarily related to a 25% increase in headcount. The timing of acquisition and other non-recurring charges also impacted our operating expenses. Total operating expenses included acquisition and other non-recurring charges of $0.8 million, $2.0 million, $3.7 million, $3.3 million and $0.2 million in the three months ended May 31, 2012, August 31, 2012, November 30, 2012, February 28, 2013 and May 31, 2013, respectively.

73

Our acquisition and other non-recurring charges in the first three quarters of fiscal 2013 related to CEO transition, export compliance and acquisition costs, which primarily impacted general and administrative expenses. The $3.3 million in acquisition and other non-recurring charges in the fourth quarter of fiscal 2013 related primarily to CEO transition costs and option holder bonuses, and the total expense had an approximately equal impact on each of research and development, sales and marketing and general and administrative expenses.

Quarterly Non-GAAP Financial Measure Trends

Gross billings. Our quarterly gross billings results reflect some seasonality in sales of our solutions. We typically have seasonally higher gross billings in our first and fourth quarters. The increase in gross billings during the first quarter primarily related to subscription renewals, where we have large blocks of subscription expirations occurring annually in our first quarter. Due to our high rate of customer retention, we typically experience an increase in gross billings as a result of renewals in this first quarter. Additionally, certain industries make purchases more frequently in our first quarter. The increase in gross billings in our fourth quarter is primarily related to calendar year-end activity, due to customer deployment of solutions prior to, or shortly after, the calendar year-end, both of which impact our fourth quarter ending February. In general, gross billings in our second quarter period are impacted by fewer selling days and reduced economic activity, particularly in Europe, over the summer period. Gross billings trends during the period reported have been impacted by foreign currency fluctuations.

The increase in gross billings in the three months ended February 28, 2013 and May 31, 2013 were primarily driven by our continued ability to cross-sell adjacent solutions to existing customers and the growth in our renewal subscriptions as a result of our high level of customer retention. In addition, we continue to invest in sales and marketing, resulting in an increase in our ability to attract and retain new customers.

Adjusted EBITDA. Adjusted EBITDA is subject to the same seasonality trends that affect gross billings, since adjusted EBITDA adds back the increase in deferred revenue during the period to net income. Additionally, adjusted EBITDA is subject to quarterly changes based on investment objectives. We typically experience higher sales and marketing expenses in our fourth quarter as a result of certain conferences and trade shows that occur in the fourth quarter ending February.

The trends in adjusted EBITDA from period to period were based primarily upon changes in gross billings and operating expenses. Our increases in operating expenses in fiscal 2013 consisted primarily of sales and marketing and research and development expenses related to investment in headcount. Research and development headcount increased by 28%, and sales and marketing headcount increased by 25%. The improved trend in adjusted EBITDA in the three months ended February 28, 2013 and May 31, 2013 was consistent with our increase in gross billings during the same periods.

Free cash flow. Free cash flow is impacted by the seasonality trends in gross billings and adjusted EBITDA discussed above. Additionally, free cash flow is subject to the timing of investments in capital expenditures, the majority of which are made in the first half of our fiscal year, which principally relate to investment in cloud and corporate infrastructure, required to support the growth of our business. While our management plans for these types of infrastructure investments, the timing of the investment is driven, most importantly, by customer need, and can vary from our plan.

The trends in free cash flow during the periods presented were primarily impacted by the trends in our gross billings and adjusted EBITDA trends. The increase in free cash flow in the three months ended November 30, 2012 was driven primarily by an increase in our net cash provided by operating activities as a result of the timing of certain payments which were paid in the subsequent period compared to when the expense was recorded.

Active Subscribers. To date, changes in active subscribers have not been materially impacted by seasonal trends. The increase and linearity of the active subscribers is related to our ability to maintain a high renewal rate of subscriptions. Active subscribers are also impacted by our ability to attract and acquire new customers. During fiscal year 2013, we renewed 93% of the expiring subscriptions, on a dollar basis, and continued to invest in sales and marketing infrastructure to attract and retain new customers which contributed to the increase in active subscribers.

74

Liquidity and Capital Resources

	As of February 28/29,						As of May 31, 2013
	2011		2012		2013
							(unaudited)
	(in thousands)
Cash, cash equivalents and marketable securities	$	100,187	$	128,783	$	31,645	$	21,953

	Year Ended February 28/29,									Three Months Ended  May 31, 2013
	2011			2012			2013
										(unaudited)
	(in thousands)
Cash provided by operating activities	$	36,909		$	43,926		$	39,375		$	194
Cash provided by (used in) investing activities		2,951			(11,120	)		(8,504	)		(7,839	)
Cash provided by (used in) financing activities		(1,450	)		(5,048	)		(127,111	)		(1,814	)

As of May 31, 2013, we had cash, cash equivalents and marketable securities of $22.0 million, of which approximately $4.4 million was held outside of the United States and not presently available to fund domestic operations and obligations. If we were to repatriate cash held outside of the United States, it could be subject to U.S. income taxes, less any previously paid foreign income taxes.

To date, we have funded our operations primarily through cash generated from operations, and to a lesser extent, private sales of equity securities. We believe that our existing cash and cash equivalents, together with our existing credit facility, will be sufficient to meet our anticipated cash needs for at least the next 12 months. Our future capital requirements will depend on many factors including our growth rate, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced solutions and service offerings, and the continuing market acceptance of our solutions. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition would be adversely affected.

The Recapitalization

In October 2012, we completed our Recapitalization pursuant to a recapitalization agreement entered into with our founders and their affiliates and certain of our existing investors. As part of the Recapitalization, we (i) declared $130.0 million of cash dividends, (ii) sold 22,727,913 shares of our Series B redeemable convertible preferred stock to certain of our existing investors at a price per share of approximately $5.62, for an aggregate purchase price of $127.5 million, and (iii) repurchased 22,727,913 shares of common stock from our founders and their affiliates at a price per share of approximately $5.62, for an aggregate repurchase price of $127.5 million. The shares of our common stock which we repurchased were subsequently cancelled. In December 2012, in lieu of dividends, we paid an aggregate of $2.8 million in bonus payments to our employees who held fully vested options to purchase our common stock at the time of the Recapitalization.

The dividend paid was accounted for as a return of capital to holders of our common stock and redeemable convertible preferred stock by reducing the carrying value of our additional paid-in capital (excess of capital return over carrying value of contributed capital) and redeemable convertible preferred stock, respectively.

As part of the Recapitalization, we entered into a $40.0 million credit facility with SVB consisting of a revolving loan facility which includes a letter of credit sub facility of up to $10.0 million. The credit facility expires in October 2014. The credit facility is secured by substantially all of our assets, and contains restrictive covenants as described in the agreement. These covenants require us to maintain a minimum adjusted EBITDA, as defined in the credit facility, in excess of $25.0 million for any trailing four quarter period and a minimum adjusted quick ratio in excess of 0.5 as of the last day of each month. The minimum required adjusted quick ratio will increase to 1.1 over the term of the credit facility. The adjusted quick ratio is calculated as the ratio of qualified cash plus net billed

75

accounts receivable to consolidated current liabilities plus revolving credit extension under the credit facility, less (i) any deferred payments in connection with permitted acquisitions and (ii) the current portion of deferred revenue. We were in compliance with each of these covenants as of May 31, 2013. The terms of the credit facility require payment of an unused line fee of 0.375% per quarter of the unused portion. ABR loans under the credit facility bear interest at a rate per annum equal to the highest of the prime rate, the federal funds effective rate plus 0.5% and the eurodollar rate for a one-month interest period plus 1%. Eurodollar loans under the credit facility bear interest at a rate per annum equal to the eurodollar rate plus 1.5%. The credit facility also sets forth specified events of default. No amounts had been drawn under the credit facility as of February 28, 2013 and May 31, 2013.

In this prospectus, we refer to all of the transactions related to recapitalization and the related transactions collectively as the “Recapitalization.”

Operating Activities

Our primary source of cash from operating activities has been from cash collections from our customers. We expect cash inflows from operating activities to be affected by increases in sales and timing of collections. Our primary uses of cash from operating activities have been for personnel costs and investment in sales and marketing and research and development infrastructure. We expect cash outflows from operating activities to be affected by increases in sales and increases in personnel costs as we grow our business.

For the three months ended May 31, 2013, operating activities provided $0.2 million in cash as a result of a net loss of $2.6 million and a net change of $2.0 million in our net operating assets and liabilities, offset by non-cash charges of $4.8 million.

For the three months ended May 31, 2012, operating activities provided $10.2 million in cash, primarily as a result of a net loss of $2.5 million, offset by non-cash charges of $4.1 million and a net change of $8.6 million in our net operating assets and liabilities.

For fiscal 2013, operating activities provided $39.4 million in cash, primarily as a result of a net loss of $8.2 million, offset by non-cash charges of $2.1 million as well as a net change of $45.5 million in our net operating assets and liabilities. Non-cash charges primarily included stock-based compensation and depreciation and amortization, offset by deferred income taxes. The net change in our operating assets and liabilities was primarily the result of a $44.2 million increase in deferred revenue resulting from an increase in sales.

For fiscal 2012, operating activities provided $43.9 million in cash, primarily as a result of a net loss of $0.3 million and non-cash charges of $2.1 million, offset by a net change of $46.2 million in our net operating assets and liabilities. Non-cash charges included stock-based compensation and depreciation and amortization, offset by deferred income taxes. The net change in our operating assets and liabilities was primarily the result of a $56.6 million increase in deferred revenue offset by a $10.9 million increase in deferred costs due to an increase in sales.

For fiscal 2011, operating activities provided $36.9 million in cash, primarily as a result of net income of $2.3 million, non-cash charges of $1.3 million and a net change of $33.3 million in our net operating assets and liabilities. Non-cash charges primarily included stock-based compensation and depreciation and amortization, offset by deferred income taxes. The net change in our operating assets and liabilities was primarily the result of a $37.8 million increase in deferred revenue offset by a $5.1 million increase in deferred costs due to an increase in sales.

Investing Activities

Our investing activities have consisted primarily of purchases of property and equipment related to providing cloud subscriptions, purchases and sales of short-term marketable securities, and activity in connection with prior acquisitions. We expect to continue to make purchases of property and equipment to support continued growth of our business.

76

Cash used in investing activities for the three months ended May 31, 2013 and 2012 was $7.8 million and $5.0 million, respectively. Cash used in the three months ended May 31, 2013 primarily related to purchases of property and equipment and our acquisition of SignNow, Inc. in April 2013. Cash used in the three months ended May 31, 2012 primarily related to purchases of property and equipment and payment of contingent consideration related to a previous acquisition.

For fiscal 2013 and 2012, cash used in investing activities was $8.5 million and $11.1 million, respectively, and was primarily the result of purchases of property and equipment and payment of contingent consideration related to a previous acquisition.

For fiscal 2011, cash provided by investing activities was $3.0 million and was primarily the result of proceeds from sales of marketable securities, partially offset by purchases of property and equipment.

Our annual capital expenditures generally have varied between approximately 2% and 5% of annual total revenue. We believe future capital expenditures are likely to be consistent with historical experience with variations above or below the range depending upon our need to make additional investments for facilities expansion.

Financing Activities

Our financing activities primarily consisted of proceeds from the sale of our redeemable convertible preferred stock, proceeds from the exercises of stock options, repurchases of common stock and payment of dividends declared on our common stock and redeemable convertible preferred stock. We expect the completion of our initial public offering to result in a material increase in our cash flows from financing activities.

For the three months ended May 31, 2013, financing activities used $1.8 million in cash, primarily as a result of the payment of $1.4 million of dividends declared on our common stock and redeemable convertible preferred stock in fiscal 2013. For the three months ended May 31, 2012, financing activities provided $3.3 million in cash, primarily as a result of $1.7 million in net proceeds from the exercises of stock options and $1.7 million in excess tax benefits realized from our equity incentive plans.

For fiscal 2013, financing activities used $127.1 million in cash, primarily as a result of the net payment of $128.4 million in dividends to holders of our common stock and redeemable convertible preferred stock and the repurchase of $127.5 million of our common stock from our founders and their affiliates, partially offset by net proceeds of $125.7 million from the sale of our Series B redeemable convertible preferred stock to certain of our existing investors.

For fiscal 2012, financing activities used $5.0 million, primarily related to the purchase of a non-controlling interest and the repurchase of common stock.

For fiscal 2011, financing activities used $1.5 million primarily related to the repayment of a note payable.

Contractual Obligations and Commitments

The following summarizes our contractual obligations and commitments as of February 28, 2013:

	Payments Due by Period
	Total		Less Than 1 Year		1 - 3 Years		3 - 5 Years		More Than 5 Years
	(in thousands)
Operating leases(1)	$	6,430	$	1,842	$	2,920	$	1,668	$	—
Debt obligations(2)		5,094		222		489		4,383		—
Purchase commitments(3)		3,479		3,479		—		—		—
Total	$	15,003	$	5,543	$	3,409	$	6,501	$	—

(1) Consists of contractual obligations from office space and equipment under non-cancelable operating lease.

77

(2) In December 2011, as part of the purchase of our corporate headquarters, we assumed debt obligations of $5.3 million bearing interest at 6.23% per year.

(3) Consists of non-cancelable purchase commitments for inventory.

The contractual obligation table above excludes tax liabilities of $4.0 million related to uncertain tax positions because we are unable to make a reasonably reliable estimate of the timing of settlement, if any, of these future payments.

Off-Balance Sheet Arrangements

Through May 31, 2013, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.

The critical accounting policies requiring estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below.

Revenue Recognition

We typically provide access to our solutions through appliances and related subscription agreements, whereby the customer is charged an upfront fee for the appliance and is required to purchase a related subscription agreement. The subscription agreements are subject to customer renewal at the end of each subscription period. Our appliances contain hardware and embedded proprietary software. The subscriptions, referred to as Barracuda Energize Updates, provide hourly spam, anti-malware, and security updates, and are required to be purchased to access our solutions. The subscriptions also entitle customers to phone support and software updates on a when and if available basis. We have determined that the elements of our customer arrangements, including the appliance and subscription, do not qualify for treatment as a separate unit of accounting. Accordingly, all fees received under our customer agreements are accounted for as a single unit of accounting and, except for any up-front fees for the appliance, such fees are recognized ratably on a daily basis over the term of the subscription agreement. Subscription revenue also includes revenue from fixed term licenses of our virtual appliance software support and maintenance. Recognition of revenue commences when there is persuasive evidence of an arrangement, the fee is fixed and determinable, collectability is deemed reasonably assured and the services have commenced.

We receive an upfront fee from customers for delivery and transfer of title for their appliance. No further fees related to the appliance are required to be paid by the customer in subsequent periods. Because the appliance does not have value to the customer on a stand-alone basis and requires a subscription agreement to access our solutions, the delivery of the appliance does not represent the culmination of a separate earnings process associated with the payment of the up-front fee. Accordingly, the amount of the up-front fee is recorded as deferred revenue upon invoicing and the amount is recognized as revenue ratably on a daily basis over the estimated average customer relationship period of three years.

Customers have a 30-day right to return, after which time the arrangement is non-cancelable. We make estimates and maintain a reserve for expected customer cancellations. These estimates involve inherent uncertainties and management judgment.

78

Stock-Based Compensation

Compensation expense related to stock-based transactions, including employee and nonemployee director stock options and RSUs, is measured and recognized in the financial statements based on fair value. The fair value of each option award is estimated on the grant date using the Black-Scholes-Merton option-pricing model and a single option award approach. The stock-based compensation expense is recognized, net of forfeitures using a straight-line basis over the requisite service periods of the awards, which is generally four years. We estimate a forfeiture rate to calculate the stock-based compensation for our awards. Our forfeiture rate is based on an analysis of our actual historical forfeitures.

The fair value of RSUs is determined based upon the fair value of the underlying common stock at the date of grant. Our outstanding RSUs vest upon the satisfaction of a time-based service component. The stock-based compensation expense is recognized ratably over the requisite service period of the RSUs, which is generally four years.

Our option-pricing model utilizes the estimated fair value of our common stock and requires the input of highly subjective assumptions, including the fair value of the underlying common stock, the expected term of the option, the expected volatility of the price of our common stock, risk-free interest rates, and the expected dividend yield of our common stock. The assumptions used in our option-pricing model represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future.

These assumptions are estimated as follows:

• Fair Value of our Common Stock. Because our common stock is not publicly traded, we must estimate the value of our common stock, as discussed in the section titled “—Common Stock Valuations” below.

• Expected Volatility. We determine the price volatility factor based on the historical volatilities of our peer group as we did not have a sufficient trading history for our common stock. Industry peers consist of several public companies in the technology industry that are similar to us in size, stage of life cycle, and financial leverage. We did not rely on implied volatilities of traded options in our industry peers’ common stock because the volume of activity was low. We intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own common stock share price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.

• Expected Term. The expected term represents the period that our stock-based awards are expected to be outstanding. We determined the expected term assumption based on the average of the contractual term and the average vesting period.

• Risk-Free Interest Rate. We base the risk-free interest rate used in the Black-Scholes-Merton valuation model on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term of the options for each option group.

• Dividend Yield. The expected dividend assumption is based on our current expectations about our anticipated dividend policy. While we declared and paid a dividend as part of the Recapitalization, we currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any dividends on our common stock in the foreseeable future.

79

The following table summarizes the assumptions used to estimate the fair value of options granted during the periods presented:

	Year Ended February 28/29,
	2011			2012			2013
Expected volatility		50	%		41%-46	%		44	%
Expected term (in years)		6.25			6.25			6.25
Risk-free interest rate		2.02	%		1.84	%		0.96	%
Dividend yield		—			—			—
Weighted average fair value of options granted		$1.85			$1.68			$1.78

In addition to assumptions used in the Black-Scholes-Merton option-pricing model, we must also estimate a forfeiture rate to calculate the stock-based compensation for our awards. Our forfeiture rate is based on an analysis of our actual forfeitures. We will continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover, and other factors. Quarterly changes in the estimated forfeiture rate can have a significant impact on our stock-based compensation expense as the cumulative effect of adjusting the rate is recognized in the period the forfeiture estimate is changed. If a revised forfeiture rate is higher than the previously estimated forfeiture rate, an adjustment is made that will result in a decrease to the stock-based compensation expense recognized in the financial statements. If a revised forfeiture rate is lower than the previously estimated forfeiture rate, an adjustment is made that will result in an increase to the stock-based compensation expense recognized in the financial statements.

We will continue to use judgment in evaluating the assumptions related to our stock-based compensation on a prospective basis. As we continue to accumulate additional data related to our common stock, we may have refinements to our estimates, which could materially impact our future stock-based compensation expense.

Common Stock Valuations

We are required to estimate the fair value of the common stock underlying our stock-based awards when performing the fair value calculations with the Black-Scholes-Merton option-pricing model. The fair values of the common stock underlying our stock-based awards were determined by our board of directors, with input from management and contemporaneous third-party valuations. We believe that our board of directors has the relevant experience and expertise to determine the fair value of our common stock. As described below, the exercise price of our stock-based awards was determined by our board of directors based on the most recent third-party valuation report as of the grant date.

Given the absence of a public trading market of our common stock, and in accordance with the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, our board of directors exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of our common stock including:

• valuations of our common stock performed by unrelated third-party specialists;

• the prices, rights, preferences and privileges of our redeemable convertible preferred stock relative to those of our common stock;

• lack of marketability of our common stock;

• our actual operating and financial performance;

• current business conditions and projections;

• hiring of key personnel and the experience of our management;

• our company history and the introduction of new solutions;

• our stage of development;

80

• likelihood of achieving a liquidity event, such as an initial public offering or a merger or acquisition of our company given prevailing market conditions;

• illiquidity of stock-based awards involving securities in a private company;

• the market performance of comparable publicly traded companies; and

• the U.S. and global capital market conditions.

The dates of our valuation reports, which were prepared on a quarterly basis, were not contemporaneous with the grant dates of our stock-based awards. Therefore, we considered the amount of time between the valuation report date and the grant date to determine whether to use the latest common stock valuation report for the purposes of determining the fair value of our common stock for financial reporting purposes. If stock-based awards were granted a short period of time preceding the date of a valuation report, we assessed the fair value of such stock-based awards used for financial reporting purposes after considering the fair value reflected in the subsequent valuation report and other facts and circumstances on the date of grant as discussed below. In certain instances, the fair value that we used for financial reporting purposes exceeded the exercise price for those awards. In reaching this conclusion, we also evaluated whether the subsequent valuation report indicated that any significant change in valuation had occurred between the previous valuation report and the grant date. The additional factors considered when determining any changes in fair value between the most recent valuation report and the grant dates included, when available, the prices paid in recent transactions involving our equity securities, as well as our stage of development, our operating and financial performance, current industry conditions and the market performance of comparable publicly traded companies. There were significant judgments and estimates inherent in these valuations, which included assumptions regarding our future operating performance, the time to completing an initial public offering or other liquidity event and the determinations of the appropriate valuation methods to be applied. If we had made different estimates or assumptions, our stock-based compensation expense, net loss and net loss per share attributable to common stockholders could have been significantly different from those reported in this prospectus.

In valuing our common stock, our board of directors determined the equity value of our business generally using the income approach and the market comparable approach valuation methods. When applicable, due to a recent offering of our redeemable convertible preferred stock, the prior sale of company stock method was also utilized. The income approach determines our enterprise value on the basis of the estimated present value of our projected future cash flows. These future cash flows are discounted to their present values using a discount rate derived from an analysis of the cost of capital of comparable publicly traded companies in our industry or similar lines of business as of each valuation date and this discount rate is adjusted to reflect the risks inherent in our cash flows. The market comparable approach utilizes financial metrics and trading prices to determine trading multiples of a selected peer group of U.S.-based publicly traded companies. These multiples are then applied to our financial metrics to derive a range of indicated values. Once calculated, the results of the income approach and the market comparable approach are then weighted to determine an estimated enterprise value.

Our peer group of U.S.-based publicly traded companies used for determination of the discount rate and market trading multiples is comprised of companies that focus primarily on producing IT solutions in areas in which we operate. More specifically, we focused on companies that provide security and storage solutions to customers of all sizes, companies who had similar business models of selling both products and subscription-based services and companies that have similar financial characteristics to us, such as growth rate, gross margins, working capital ratios and other factors. From time to time, we updated the set of peer group companies as new or more relevant information became available. Our peer group companies for the February 29, 2012 valuation report consisted of 12 companies, and for the August 31, 2012 valuation report we added one company. For the February 28, 2013 valuation report we added two companies and removed six companies, for a peer group of nine companies. For the May 31, 2013 valuation report we added five companies and removed one company, for a peer group of 13 companies. The changes in our peer group public companies from period to period resulted primarily from the elimination of companies in our peer group that were acquired or no longer had similar characteristics, as well as the addition of newly public companies with similar

81

characteristics. While we believe that this group of comparable companies was appropriate, there are differences in size or stage of maturity between many of our selected peer public companies and us. Therefore, had a different set of peer companies been used, a different valuation may have resulted.

The prior sale of company stock method estimates our enterprise value by considering any prior sales of our capital stock. When considering prior sales of our equity, the valuation considers the circumstances surrounding the sale, such as the size of the equity sale, the relationship of the parties involved in the transaction, the timing of the equity sale, and the rights, preferences and privileges of the capital stock sold in the transaction.

Once we determined an enterprise value, we utilized the option pricing method, or OPM, to allocate the equity value to each of our classes of stock. The OPM values each equity class by creating a series of call options on our equity value, with exercise prices based on the liquidation preferences, participation rights, and strike prices of derivatives. This method is generally preferred when future outcomes are difficult to predict and dissolution or liquidation is not imminent.

Beginning with the May 31, 2013 valuation report, due to greater clarity on potential liquidation events and our selection of a lead underwriter for our IPO, we began using the probability weighted expected return method, or PWERM, to allocate our equity value among the various potential outcomes. Using the PWERM, the value of our common stock is estimated based upon an analysis of varying values for our common stock assuming the following possible future events for our company:

• the completion of an IPO;

• the completion of a sale of the company; and

• continuation as a private company.

We applied a percentage probability weighting to each of the above scenarios based on our expectations of the likelihood of each event. We then applied the PWERM in order to allocate the derived aggregate enterprise value to our common stock.

In addition, we considered an appropriate discount adjustment to recognize the lack of marketability due to being a closely held entity.

We granted awards with the following exercise prices between March 1, 2012 and the date of this prospectus:

Grant Date	Options or RSUs		Number of Shares Subject to Awards Granted			Exercise Price			Fair Value Per Share  of Common Stock
May 18, 2012		Options		6,878,000		$	4.13		$	4.13
May 18, 2012		RSUs		1,178,439			N/A			4.13
November 1, 2012		RSUs		3,000,000			N/A			4.22
November 1, 2012		Options		2,760,000			4.22			4.22
November 20, 2012		Options		856,000			4.22			4.22
April 30, 2013		Options		179,191	(1)		0.50	(2)		4.29
May 17, 2013		Options		615,000			4.29			5.75
August 22, 2013		Options		318,000			5.85

(1) We assumed these options in connection with our acquisition of SignNow, Inc.

(2) The exercise price of options to purchase shares of our common stock was determined by reference to the exercise price of options to purchase shares of SignNow, Inc., which were assumed in connection with our acquisition of SignNow, Inc.

As of May 31, 2013, the aggregate intrinsic value of vested and unvested options was $         million and $         million, respectively, and the aggregate value of our vested and unvested RSUs was $         million and

82

$         million, respectively, based on the estimated fair value for our common stock of $         per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus. As of May 31, 2013, we had $27.1 million of unrecognized stock-based compensation expense, net of estimated forfeitures, related to stock options and RSUs that is expected to be recognized over a weighted-average period of 3.2 years.

We have granted options to purchase 318,000 shares of common stock since May 31, 2013. The additional expense associated with these options, net of estimated forfeitures, is approximately $         million. The expected weighted-average period for these awards is 4.0 years.

The following discussion relates primarily to our determination of the fair value per share of our common stock for purposes of calculating stock-based compensation costs since March 1, 2012. No single event caused the valuation of our common stock to increase through May 31, 2013. Instead, a combination of the factors described below in each period led to the changes in the fair value of our common stock. Notwithstanding the fair value reassessment for option grants made on May 17, 2013 described below, we believe reliance on the valuation report and the underlying methodology in such report was a reasonable method to determine the exercise prices for stock-based awards on the grant date.

May 2012 Awards

We granted options to purchase 6,878,000 shares of our common stock in May 2012. Our board of directors set an exercise price of $4.13 per share for these options based, in part, on a valuation report as of February 28, 2012. In addition, we granted 1,178,439 RSUs in May 2012 which, by definition, do not have an exercise price.

We experienced sequential revenue growth, generating $43.4 million for our fiscal quarter ended February 29, 2012. Additionally during our fiscal quarter ended February 29, 2012, we continued to invest in sales and marketing, and our number of active subscribers continued to grow.

We obtained an independent valuation which determined that the fair value of our common stock was $4.06 per share as of February 29, 2012. The enterprise value was derived utilizing a weighted combination of the income approach, discounted cash flow method, and the market approach, guideline public company method, each weighted at 50%. The valuation applied a discount rate of 29% based on the risks attributable to our size, industry and operations. The next twelve months, or NTM, revenue multiple selected was near the median of peer group NTM revenue multiples, which ranged from a bottom quartile of 1.8x to a top quartile of 7.4x. The NTM EBITDA multiple selected took into consideration the forecast of our expected future financial performance, and was between the bottom quartile and the median of peer group NTM EBITDA multiples, which ranged from a bottom quartile of 6.0x to a top quartile of 17.2x. The enterprise value was then allocated to the common stock utilizing an OPM with the following assumptions: a time to liquidity event of one year (based on an analysis of multiple exit scenarios), a risk free rate of 0.18% and volatility of 50% over the time to a liquidity event. The results of the OPM were reduced by a discount for lack of marketability of 20% to yield the fair value of our common stock on a non-marketable, minority basis.

Our board of directors considered our most recent operating results, as well as the valuation report and the execution of a non-binding term sheet related to a proposed financing and recapitalization of our company, when it determined the fair value of our common stock was $4.13 per share as of May 18, 2012.

83

November 2012 Awards

We granted options to purchase 3,616,000 shares of our common stock in November 2012. Our board of directors set an exercise price of $4.22 per share for these options based, in part, on a valuation report as of August 31, 2012. In addition, we granted 3,000,000 RSUs in November 2012.

During our fiscal quarters ended May 31, 2012 and August 31, 2012, we continued to experience sequential growth in revenue, generating $46.0 million and $49.0 million in total revenue, respectively. We made significant incremental investments in product development and brand development to support our growth.

We obtained an independent valuation which determined that the fair market value of our common stock was $4.22 as of August 31, 2012. The valuation report was rendered as of October 12, 2012 and took into account the completion of our Series B financing and the recapitalization on October 3, 2012, including our declared cash dividends of $130.0 million to our stockholders, which dividend had the effect of reducing the per share fair market value of our common stock by approximately $0.88. Our enterprise value was derived using a market approach based on sales of our Series B preferred stock at $5.62 per share, as it was determined that the price paid by the investors in the financing was the most meaningful indication of our enterprise value. Accordingly, the income approach was not used in estimating our enterprise value. The enterprise value was then allocated to our common stock utilizing an OPM with the following assumptions: a time to liquidity event of one year (based on an analysis of multiple exit scenarios), a risk free rate of 0.16% and volatility of 50% over the time to a liquidity event. The results of the OPM were reduced by a discount for lack of marketability of 20% to yield the fair value of our common stock on a non-marketable, minority basis.

Our board of directors considered our most recent operating results, recent changes in our management team, including the hiring of our chief executive officer, William D. Jenkins, Jr., and the closing of the Recapitalization, as well as the valuation report, when it determined the fair value of our common stock was $4.22 per share as of both November 1, 2012 and November 20, 2012.

April 2013 Option Assumption

In connection with our acquisition of SignNow in April 2013, we assumed 179,191 unvested stock options as part of the total merger consideration. The exercise price of these options was adjusted pursuant to the exchange ratio established in the acquisition.

May 2013 Awards

We granted options to purchase 615,000 shares of our common stock in May 2013. Our board of directors set an exercise price of $4.29 per share for these options based, in part, on a valuation report as of February 28, 2013.

We continued to experience sequential revenue growth, generating $51.4 million and $52.5 million in total revenue for the fiscal quarters ended November 30, 2012 and February 28, 2013. We continued to make incremental investments in product development and sales and marketing.

We obtained an independent valuation which determined that the fair market value of our common stock was $4.29 as of February 28, 2013. The enterprise value was derived utilizing a weighted combination of the income approach, discounted cash flow method, and the market approach, guideline public company method, each weighted at 50%. The valuation applied a discount rate of 24% based on the risks attributable to our size, industry and operations. The NTM revenue multiple selected was between the bottom quartile and the median of peer group NTM revenue multiples, which ranged from a bottom quartile of 2.1x to a top quartile of 5.5x. The NTM EBITDA multiple selected took into consideration the forecast of our expected future financial performance, and was at the bottom quartile of peer group NTM EBITDA multiples, which ranged from a bottom quartile of 10.5x to a top quartile of 20.9x. The enterprise value was then allocated to the common stock

84

utilizing an OPM with the following assumptions: a time to liquidity event of one year (based on an analysis of multiple exit scenarios), a risk free rate of 0.17% and volatility of 50% over the time to a liquidity event. The results of the OPM were reduced by a discount for lack of marketability of 20% to yield the fair value of our common stock on a non-marketable, minority basis.

On May 17, 2013 our board of directors considered our growth in revenue, the commercial acceptance of our solutions and our operation results and recent product introduction in addition to a preliminary valuation report, and granted awards with an exercise price of $4.29.

Using the benefit of hindsight, for financial reporting purposes, we determined that the fair value of common stock on May 17, 2013 should take into account changes that occurred in the subsequent May 31, 2013 valuation report. We obtained an independent valuation which determined that the fair market value of our common stock was $5.85 as of May 31, 2013. The valuation took into account greater clarity on potential liquidation events, including progress towards our IPO. The enterprise value was derived utilizing a weighted combination of the income approach, discounted cash flow method, and the market approach, guideline public company method, each weighted at 50%. The valuation applied a discount rate of 22% based on the risks attributable to our size, industry and operations. The NTM revenue multiple selected was between the bottom quartile and the median of peer group NTM revenue multiples, which ranged from a bottom quartile of 3.2x to a top quartile of 6.0x. Based upon changes in our expected future financial performance, the May 31, 2013 valuation report determined that utilization of an NTM EBITDA multiple was not as meaningful because of dissimilarities in our sustained EBITDA margins compared to those of our peer group, and instead relied solely on the NTM revenue multiple selected. The enterprise value was then allocated to the common stock utilizing the PWERM with the following probabilities applied to each scenario: 70% to completion of an IPO with a time to liquidity of 0.75 years, 15% to completion of a sale of the company with a time to liquidity of 0.75 years, and 15% to continuation as a private company with a time to liquidity of two years. The results of the PWERM were reduced by a discount for lack of marketability of 10% for the completion of an IPO and completion of a sale scenario, and 20% for the continuation as a private company scenario to yield the fair value of our common stock on a non-marketable, minority basis. Our use of the PWERM and improved visibility over liquidation scenarios such as an IPO combined with increased revenue multiples for comparable public companies resulted in a significant increase in the fair market value of our common stock at May 31, 2013 compared to February 28, 2013. After consideration of the May 31, 2013 valuation report, we reassessed the fair value of common stock on May 17, 2013 to be $5.75.

August 2013 Awards

We granted options to purchase 318,000 shares of our common stock in August 2013. Our board of directors set an exercise price of $5.85 per share for these options based, in part, on a valuation report as of May 31, 2013.

We have not yet determined the fair value of our common stock as of August 31, 2013. We will consider the progression of our proposed IPO, changes in our business and operating results achieved since May 31, 2013, among other things, when determining the fair value of our common stock and recording the related stock-based compensation expense for the quarter ended August 31, 2013.

Income Taxes

We account for income taxes using the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements or in our tax returns. Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe, based upon the weight of available evidence, that it is more likely than not that all

85

or a portion of deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected from each subsidiary and considering prudent and feasible tax planning strategies.

We account for uncertainty in income taxes recognized in our financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon examination by the taxing authorities, based on the technical merits of the position. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties.

The factors used to assess the likelihood of realization of our deferred tax assets include our forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. Assumptions represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. Should actual amounts differ from our estimates, the amount of our tax expense and liabilities could be materially impacted.

Loss Contingencies

We are subject to the possibility of various loss contingencies arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset, or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. If we determine that a loss is possible and the range of the loss can be reasonably determined, then we disclose the range of the possible loss. We regularly evaluate current information available to us to determine whether an accrual is required, an accrual should be adjusted or a range of possible loss should be disclosed.

Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Exchange Risk

A portion of our revenue and operating expenses are incurred outside the United States and are denominated in foreign currencies, which are subject to foreign currency exchange rate fluctuations, particularly changes in the euro. Our reported revenues and operating results may be impacted by fluctuations in foreign currency exchange rates. Fluctuations in foreign currency exchange rates may also cause us to recognize transaction gains and losses in our statement of operations. To date, foreign currency transaction gains and losses have not been material to our financial statements, and we have not engaged in any foreign currency hedging transactions.

JOBS Act Accounting Election

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards, and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

86

Recent Accounting Pronouncements

In June 2011, the FASB issued ASU No. 2011-05, Topic 220—Presentation of Comprehensive Income (ASU 2011-05), which requires companies to present net income and other comprehensive income in one continuous statement or in two separate, but consecutive, statements. In addition, in December 2011, the FASB issued ASU No. 2011-12, Topic 220—Comprehensive Income (ASU 2011-12), which defers the requirement to present components of reclassifications of other comprehensive income on the face of the income statement. We adopted these standards in fiscal 2013. Our adoption of the standards did not impact our consolidated results of operations or financial condition.

87

BUSINESS

Overview

Barracuda designs and delivers powerful yet easy-to-use security and storage solutions. We offer cloud-connected solutions that help our customers address security threats, improve network performance and protect and store their data. Our solutions are designed to simplify IT operations for our customers, allowing them to enhance their return on technology investment. Our business model is built on the core values of speed and agility, which we apply to all aspects of our approach, including our technology innovations, the delivery and deployment of our solutions, and responses to customer inquiries. This model has enabled us to be highly scalable in reaching a large number of potential customers. Since inception, we have sold our solutions to more than 150,000 customers located in more than 100 countries.

Our security and storage solutions are connected to our cloud services which enable continuous software updates, offsite redundancy and distributed capacity, and are offered on a subscription basis. Our solutions are delivered as cloud-connected appliances and virtual appliances, as well as cloud-only solutions. Our security solutions are designed to protect and optimize the performance of the most critical points within our customers’ IT infrastructures, including email servers, web applications, data centers and core networks. Our storage solutions are designed to backup and archive business-critical data and make such data accessible for purposes such as compliance, disaster recovery and business intelligence. Our storage solutions also allow users to securely and quickly access, share, synchronize and sign files from Internet-connected devices. Our solutions can be managed centrally in any size or type of deployment through integrated, easy-to-use web interfaces that support configuration, monitoring and reporting.

We design our solutions specifically for IT professionals in resource-constrained environments who seek to benefit from current and emerging trends in information technology such as the rapid growth in cloud computing, adoption of virtualization, proliferation of mobile devices and the associated explosion of data. Our customers work in all types of organizations, from mid-market businesses, governments and educational institutions, to departments or divisions within Fortune 2000 enterprises.

We nurture a culture that delivers value through simplicity to optimize our customers’ experiences. From the design of our solutions to our sales processes, customer support, manufacturing and delivery, we strive to make our solutions easy to purchase, install, maintain and update. We believe that Barracuda has become a highly visible and recognizable brand as a trusted IT partner. We design our solutions to be easy to use and to deploy without the need for special expertise or external support from IT specialists and also to provide powerful capabilities that can be optimized to meet the requirements of resource-constrained environments. We employ a high-velocity sales model that incorporates a 30-day right to return, real-time order fulfillment and a simple, low-cost entry point to make our customers’ purchase decisions and deployments seamless, easy and efficient. Through our recurring subscription services, we provide our customers with up-to-date features, functionality and real-time security protection, eliminating the need for costly upgrades or additional software purchases. We answer our phones live 24x7x365, and endeavor to treat every customer call with the same high priority. Central to our culture is a focus on the long-term customer experience, including an ongoing dialogue with our customers to enhance our features and solutions. Our development and fulfillment processes rapidly deliver new services and functionality to our customers, enabling them to improve their time to value and return on technology investment through the low total cost of ownership, easy integration and accelerated deployment of our security and storage solutions.

For fiscal 2011, 2012 and 2013, and for the three months ended May 31, 2013, our gross billings were $191.3 million, $233.2 million, $264.2 million and $74.9 million, respectively. For fiscal 2011, 2012 and 2013, and for the three months ended May 31, 2013, our total revenue was $142.1 million, $160.9 million, $198.9 million and $56.3 million, respectively. We believe that the subscription nature of our solutions provides us with enhanced financial visibility. Subscription revenue for fiscal 2011, 2012 and 2013 and for the three months ended May 31, 2013 represented approximately 63%, 73%, 70% and 69% of our total revenue,

88

respectively. For fiscal 2011, 2012 and 2013, and for the three months ended May 31, 2013, net income (loss) to Barracuda was $3.0 million, $0.6 million, $(7.4) million and $(2.4) million, respectively. For fiscal 2011, 2012 and 2013, and for the three months ended May 31, 2013, our free cash flow, adjusted for acquisition costs and other non-recurring charges, was $34.4 million, $35.4 million, $41.1 million and $1.6 million, respectively.

Industry Background

Modern IT Trends Offer Attractive Benefits to All Organizations

Organizations are looking to take advantage of important technology trends, particularly the rapid growth of cloud computing, proliferation of mobile devices, widespread use of web applications like Facebook, LinkedIn, Twitter and YouTube and increased adoption of virtualization and software defined networking, or SDN. These advanced technology trends can be exploited by organizations to gain significant competitive advantages and to support core business operations, enable dramatic efficiency gains and open up new go-to-market channels and revenue opportunities.

The Confluence of IT Trends Creates a Set of Obstacles that IT Professionals Must Address

IT trends are significantly changing the way that IT infrastructures are designed, deployed and secured, creating a complex rapidly evolving set of challenges that need to be addressed by IT professionals.

• Escalating Security Threat Environment. Organizations face security threats from a variety of attackers, including state-sponsored, profit-motivated, automated and internal attackers. These attacks can result in organizational disruption, as well as the theft of sensitive information such as credit card information, and can cause financial and reputational damage. These threats are exacerbated further as customers migrate their applications to public and private clouds. According to a 2012 survey conducted by IDG, enterprise organizations have seen the number of security threats grow by more than 200% from an average of 94 events in 2011 to 300 in 2012. Organizations of all sizes are being forced to reexamine their security risks and technology investments as threats evolve and increase in number, complexity, variety and severity.

• Productivity and Security Challenges Posed by Web Applications. Organizations can benefit greatly from popular web applications, such as Facebook, LinkedIn, Twitter and YouTube, which enable new channels to communicate and collaborate with customers and business partners, as well as a means to market their products and recruit employees. While many of these applications can benefit the business, they can introduce significant security vulnerabilities as well as inappropriate and unproductive activities in the workplace. In order to take advantage of these benefits, organizations need to safely enable the use of these applications within a secure infrastructure, such that only the right individuals are using the right set of applications for their business functions.

• Explosion of Data and Increased Storage Consumption. According to IDC, the volume of digital information created and replicated worldwide will grow approximately 41% annually from 1.8 trillion gigabytes in 2011 to 40 trillion gigabytes in 2020. Organizations and employees are increasingly dependent on the availability of this information at all times. As a result, organizations cannot afford to lose access to business critical data and need a cost effective and scalable way to ensure that their data is being stored safely and can be recovered rapidly.

• Constrained IT Budgets. Macroeconomic conditions have kept IT budgets under significant pressure, and, despite recent innovations in the industry, security and storage infrastructures increasingly require greater investments to implement, run and manage. As a result, there is a need for security and storage environments to become vastly more efficient against the backdrop of constrained IT budgets.

Organizations Need a New Approach to IT in Resource-Constrained Environments

Rapidly changing dynamics in today’s IT landscape are forcing organizations of all sizes to evolve their IT strategies. Fortune 500 companies are better positioned to address these challenges as they typically have core IT

89

departments that can comprise a significant number of highly skilled and specialized computer scientists and engineers, as well as IT budgets that can be in the billions of dollars. We believe that there are millions of underserved organizations without these resources. These organizations include small and mid-market businesses, governments, educational institutions and departments or divisions within Fortune 2000 enterprises. IT professionals within these organizations seek powerful yet easy-to-use solutions to address the challenges posed by these trends.

We believe most traditional software and hardware vendors have designed their products and business operations to cater primarily to the largest companies. These solutions typically fail to meet the needs of millions of resource-constrained organizations in several key ways:

• Complex to Deploy and Use. Traditional IT solutions often are difficult to install, require significant configuration and necessitate specialized services and technical support to get the systems up and running. These solutions often take months to implement and require highly trained IT staff to manage and maintain. Moreover, traditional IT solutions often provide a wide variety of features that meet the specific needs of the largest, most sophisticated customers but are of little-to-no use to the vast majority of customers.

• Marketing Optimized for Large Organizations. Traditional IT solution vendors tend to focus marketing efforts primarily on high-touch, senior level interactions with a smaller number of large customers. As a result, IT professionals within resource-constrained organizations are frequently challenged to work effectively with these vendors to discern the products they require to solve their problems.

• Lengthy, High-Touch Sales Cycle. Because of the complexity and expense related to the purchase of traditional IT solutions, traditional vendors usually use high-touch direct sales models, typically to larger customers, in order to sell their products. As a result, the complexity of traditional IT solutions and the requirement for customers to tailor traditional IT solutions to their needs lead to longer sales cycles, prolonging the period of time before customers can solve their problems. These sales-related expenses typically are passed on to their customers through product prices.

• Lengthy Manufacturing and Fulfillment. Solutions from traditional IT vendors often have long delivery and installation times. In addition, vendors periodically experience delivery delays due to the inability of their supply chain to meet quality and delivery requirements consistently. The risk of these delays can be greater where custom or semi-custom components and configurations are involved. Due to their size, traditional IT solution vendors also need to manage a high degree of operational complexity and spend a significant amount of effort rationalizing these processes to improve their profitability, manage inventory and better match demand and supply. All of these factors result in additional costs, which these traditional vendors may pass on to their customers through product prices.

• Lack of Investment Protection. To meet increasing performance and solution requirements, customers often are forced to perform “forklift” system upgrades or purchase new software licenses. A “forklift” upgrade is a system upgrade in which large parts of existing infrastructure must be removed and replaced with new infrastructure. These upgrades often require significant expenditures on contracted professional services and additional IT staff commitments, and the processes of installing and configuring new systems, and migrating users and data to them, can result in business disruptions.

• Inadequate Customer Support. Traditional IT solution vendors often rely on heavily on self-service telephone support and outsourced customer support located in remote geographies. This approach can lead to an inadequate and frustrating customer support experience and lengthy time to resolution.

Our Market Opportunity

We operate in a number of established, multi-billion dollar segments across the security and storage markets that we estimate were approximately $30 billion in 2012, based on market data from established third-party

90

market research firms. We define our security market as the web access management, secure email gateway, secure web gateway, intrusion prevention systems equipment, secure socket layer VPN equipment, VPN/firewall equipment and application delivery controllers segments. According to Gartner, estimated spending on these security segments was $14.6 billion worldwide in 2012. We define our storage market as the archival disk-based storage, archiving software, purpose-built backup appliances and data protection software and hardware segments. According to IDC, estimated spending on these storage segments was $15.9 billion worldwide in 2012. Included in these markets are some high-growth segments, such as the purpose-built backup appliance segment, which, according to IDC, is projected to grow from $3.2 billion in 2012 to $5.9 billion in 2016, representing a compound annual growth rate, or CAGR, of 16.7%. According to Gartner, the next generation firewall appliance sub-segment within the VPN/firewall segment was $4.5 billion in 2011 and is forecasted to grow to $8.7 billion by 2016, a 14.1% CAGR. The market for the above security and storage segments for companies with less than 5,000 employees was $14.8 billion in 2012, according to a study we commissioned from Compass Intelligence. Compass Intelligence further estimates there were 20.8 million companies worldwide with less than 5,000 employees in 2012.

Our Business Model

Since our founding, we have designed our solutions, established our culture and built our core business model to cater specifically to the needs of IT professionals in resource-constrained environments. We provide powerful yet easy-to-use security and storage solutions. These solutions are delivered in the form of cloud-connected appliances and virtual appliances, as well as cloud-only solutions, that help our customers address security threats, improve the performance of their networks and protect and store their data. Our solutions are designed to simplify IT operations for our customers, allowing them to enhance their return on technology investment. Our business model is built on the core values of speed and agility, which we apply to all aspects of our approach, including our technology innovations, delivery and deployment of our solutions, and responses to customer inquiries. We maintain control of the value chain across our solutions, marketing efforts, sales processes, manufacturing, delivery and customer support. This integrated model enables us to tailor the customer experience to deliver powerful yet easy-to-use security and storage solutions and high-value, recurring subscriptions to IT professionals in the way that works best for their organizations.

91

Key elements of our business model include:

• Powerful, Easy-to-Use Cloud-Connected Solutions. Our solutions are purpose-built to be easy to use and to deploy without the need for special expertise or external support from IT specialists. Our solutions also are designed to provide full-featured functionality to address the most common IT challenges. We believe that whether a solution is an entry-level or company-wide deployment, it should provide  powerful functionality and be easy to use . We have a continuous feedback loop with our customers, which gives us better insight into their needs and enables us to develop solutions that address our customers’ most important needs.

• Trusted Brand and Innovative Marketing. We believe partners and customers alike have come to rely on Barracuda as a  trusted IT partner . We invest in brand development efforts to help solidify our position as a go-to provider of powerful yet easy-to-use security and storage solutions. The principal focus of our marketing programs is to reach IT professionals within resource-constrained organizations and elevate their awareness of our comprehensive portfolio of security and storage solutions. As a result of our strong investment in brand and differentiated ways to reach the customer at key decision points, we believe we have developed strong brand awareness.

• High-Velocity Sales. With our global partner network of more than 5,000 distributors and value added resellers, we offer straightforward, competitive pricing, making our solutions easier to purchase. Our inside sales force uses a disciplined approach to quickly and efficiently convert leads into paying customers. Our solutions and sales specialists work closely with IT professionals to answer questions and guide prospective customers to participate in our 30-day right to return. Customers typically receive our solutions and can deploy and begin to realize value within 24 hours. We believe that our  “product often sells itself”  based on its breadth of functionality, ease of use and simple pricing.

• Efficient Manufacturing and Fulfillment. We manage our operations through customized, streamlined processes, using our backend logistics software system that enables efficient manufacturing and physical and digital distribution of our solutions. We have developed, manufactured and fulfilled our solutions primarily from our Silicon Valley locations for over 10 years. Together, this gives us the  speed and agility  to facilitate quick and precise responses to customer needs.

• High-Value, Recurring Subscriptions. Our recurring subscription services provide our customers with  up-to-date features, functionality and real-time security protection , as well as eliminate the need for future “forklift” system upgrades or additional software purchases. Customers who purchase Barracuda Energize Updates subscriptions receive the benefits of all of the new software capabilities our engineering team develops, and furthermore, customers who purchase Instant Replacement subscriptions also receive new appliances every four years. We believe this investment protection is an important differentiator in how we deliver value to our customers.

• Proactive, Live, “Insourced” Customer Support. We provide our customers with high-quality, proactive customer support, including remote support, preventative diagnostics and a direct line to Barracuda support technicians available 24x7x365—with  no phone trees —to answer customer calls and quickly and efficiently respond to their needs. Our support employees are strategically located close to our customers in geographies across the world. Our support also provides an important feedback loop, which enables us to continuously improve our solutions to better meet our customers’ needs.

By offering a portfolio of solutions that includes cloud-connected appliances and virtual appliances, as well as cloud-only solutions, we are able to engineer functionality optimally to align with, and take advantage of, the benefits of each form factor. This alignment increases overall value for our customers through more integrated solutions, and for our business through lower infrastructure and fewer materials costs. Our high-velocity sales model enables faster adoption of our solutions by customers and benefits our business by enabling us to improve our return on investment in sales and marketing. Our efficient manufacturing and fulfillment enables fast delivery of our solutions to customers and benefits our business through our ability to maintain low inventory levels and

92

minimal overhead expenses. Our customer support proactively resolves customer issues and, we believe, results in higher renewal rates and new cross-sell opportunities for us. Our subscription model provides our customers with continuous and transparent access to the latest functionality enhancements and a highly visible, recurring revenue stream for our business.

Our Competitive Strengths

We believe we have a number of competitive advantages that will enable us to maintain and extend our leadership position including:

• Vertically-Integrated Approach. With our vertically-integrated approach, we control the value chain across our solutions, including product design and functionality, marketing efforts, sales processes, manufacturing, delivery and customer support. This enables us to tailor the customer experience to deliver powerful yet easy-to-use security and storage solutions to organizations in the way that works best for IT professionals in resource-constrained environments.

• Hybrid, Cloud-Connected Solution Design. Our hybrid solutions consist of cloud-connected appliances and virtual appliances, as well as cloud-only solutions, that deliver security and storage capabilities out-of-the-box. By offering a portfolio of solutions and multiple deployment options, we are able to engineer functionality optimally to align with, and take advantage of, the benefits of each form factor, thereby increasing overall value for our customers.

• Large, Engaged Customer Base. We have gained a strong foothold in our markets and, since inception, we have sold our solutions to more than 150,000 customers worldwide. Our broad customer base and solution portfolio provide us with a platform from which we can cross-sell solutions to our existing customers. We strive to maintain close contact with our customers so that we can tailor our solutions enhancements to better meet our customers’ needs and fuel our innovation cycle based on their feedback.

• Leadership and Dedicated Focus. Since our founding, we have focused on identifying common pain points and designing differentiated solutions to simplify complex IT problems for resource-constrained organizations. We have demonstrated our ability to execute our innovative business model successfully and establish a leadership position across multiple markets, starting with the markets for email security and web security and more recently in the market for backup.

• Innovative Technology and Intellectual Property. We continue to invest in research and development to ensure our solutions are powerful yet easy to use. We also operate Barracuda Central, our security intelligence center, to monitor and block the latest Internet threats. Additionally, as of May 31, 2013, we had 43 issued patents and 50 patent applications pending in the United States.

• Strong Brand. We have built our brand with IT professionals in mind and our brand is at the core of our business model. We believe Barracuda is widely recognized as a trusted IT partner who combines leading technology solutions with highly responsive customer service in order to simplify IT for IT professionals.

Our Strategy

Our goal is to maintain and extend our leadership position as a global provider of solutions that simplify complex IT problems for IT professionals in resource-constrained organizations. Key elements of our growth strategy include:

• Increase Sales to New Customers. We believe there is a significant opportunity for us to simplify the complex IT challenges for millions of businesses that have resource-constrained IT environments. We plan to continue to engage with IT professionals through our differentiated business model in order to expand our customer base. We will continue to invest in our brand and marketing efforts to introduce

93

new customers to our broad portfolio of security and storage solutions.

• Increase Our Solution and Deployment Footprint within Our Existing Customer Base. We believe that many customers would prefer to purchase IT solutions from fewer vendors. In addition to our initial solution sales to customers, our customers often come back to us when they need to expand into other IT solutions. We believe this cycle produces significant lifetime value in a customer. We plan to pursue cross-sell opportunities with our diverse, worldwide customer base, especially as they look to consolidate IT suppliers to reduce overall IT spending.

• Apply Our Business Model to New Technologies and Markets. We intend to focus on developing and acquiring technologies that fit within our business model and can address the needs of IT professionals. When we consider developing a new technology or acquiring a company, we evaluate each opportunity in a disciplined fashion to confirm that the new solutions can be optimized for IT professionals, produced simply, deployed easily and offered as a subscription service.

• Expand and Optimize Our Worldwide Channel and Partner Network. We believe our worldwide channel and partner networks provide us with significant operating leverage. We currently have more than 5,000 distributors and value added resellers across the globe. We intend to continue driving operating leverage by expanding our distributor and value added reseller network, especially in international regions where we can benefit from the local expertise of our partners.

Our Solution Portfolio

Our portfolio of purpose-built solutions includes cloud-connected appliances and virtual appliances, as well as cloud-only solutions. Our appliances consist of devices that are pre-installed with our proprietary software, while our virtual appliances provide the same features in a software-only offering. Our cloud-only solutions are designed for customers who cannot or do not wish to deploy additional on-premises infrastructure. Our appliances and virtual appliances leverage our cloud service to deliver a hybrid cloud-connected solution to our customers. These hybrid solutions enable us to optimize usage of on-premises hardware required while simultaneously leveraging the scalability of the cloud.

94

Security

Our security offerings help protect our customers against threats which propagate over the Internet. They also help ensure that business applications and the networks they run on are performing with optimal efficiency and reliability.

Email Security. The Barracuda Spam & Virus Firewall includes spam and virus blocking, denial-of-service prevention, email continuity, encryption and policy management features. With the included Cloud Protection Layer, or CPL, Barracuda Spam & Virus Firewall customers can route their email through the Barracuda cloud performing advanced malware detection and pre-filtering to keep threats off their premises, reduce incoming connections to their network and spool mail in the event their sites become unavailable. Once delivered to the premises, inbound messages pass through up to 12 layers of security and custom policies before being delivered to the user. Outbound messages are filtered to prevent sensitive data such as credit card information from leaving the organization and to prevent spam or viruses from emanating from customer networks. The cloud-based Barracuda Email Security Service provides the same functionality as the Barracuda Spam & Virus Firewall and is designed for customers who host their own email but wish to fully offload their email security to a cloud service.

Web Security. The Barracuda Web Filter integrates several technologies for setting and enforcing granular web filtering policies to protect users from rapidly evolving web-based threats and to increase productivity and optimize bandwidth. The Barracuda Web Filter blocks user access to known malicious websites, scans web downloads for malware, enables granular enforcement based on existing user and group authentication, and provides comprehensive web usage visibility through intuitive dashboards. Our solutions protect networks and users against spyware, viruses and adware, using definitions that are updated continually through Barracuda Central. They also help monitor and regulate activity with web-based applications including Facebook, LinkedIn, Twitter and YouTube, and provide clear visibility into web activity. By integrating the Barracuda Web Filter with the Barracuda Message Archiver, organizations also can index and archive captured social media correspondences. The cloud-based Barracuda Web Security Service is designed to deliver web security and policy enforcement in highly distributed network environments. Both the Barracuda Web Filter and the Barracuda Web Security Service can filter activity from off-network or mobile users through the Barracuda Web Security Agent for Windows and Mac computers, through the Barracuda Safe Browser for iOS supporting iPhone and iPad, or through any other supported means of directing web traffic to the Barracuda Web Security Service.

Next-Generation Firewall. Our next-generation firewall solutions offer Layer 7 application visibility and add user-identity awareness to safely enable access policies for specific users and user groups. They are designed for IT administrators seeking to re-establish control of networks made chaotic and vulnerable by evasive web applications such as social media sites and by remote control or file sharing applications that can open backdoors into organizations’ networks. Our next-generation firewall solutions integrate network firewall, intrusion prevention, or IPS, VPN and Layer 7 Application control, with options for additional components such as web security. The Barracuda Firewall is delivered as a hybrid appliance and can be managed locally through a familiar web interface or from the cloud. The Barracuda NG Firewall is designed for large distributed organizations, and includes a centralized management system to simplify deployment, configuration and management across multiple units and locations.

Application Security. The Barracuda Web Application Firewall protects web servers from data breaches and downtime by intercepting sophisticated application-layer attacks, such as SQL Injection, cross-site scripting, or XSS, session hijacking and application-layer distributed denial of service, or DDoS. The Barracuda Web Application Firewall is designed to proxy all incoming web traffic to block attacks and insulate the web servers. The Barracuda Web Application Firewall also proxies outbound traffic to prevent loss of sensitive data such as social security numbers. It is available for use in virtual data centers, including public cloud-shared data centers such as Microsoft’s Windows Azure offering.

95

Application Delivery Controllers. The Barracuda Load Balancer ADC optimizes application performance, availability and security. The Barracuda Load Balancer ADC is an integrated platform that distributes network traffic across multiple servers using advanced Layer 4 and Layer 7 load balancing techniques or even across multiple data centers using global server load balancing, or GSLB, content caching, data compression and connection pooling to offload computing functions from backend servers and improve application response time. Advanced features for application optimization and integrated security are designed to protect customers from malicious data, application-layer attacks and DDoS attacks before they reach internal servers.

Remote Access. The Barracuda SSL VPN provides remote users with secure access to internal network resources from any web browser while providing the security needed to protect internal systems from unauthorized access, viruses and other malware.

Storage

Our storage solutions provide a data protection portfolio for archive, backup and cloud storage.

Backup. Barracuda Backup is an end-to-end solution that simplifies the backup process and enables secure offsite replication to other Barracuda Backup appliances and to the Barracuda storage cloud. Barracuda Backup uses advanced deduplication technology to reduce the amount of backup data stored. Our LiveBoot technology enables virtual appliances to be run directly from the backup for disaster recovery purposes, from either the local appliance or the cloud, without the overhead associated with restoring backup images to their original format. Barracuda Backup provides a single solution for both hardware and virtual server applications and the hybrid appliance model allows for easy data replication and fast local recovery. Barracuda Backup is available as a physical appliance with our cloud storage service for replication and includes software required for native application backups for popular applications, such as Microsoft Exchange and Microsoft SQL Server, as well as backup over industry standard network file sharing protocols.

Archival. Email archiving requires a different solution from a typical backup because it requires the storage of all messages rather than just specific snapshots in time. The Barracuda Message Archiver substantially reduces archive sizes by eliminating duplicate messages, storing only one instance of each message attachment, and then compressing the stored data. In addition, customers can use the Barracuda Message Archiver to significantly reduce mail database sizes by reducing email retention policies on their active mail servers and by stubbing attachments, removing them from the mail server and creating references to the archived copies. The Barracuda Message Archiver also provides easy end user access to archived mails through a web interface, Outlook Add-In and mobile applications for both Apple iOS and Android devices.

Cloud Storage. Copy is our cloud-based file storage platform that allows our customers to securely access, share and sync files of any size from any device. Copy works across Windows, Mac OS X and Linux computers and offers mobile device support for Apple iOS and Android. Shared files and folders can be sent to anyone either publicly or privately and accessed from any location or device. Copy also allows users to share files privately using Copy’s built-in identity verification. Copy also includes user and group management and added controls for proprietary company data.

Cloud eSignature. SignNow is a leading mobile eSignature application. Businesses globally use the SignNow platform to electronically sign documents from Internet connected devices, reducing the need to print, fax or ship documents. Customers also can centralize contract archives with SignNow, gaining control over document signing workflow, auditing and tracking.

96

Technology Architecture

Our technology architecture for both our security and storage solutions consists of several common foundational components. We utilize a common architecture so that improvements of those components benefit our solutions, reducing development time.

Key common foundational components of our architecture include:

Common Core and Secure Platform

We use a proprietary operating system, built on the Linux open source kernel, that provides security and stability to protect the solutions that secure customers’ networks. The secure platform also provides foundational services that may include:

• web and application servers that enable our user interface and application programming interfaces, or APIs;

• infrastructure interoperability services, such as Kerberos and Active Directory;

• hardware abstraction layers that allow our solutions to scale from entry-level to high-capacity systems and to rapidly respond to changes in supply chain availability;

• auto-provisioned database systems that support many of the management features and applications; and

• common logging, notification and reporting services.

Continuous Updates and Real-Time Protection

Our security and storage applications are built to provide ongoing value as the technology and security landscape evolves. Through continuous updates via Barracuda Energize Updates and Barracuda Real-time Protection, our solutions are able to continuously receive up-to-date databases and agents including:

• information that allows us to identify spam, viruses, spyware and other Layer 7 attacks by several means, including the content, behavior and source of the data;

97

• web category and application databases;

• information about the latest document types to properly identify text/content for indexing and searching;

• detailed formats of social media web requests that allow us to provide data loss prevention, or DLP, and archival services;

• backup agents for the latest versions of the newest desktop and server software; and

• policy definitions for enforcement of content policies, including social security number and credit card patterns.

Shared Software Components

Many of our solutions share our proprietary software modules that are core to our business. This approach enables us to benefit from significant time and cost savings from rapid integration of our library of shared software components. For example, our antivirus technology is integrated into many solutions we have developed or acquired. Other examples include:

• powerful and versatile proxy servers for web (HTTP forward and reverse), email (SMTP) and domain name services;

• high performance packet processing and flow tracking that allows identification of users and applications for security policy, prioritization and adaptive routing;

• content indexing and search capabilities; and

• agents for endpoints such as desktops, servers and mobile devices.

Shared Cloud Services

By creating our own cloud services, we are able to deliver the benefits of a cloud delivery model while maintaining a small footprint in our customers’ networks. Our appliances and virtual appliances communicate with our cloud services so that we can deliver new features without significantly increasing the requirements of the infrastructure installed in a customer’s network. This allows us to continue delivering features in a constantly evolving environment without the potential customer satisfaction issues that arise with frequent hardware updates.

Our cloud services are used by our cloud-only and hybrid cloud-connected appliances, which allows us to rapidly develop new solutions and features. For example:

• Our email content inspection service is used by both the Barracuda Email Security Service and the CPL included with the Barracuda Spam & Virus Firewall appliances and virtual appliances deployed on the customer premises.

• Our cloud web categorization service is used by the Barracuda Web Security Service, the Barracuda Web Filter, the Barracuda Firewall and the Barracuda NG Firewall.

• Our deduplicated file storage service, developed originally for the Barracuda Backup Server, also is used by the Barracuda Email Security Service and Copy.

Common Management Layer

We have invested significant resources into developing an architecture that allows for centralized solution management. Our solutions are designed with common user interfaces and provide central control across different solutions. They also enable control over solutions dispersed across multiple geographies by relying on a

98

cloud service where security functionality is distributed but centralized control is desired. This capability enables administrators to control and enforce policies once and apply them across multiple distributed locations. The management layer allows a global view of many devices so that they can have the latest firmware, definitions and security policies.

Where appropriate, we employ a multi-tenant architecture which allows us to serve multiple customers while securely segregating their data. The platform includes intelligent route-optimization technology that dynamically routes customer traffic quickly and effectively.

Our core management technologies also include:

• high availability and clustering software that allows a group of systems to be managed through a single configuration interface and allows the remaining systems to continue processing for any system that might become unavailable or fail;

• support tools that allows for rapid access and troubleshooting tools; and

• an update infrastructure for delivering new versions of our firmware, as well as the definitions and databases to ensure that the systems are up to date.

Barracuda Central

Barracuda Central is our centralized and automated security intelligence center that enables continuous threat detection and monitoring. Data collected and aggregated at Barracuda Central is analyzed and used to create definitions for continuous automatic Barracuda Energize Updates for our solutions. Barracuda Central is comprised of four primary layers.

Internal and External Data Feeds

We receive data from four primary sources:

• The Barracuda global data feed receives metadata for nearly half a billion messages every day that pass through our networks from the appliances deployed in our subscribers’ networks. We also receive the metadata for over 700 billion web requests per day.

• Barracuda Labs analyzes new threats and develops innovative security approaches. Barracuda Labs is focused on emerging threats such as social network, mobile and web-based exploits and other forms of modern malware attacks, and develops advanced detection techniques to deliver threat intelligence.

• Subscribers, their end-users, and users of our free reputation services submit feedback on categorization, false-negatives and false-positives through various means. These means include email, web forms, user interfaces on our appliances/services, and agents such as email add-ins.

99

• Via third-party and community data sharing, we are able to augment our accuracy while simultaneously giving back to the community.

Automated and Manual Analysis

Through many automated and manual processes, the incoming data is analyzed and used to generate new threat definitions and new algorithms to continuously increase the effectiveness of our solutions.

• Our security engineering team develops algorithms and mitigation techniques that are deployed into our Barracuda compute cloud in order to increase effectiveness. We also develop corresponding algorithms and mitigation techniques that are delivered to the appliances or cloud services for local processing.

• Our Barracuda compute cloud processes the data feeds and is designed to automatically identify the vast majority of threats. As these threats are identified, they are added to the appropriate databases for delivery via Barracuda Energize Updates and for availability through real-time queries to Barracuda Real-time Protection.

• Our security operations team monitors the data feeds and tunes the algorithms in the Barracuda compute cloud. Our security operations team also works with our security engineering team to identify new algorithms that allow more threats to be automatically identified.

Continuous Updates and Real-time Protection

• Once threats are identified and definitions are created, the definitions are delivered securely to the appliances, virtual appliances and cloud services via Barracuda Energize Updates. Some of these definitions are updated many times over every hour and allow for fast local processing and offline operation.

• To reduce latency, size and performance impact of delivered definitions, we provide Barracuda Real-time Protection. Barracuda Real-time Protection consists of a set of protocols and services which allows appliances, virtual appliances and cloud services to have access to up-to-the-second threat detection. Instead of waiting for a local database to be updated for the latest threat information, systems contact our central database and provide metadata about a message or web page in a request. Barracuda Real-time Protection often can determine the threat level immediately and, in response, instruct the requesting system to allow or deny processing.

Deployed Appliances, Virtual Appliances and Cloud Services

Our appliances, virtual appliances and cloud services use the data produced by Barracuda Central to block the latest threats. These systems automatically provide feedback and metadata back into the Barracuda Central data feeds enabling continued improvements to accuracy and performance.

Our Customers

We target customers across a wide range of industries, including education, government, financial services, healthcare, professional services, telecommunications, retail and manufacturing. Our revenue is diversified across our entire customer base. One distribution partner accounted for 13% and 16% of total revenue in fiscal 2013 and the three months ended May 31, 2013, respectively. No single customer or distribution partner accounted for more than 10% of our total revenue in fiscal 2011 or 2012.

For fiscal 2012 and 2013 and the three months ended May 31, 2013, we generated approximately 34%, 30% and 32% of our total revenue, respectively, from customers located outside of the United States. Other financial information about our segment and geographic areas is incorporated herein by reference to Note 9 of the notes to our consolidated financial statements included elsewhere in this prospectus.

100

Customer Case Studies

The following case studies are examples of how some of our customers have selected, deployed and benefited from our solutions.

Regional Law Firm Focused on Financial Services

Challenge: This law firm is focused on collections activities with banks and financial institutions. With three offices and 170 employees, and only four IT professionals, they are challenged with keeping their network up and running, meeting regulatory compliance, and providing a high level of service to employees and customers. They also have an ongoing requirement to minimize training and IT management overhead.

Solutions & Benefits: In 2009, the company deployed the Barracuda Web Filter solution to protect users from unsafe content while browsing online. Due to the ease of use designed into our solutions, the support they received from us, and the common look and feel that enabled them to easily manage their infrastructure, the law firm adopted additional Barracuda solutions. In 2012, the customer deployed the Barracuda Spam & Virus Firewall solution, as well as four Barracuda NG Firewalls and two additional Barracuda Web Filters to further protect their users and information. In 2013, the customer deployed an additional Barracuda NG Firewall and the Barracuda Message Archiver.

Large European Retailer

Challenge: This European-based specialty retailer with thousands of stores in dozens of countries and tens of thousands of employees has a requirement to provide reliable and secure network connectivity to branch offices. The company wanted to integrate existing data connections, enable granular traffic management to cope with limited bandwidth at some locations, and reduce the resources required to operate the wide area network, or WAN.

Solutions & Benefits: Barracuda NG Firewalls were first deployed in 2010 to offices and stores to deliver user authentication, SSL VPN access and WAN optimization. This company has continued to purchase and deploy additional Barracuda NG Firewall solutions in each year between 2011 and 2013. The rollout has been accomplished quickly and remotely saving significant travel, time and expense. With secure connectivity to the remote locations, the company has been able to avoid a costly international multiprotocol label switching, or MPLS, network deployment. Ongoing management now requires less overhead and IT administration, and can be performed from a central location.

Global Communications and Document Management Company

Challenge: This Global Fortune 500 company is faced with the challenge of protecting large amounts of data. The company’s previous data protection infrastructure included multiple backup vendors that required the deployment of disparate software, servers, storage and offsite tape, resulting in a recovery time of more than five days in the event of a disaster. The company’s objective was to simplify the environment while maintaining the integrity of the backups, to reduce recovery time, and to leverage and protect investments in virtualization.

Solutions & Benefits: In 2012, Barracuda Backup was installed at the company’s headquarters and other large facilities and remote offices. Our easy-to-manage solution simplified the company’s backup infrastructure, enabled consolidation to a single vendor from six, resulted in up-front cost savings of $150,000, and reduced risk and recovery times. In 2013, the company has begun expanding its deployment of Barracuda Backup.

Global Maritime Logistics Holding Company

Challenge: This global holding company for logistics groups specializes in maritime transport, with 20 terminals, over 100 ships, and over 50 branches worldwide. They were challenged with consolidating multiple point solutions across security and storage use cases.

101

Solutions & Benefits: This customer has deployed multiple Barracuda solutions to simplify their infrastructure. In 2011, the company deployed the Barracuda Link Balancer to ensure network reliability and performance. In 2012, the customer replaced several legacy point products with the Barracuda Web Filter, Barracuda Message Archiver and Barracuda SSL VPN solutions, and in 2013, the customer deployed the Barracuda NG Firewall because of the common management infrastructure and ease of use.

Large State Technical College System

Challenge: With more than 170,000 students, 26 colleges and over 100 different campuses, the IT team is faced with a number of challenges to protect their users and data. As a government entity, the college is required to monitor web activity and block on-campus access to all unauthorized content, compounded by an additional set of challenges associated with mobile devices.

Solutions & Benefits: In 2009, the Barracuda Web Security Service was deployed to provide content filtering and web policy enforcement at all of the campuses, regardless of the location inside or outside the network or type of device. The service allows the school to centrally manage and maintain policy and reporting, while enabling a pure cloud solution at some campuses and a hybrid solution that includes Barracuda Web Filter appliances and virtual appliances at others. The customer also deployed the Barracuda Message Archiver and our backup software solution in 2009. In 2010, the college increased its investment in Barracuda with an additional deployment of 20 Barracuda Web Filters, and again in 2011 with the addition of 40 Barracuda Web Filters. Each campus has the flexibility to deploy the solutions that best meet their requirements.

Sales and Marketing

Our sales and marketing approach is designed to be efficient for high volumes of transactions. Our marketing efforts focus on driving traffic to our websites and on generating high-quality sales leads. Our sales efforts focus on converting these leads into paying customers through a high volume, short duration sales process.

Sales

We sell our appliances, services and software to our customers using sales personnel and our global network of more than 5,000 distribution partners and value added resellers in more than 100 countries. Our inside sales force is devoted to turning highly qualified leads into purchasers of our solutions. The substantial majority of our leads come from potential customers who have requested a free evaluation of our solutions, or from our existing customer base. As a result, our inside sales force typically calls potential buyers who already understand the value of our solutions and do not require a lengthy sales cycle. Our sales reach is augmented by our distributors and value added resellers to efficiently interact with our customer base for initial deployment and cross-selling additional solutions.

The Barracuda Networks Reseller Program is a global network of resellers offering our solutions, service and support to our customers. We believe that our solutions and innovative marketing, lead generation and training programs provide a significant opportunity for high-quality reseller and distributor partners. Our channel network leverages our channel partners’ industry, product and geographic knowledge and their customer reach to expand our customer base.

We implement our approach through a disciplined sales process that provides clear guidelines for our sales force, and we actively measure and manage our sales results. We offer our solutions using standardized contract terms, and we enable our customers to buy our solutions in a manner convenient to them.

Marketing

We use a variety of online marketing programs for lead generation, as well as more traditional direct marketing and indirect channel partner marketing programs to drive interest in our solutions. These efforts

102

leverage the high level of use of Internet search engines through search engine marketing and optimization programs. Once we drive traffic to our websites, we have well-defined processes that allow us to automatically track visitors’ activities on our website, communicate with potential customers, encourage evaluations of our solutions and generate highly qualified leads to our sales organization.

Our marketing approach focuses on creating brand awareness, allowing us to build and maintain, through relevant web-based content and online communications, a substantial customer base and community, many of whom act as advocates for Barracuda. We employ an innovative approach to traditional visual marketing through the use of signs and billboards in key locations such as airports where target customers often travel. We also enhance brand recognition and marketing through the use of vehicles wrapped with highly-visible branding.

In addition, we attend industry trade shows and conferences, regularly communicate with industry analysts and solicit their feedback on our solutions and strategies and host webinars on current issues to create awareness of our brand and solutions.

Our Go-to-Market Strategy. We have successfully grown our business by using a go-to-market strategy that includes the following:

• Low-Touch Sales Model. Our marketing efforts drive customers to fill out online forms in which they provide information about their business and specific IT needs. Our inside sales force is responsible for following up on these qualified leads from our partners and our website and working to turn potential customer interest into opportunities that our channel partners can fulfill. For example, based on the information a customer completes on one of our online forms, our inside sales force may call the customer and walk them through an online demo and connect them to a channel partner. In larger transactions our field sales team may become involved in a transaction to help a channel partner close an opportunity.

• Global Partner Network. We leverage our channel network to augment our inside sales force, giving us access to a broader potential customer base than we would be able to access on our own. We believe this greatly expands our distribution leverage as many times our customers order through our partner network without the involvement of our sales team.

• 30-Day Right to Return. All new sales include a 30-day right to return. The risk-free nature of the transaction allows our customers to more quickly adopt Barracuda solutions and realize the value.

• Renewals and Cross-Selling. As our existing customers grow, we may have opportunities to sell more advanced versions of our solutions as well as cross-sell adjacent solutions. We have a dedicated sales team that focuses exclusively on renewals. We employ training and marketing programs to assist our sales force and channel partners to better sell into our sizable customer base. Because of our robust solution portfolio, an existing customer provides us with multiple additional sales points as they look to consolidate suppliers while expanding their IT systems.

Customer Support

Barracuda Technical Support. Customer support is an essential element of our business model, and we are focused on the impact of support on our customers’ experience. We offer multiple support options. All calls are answered and managed by specially trained Barracuda support agents 24x7x365. Moreover, we do not use phone trees and every call is answered live and in time zone. We also offer multilingual support.

We hire our customer support agents specifically based on their customer service experience and orientation and then provide in-house training to help them build their knowledge base and skill set. Our agents are categorized in tiers based on their skills. Tier 1 agents handle initial setup, basic support and troubleshooting. Tier 2 agents address detailed troubleshooting, analysis and support. Tier 3 agents address advanced issues, backend analysis and support. Finally, engineering support is available for any unresolved issues escalated to the

103

development team. Agents of varying skill level sit together in groups in order to best serve our customers but also foster a collaborative environment in which our agents can learn and grow their skills.

We offer self-service support in the form of our online knowledge base, community forum and documentation portal. We also offer an online community forum, which offers information, updates and peer support. We also maintain a portal of technical documentation and whitepapers on our website.

Support Subscriptions. We provide a number of support subscriptions with our portfolio of solutions.

Barracuda Energize Updates. The required Barracuda Energize Updates subscription and virtual appliance subscriptions provide our customers with access to Barracuda Technical Support.

Instant Replacement. Instant Replacement provides replacement hardware with next business day shipping. Along with providing priority replacements in case of equipment failure, the Instant Replacement subscription also provides ongoing migration to the latest hardware platforms through the Barracuda Hardware Refresh Program, enabling customers to receive a new hardware unit every four years at no additional cost.

Premium Support. Barracuda Premium Support provides for a dedicated account manager and a team of technical engineers to provide fast resolution of high-priority support issues, helping to ensure continuous uptime. Premium Support is designed for organizations that cannot afford extended periods of downtime for their mission critical environments.

Manufacturing

We manufacture our appliances at our manufacturing facilities in Silicon Valley. By managing manufacturing locally and maintaining a highly flexible workforce, we are able to easily scale our manufacturing operations and react rapidly to customer needs. This enables us to support efficient, flexible, “just-in-time” manufacturing and key features of our business model such as real-time order fulfillment and our Instant Replacement program. Although we currently depend on a single source or a limited number of sources for certain components used in the manufacture of our appliances and are therefore subject to the risk of shortages in supply of these components, to date we have not experienced a significant delay in shipments. We generally use commodity hardware in our appliances, which is readily available from multiple sources, and we do not have any long-term supply agreements. Sourcing our materials from multiple suppliers enables us to fill orders with short lead-time and lower manufacturing costs.

Research and Development

Our research and development efforts are focused on the development of new solutions, including software and cloud solutions, and the integration of additional features and capabilities into our existing solutions. Our product management and engineering teams have extensive security and storage expertise and work closely with customers to identify their current and future needs. The experience of our design teams enables us to effectively assess the tradeoffs and advantages when determining which features and capabilities of our solutions should be implemented.

We believe that innovation and timely development of new features and solutions is essential to meeting the needs of our customers and improving our competitive position. We test our solutions thoroughly to certify and ensure interoperability with third-party hardware and software products.

Our research and development expenses were $24.0 million, $27.8 million, $35.2 million, $7.7 million and $10.8 million, in fiscal 2011, 2012 and 2013 and the three months ended May 31, 2012 and 2013, respectively.

Intellectual Property

Our success depends in part upon our ability to protect our core technology and intellectual property. To accomplish this, we rely on a combination of intellectual property rights, including patents, trade secrets, copyrights and trademarks, as well as customary contractual protections.

104

We had 43 issued patents and 50 patent applications pending in the United States, as of May 31, 2013. Our issued patents expire between November 2016 and October 2030. We cannot assure you whether any of our patent applications will result in the issuance of a patent or whether the examination process will require us to narrow our claims. We also license software from third parties for integration into our solutions, including open source software and other software available on commercially reasonable terms.

We control access to and use of our proprietary software and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers and partners, and our software is protected by U.S. and international copyright laws. Despite our efforts to protect our trade secrets and proprietary rights through intellectual property rights, licenses and confidentiality agreements, unauthorized parties may still copy or otherwise obtain and use our software and technology. In addition, we intend to expand our international operations, and effective patent, copyright, trademark and trade secret protection may not be available or may be limited in foreign countries.

Our industry is characterized by the existence of a large number of patents and frequent claims and related litigation regarding patent and other intellectual property rights. In particular, leading companies in our markets have extensive patent portfolios and are regularly involved in litigation. From time to time, third parties, including certain of these leading companies, may assert patent, copyright, trademark and other intellectual property rights against us, our channel partners or our customers. Our standard license and other agreements may obligate us to indemnify our channel partners and customers against such claims. Successful claims of infringement by a third party could prevent us from distributing certain solutions or performing certain services, require us to expend time and money to develop non-infringing solutions, or force us to pay substantial damages, including treble damages if we are found to have willfully infringed patents or copyrights, royalties or other fees. In addition, if we become more successful, competitors may try to develop solutions and services that are similar to ours that may infringe our proprietary rights. Competitors or other third parties may also be more likely to claim that our solutions infringe their proprietary rights. We cannot assure you that we do not currently infringe, or that we will not in the future infringe, upon any third-party patents or other proprietary rights.

Competition

We operate in the intensely competitive security and storage markets that are characterized by constant change and innovation, and we expect competition to increase in the future from larger, well-established competitors and new market entrants. Changes in the application, threat and technology landscape result in evolving customer requirements. Our main competitors in these markets fall into two categories:

• Independent network security, storage and application delivery vendors such as Blue Coat Systems, Inc., Check Point Software Technologies, Ltd., CommVault Systems, Inc., EMC Corporation, F5 Networks, Inc., Fortinet, Inc., Imperva, Inc., Juniper Networks, Inc., Palo Alto Networks, Inc. and Symantec Corporation that offer competing solutions.

• Diversified IT suppliers such as Cisco, Dell Inc., Hewlett-Packard Company, the McAfee division of Intel and International Business Machines, that have acquired large security specialist vendors in recent years, that have software- or hardware-based storage solutions or that have the technical and financial resources to bring competitive solutions to the market.

In addition, we compete with companies that offer point solutions that compete with some of the features present in our platform. As our market grows, we believe it will attract more highly specialized vendors as well as larger vendors that may continue to acquire or bundle their solutions more effectively.

The principal competitive factors in our market include:

• solution ease-of-use;

• solution features, reliability, performance and effectiveness;

105

• solution line breadth and applicability;

• solution extensibility and ability to integrate with other technology infrastructures;

• price and total cost of ownership;

• proactive live technical support;

• strength of sales and marketing efforts; and

• brand awareness and reputation.

We believe we generally compete favorably on the basis of these factors. However, many of our competitors have substantially greater financial, technical and other resources; greater name recognition; stronger reputations and longer operating histories; larger sales and marketing budgets; broader distribution and established relationships with distribution partners and customers; lower labor and development costs; greater customer support resources; larger and more mature intellectual property portfolios; and greater resources to make acquisitions.

Employees

As of May 31, 2013, we had 1,081 full-time employees. None of our employees are either represented by a labor union or subject to a collective bargaining agreement. We have not experienced any work stoppages, and we consider our relations with our employees to be good.

Facilities

Our principal executive offices are located in Campbell, California, consisting of approximately 61,400 square feet of office space that we own and approximately 8,800 square feet of office space that we lease under a lease that expires in June 30, 2013. We also lease approximately 42,000 square feet of office space for research and development in Ann Arbor, Michigan and approximately 47,000 square feet of office space for manufacturing and customer support in San Jose, California, with leases that expire in October 31, 2017 and August 31, 2018, respectively. We have additional office locations throughout the United States and in various international locations.

We believe that our existing facilities are sufficient for our current needs. We intend to add new facilities and expand our existing facilities as we add employees and grow our business, and we believe that suitable additional or substitute space will be available on commercially reasonable terms to meet our future needs.

Legal Proceedings

Export Compliance

In late 2011, following a voluntary internal review of our compliance with U.S. export control and sanctions laws, our management team became aware that certain of our physical appliances had been sold indirectly into embargoed countries via our distributors and resellers, potentially in violation of U.S. export control and economic sanctions laws. In addition, certain of our solutions incorporate encryption components and may be exported from the U.S. only with the required approvals; in the past, we may have exported products prior to receiving these required authorizations. We believe that these potential violations were inadvertent and occurred because we and certain of our resellers did not have sufficient compliance procedures in place to prevent the transactions at issue. As a result, we were unable to preclude certain of our channel partners and resellers from selling our solutions into countries subject to a U.S. embargo until late 2011. After completion of a comprehensive internal investigation conducted by outside counsel, we submitted voluntary disclosures regarding these matters to the U.S. Commerce Department, Bureau of Industry and Security, or BIS, and to the U.S. Treasury Department, Office of Foreign Assets Control, or OFAC. These disclosures summarized potential violations of export controls and economic sanctions laws, including reexports by third parties and provision of services to end users in embargoed countries including Iran, Sudan and Syria.

106

The reviews of our voluntary disclosures by BIS and OFAC are still pending and in the early stages, and their reviews of our voluntary disclosures may continue for a long period of time. BIS and OFAC may conclude that our actions resulted in violations of U.S. export control and economic sanctions laws and warrant the imposition of penalties that could include fines, termination of our ability to export our products, and/or referral for criminal prosecution. Any such penalties may be material to our financial results in the period in which they are imposed and could significantly affect our quarterly operating results for that quarter. The penalties may be imposed against us and/or our management. Also, disclosure of our conduct and any fines or other action relating to this conduct could harm our reputation and indirectly have a material adverse effect on our business, operating results and financial condition. See the section titled “Risk Factors—We may be subject to fines or other penalties for potential past violations of U.S. export control and economic sanctions laws.”

Other

On August 13, 2013, Parallel Networks, LLC, or Parallel Networks, which we believe is a non-practicing entity, filed a lawsuit against us in the U.S. District Court for the District of Delaware, Parallel Networks, LLC v. Barracuda Networks, Inc., Case No. 1:13-cv-01412-UNA, alleging that certain of our appliances infringe two of their U.S. patents: U.S. Pat. No. 7,571,217, titled “Method and System for Uniform Resource Locator Transformation,” and U.S. Pat. No. 8,352,570, titled “Method and System for Uniform Resource Locator Transformation.” Parallel Networks has asserted similar claims against other companies, including Array Networks, Inc., Brocade Communications Systems, Inc., Citrix Systems, Inc., Riverbed Technology, Inc. and SAP AG. This matter is in its earliest stages, but we intend to vigorously defend the lawsuit.

From time to time, we may be party to litigation and subject to claims that arise in the ordinary course of business. In addition, third parties may from time to time assert claims against us in the form of letters and other communications. We currently believe that these ordinary course matters will not have a material adverse effect on our business; however, the results of litigation and claims are inherently unpredictable. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

107

MANAGEMENT

Executive Officers and Directors

The following table provides information regarding our executive officers and directors as of May 31, 2013:

Name	Age		Position(s)
Executive Officers:
William D. “BJ” Jenkins, Jr.		47	Chief Executive Officer and Director
David Faugno		43	Chief Financial Officer and Vice President
Michael D. Perone		46	Chief Marketing Officer, Executive Vice President and Director
Michael D. Hughes		46	Senior Vice President, Worldwide Sales
Diane C. Honda		48	Vice President, General Counsel and Secretary
Other Directors:
Jeffry R. Allen(1)		61	Director
Dean M. Drako		47	Director
James J. Goetz(2)		47	Director
David R. Golob(2)(3)		45	Director
Zachary S. Levow		40	Chief Technology Officer, Executive Vice President and Director
Gordon L. Stitt(1)(3)		57	Director

(1) Member of our audit committee.

(2) Member of our compensation committee.

(3) Member of our nominating and corporate governance committee.

Executive Officers

William D. “BJ” Jenkins, Jr. has served as our president and chief executive officer and as a member of our board of directors since November 2012. From April 1998 to November 2012, Mr. Jenkins served in various roles, including president of the Backup Recovery Systems division, at EMC Corporation, an information infrastructure company. Mr. Jenkins holds a B.S. degree in general engineering from the University of Illinois and an M.B.A. degree from Harvard Business School.

We believe that Mr. Jenkins is qualified to serve as a member of our board of directors because of the perspective he brings as our chief executive officer and his experience in senior management positions at several technology companies.

David Faugno has served as our chief financial officer and vice president since March 2006. Additionally, from April 2012 to November 2012, Mr. Faugno served as a member of the office of the president and chief executive officer, or the office of the CEO. Prior to joining our company, Mr. Faugno served as director of corporate finance, mergers and acquisitions at Cisco Systems Inc., a network equipment company, from July 2004 to February 2006, which he joined in connection with Cisco’s acquisition of Actona Technologies Inc., a wide area storage vendor, where he served as chief financial officer and vice president of operations from March 2002 to July 2004. From May 2001 to January 2002, Mr. Faugno served as chief financial officer of Soltima Inc., a wireless infrastructure software company. From 1992 to 2000, Mr. Faugno served in various finance and operational roles with AT&T, a telecommunications company. Mr. Faugno holds a B.S. degree in accounting from Rutgers University and an Executive M.B.A. degree from Duke University.

108

Michael D. Perone co-founded our company in 2003 and serves as a member of our board of directors and as our chief marketing officer and executive vice president. Additionally, from April 2012 to November 2012, Mr. Perone served as a member of the office of the CEO. Prior to co-founding our company, he co-founded Affinity Path, Inc., a private label Internet service provider company, and served as its chief marketing officer from January 2000 to January 2002. From January 1999 to December 2000, Mr. Perone co-founded Spinway, Inc., an Internet service provider, and served as its chief visionary officer. From January 1996 to January 1999, he founded and served as president of Address.com, Inc., an email and Internet access provider.

We believe that Mr. Perone is qualified to serve as a member of our board of directors because of the perspective and experience he brings as our co-founder and because of his experience in founding and growing technology companies.

Michael D. Hughes has served as our senior vice president of worldwide sales since 2010. Prior to joining our company, he served as vice president of sales at Asempra Technologies, a provider of recovery solutions, from May 2007 to May 2009. From August 2004 to May 2007, Mr. Hughes served as the vice president of OEM sales and then as general manager and sales director of Northern Europe at McDATA Corporation, a storage networking and data infrastructure solutions company. From October 2002 to August 2004, he served as the director of business development at Invio Software, Inc., a storage software company. From August 1998 to October 2002, Mr. Hughes served in a variety of roles as at Marimba, Inc., a provider of systems management solutions, including director of business development and vice president of embedded systems. Mr. Hughes holds a B.S. degree in marketing from Miami University and an M.B.A. degree from the University of Michigan.

Diane C. Honda has served as our vice president and general counsel since October 2012. Prior to joining us, she served in several positions, including vice president, general counsel and secretary at Extreme Networks, Inc., a network infrastructure provider, from November 2004 to October 2012. From February 2003 to February 2004, Ms. Honda served as director of legal affairs at Riverstone Networks, a provider of networking switching hardware. From June 1987 to June 2001, she served in several positions, including managing attorney of the Financial Services Organization, at Hewlett-Packard Company, a computer hardware, software and services company. Ms. Honda holds B.S. degrees in computer science and industrial management from Carnegie Mellon University and a J.D. degree from Santa Clara University School of Law.

Board of Directors

Jeffry R. Allen has served as one of our directors since June 2007. Since May 2005, Mr. Allen has been a director at NetApp, Inc., a storage solutions company. Mr. Allen served in various roles at NetApp, including as its executive vice president of business operations, and its chief financial officer, from December 1996 to June 2005. From July 1990 through December 1996, Mr. Allen was responsible for various operations and manufacturing roles at SynOptics Communications, Inc., a computer communications company, and subsequently at Bay Networks, the company created via the merger of SynOptics and Wellfleet Communications, Inc. Previously, Mr. Allen had a 17-year career at Hewlett-Packard Company, where he served in a variety of financial, information systems, and financial management positions, including controller for the Information Networks Group. Mr. Allen holds a B.S. degree in accounting from San Diego State University.

We believe that Mr. Allen is qualified to serve as a member of our board of directors because of his financial and accounting expertise and his experience serving in a variety of finance positions at numerous public companies.

Dean M. Drako co-founded our company in 2003 and has served as a member of our board of directors since our inception. Mr. Drako served as our president and chief executive officer and chairman from our inception through July 2012. Since July 2012, he has served as president and chief executive officer of Eagle Eye Networks, Inc., a cloud-based video security company. Mr. Drako also founded IC Manage in 2003, a design and IP management company, where he continues to serve as president, chief executive officer and chairman.

109

Mr. Drako founded and served as president and chief executive officer of Boldfish, Inc., a provider of enterprise messaging solutions, from 1999 to 2001. Prior to this, Mr. Drako founded and served as president and chief executive officer of Design Acceleration, Inc., a maker of semiconductor design analysis and verification tools. Mr. Drako holds a B.S. degree in electrical engineering from the University of Michigan, Ann Arbor and an M.S. degree in electrical engineering from the University of California, Berkeley.

We believe that Mr. Drako is qualified to serve as a member of our board of directors because of the perspective and experience he brings as our co-founder and former chief executive officer, and in founding and growing technology companies.

James J. Goetz has served as one of our directors since July 2009. Since June 2005, Mr. Goetz has been a managing member of Sequoia Capital Operations, LLC, a venture capital firm. Mr. Goetz currently serves on the board of directors of Jive Software, Inc., a provider of social business software, Palo Alto Networks, Inc., a network security company, and a number of privately held companies. Mr. Goetz holds B.S. degrees in electrical and computer engineering from the University of Cincinnati and an M.S. degree in electrical engineering from Stanford University.

We believe that Mr. Goetz is qualified to serve as a member of our board of directors because of his experience in venture capital industry analyzing, investing in and serving on the boards of directors of technology companies, as well as his perspective as a representative of one of our largest stockholders.

David R. Golob has served as one of our directors since December 2005. Since September 2001, Mr. Golob has been a Partner at Francisco Partners, a private equity firm. Mr. Golob currently serves on the board of directors of several privately held companies. Mr. Golob holds an A.B. degree in chemistry from Harvard College and an M.B.A. degree from the Stanford Graduate School of Business.

We believe that Mr. Golob is qualified to serve as a member of our board of directors because of his experience in the private equity and venture capital industries analyzing, investing in and serving on the boards of directors of technology companies, as well as his perspective as a representative of one of our largest stockholders.

Zachary S. Levow co-founded our company in 2003 and serves as a member of our board of directors and as our chief technology officer and executive vice president. Prior to co-founding our company, he co-founded Affinity Path, Inc., a private label Internet service provider, and served as its chief technology officer from January 2001 to January 2002. From January 1999 to December 2001, Mr. Levow co-founded Spinway, Inc., an Internet service provider, and served as its chief technology officer. Mr. Levow holds B.S. degrees in mathematics/computer science from Carnegie Mellon University.

We believe that Mr. Levow is qualified to serve as a member of our board of directors because of his technical acumen and the experience he brings as our co-founder and chief technology officer.

Gordon L. Stitt has served as one of our directors since June 2007. Additionally, from April 2012 to November 2012, Mr. Stitt served as a member of the office of the CEO. Mr. Stitt co-founded Extreme Networks, Inc., a provider of high-performance Ethernet switching solutions for enterprises and data centers, and served as its president and chief executive officer from its founding in May 1996 to August 2006. Mr. Stitt holds a B.S. degree in electrical engineering and computer science from Santa Clara University and an M.B.A. degree from the Haas School of Business, U.C. Berkeley.

We believe that Mr. Stitt is qualified to serve as a member of our board of directors because of his experience in senior management positions at several technology companies and his knowledge of strategic and operational issues facing technology companies.

110

Our executive officers are appointed by our board of directors and serve until their successors have been duly elected and qualified. There are no family relationships among any of our directors or executive officers.

Code of Business Conduct and Ethics

Prior the completion of this offering, our board of directors will adopt a code of business conduct and ethics that applies to all of our employees, officers and directors, including our chief executive officer, chief financial officer and other principal executive and senior financial officers.

Board Composition

Our business and affairs are managed under the direction of our board of directors. The current composition of the board of directors is dictated by our voting agreement, although this agreement will terminate upon the completion of this offering. The number of directors will be fixed, following the completion of this offering, by our board of directors, subject to the terms of our amended and restated certificate of incorporation and amended and restated bylaws that will become effective immediately prior to the completion of this offering. Upon the completion of this offering, our board of directors will consist of                  directors.

In accordance with our amended and restated certificate of incorporation and our amended and restated bylaws, immediately after the completion of this offering, our board of directors will be divided into three classes with staggered three-year terms. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. Our directors will be divided among the three classes as follows:

• the Class I directors will be                     ,                      and                     , and their terms will expire at the annual meeting of stockholders to be held in 2014;

• the Class II directors will be                     ,                      and                     , and their terms will expire at the annual meeting of stockholders to be held in 2015; and

• the Class III directors will be                      and                     , and their terms will expire at the annual meeting of stockholders to be held in 2016.

Each director’s term continues until the election and qualification of his successor, or his earlier death, resignation, or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. This classification of our board of directors may have the effect of delaying or preventing changes in control of our company.

Director Independence

Our board of directors has undertaken a review of the independence of each director. Based on information provided by each director concerning his background, employment and affiliations, our board of directors determined that Messrs. Allen, Goetz, Golob and Stitt do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the applicable rules and regulations of the SEC and the listing requirements and rules of the             . In making these determinations, our board of directors considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director, and the transactions involving them described in the section titled “Certain Relationships and Related Party Transactions.”

111

Committees of the Board of Directors

Our board of directors has established an audit committee, a compensation committee and a nominating and corporate governance committee. The composition and responsibilities of each of the committees of our board of directors is described below. Members will serve on these committees until their resignation or until otherwise determined by our board of directors.

Audit Committee

Our audit committee is comprised of Messrs. Allen and Stitt, with Mr. Allen serving as chairman. Messrs. Allen and Stitt meet the requirements for independence of audit committee members under current              listing standards and SEC rules and regulations. Each member of our audit committee meets the financial literacy requirements of the current              listing standards. We expect to satisfy the member independence requirements for the audit committee prior to the end of the transition period provided under current              listing standards and SEC rules and regulations for companies completing their initial public offering. In addition, our board of directors has determined that Mr. Allen is an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the Securities Act. Our audit committee will, among other things:

• select a qualified firm to serve as the independent registered public accounting firm to audit our financial statements;

• help to ensure the independence and performance of the independent registered public accounting firm;

• discuss the scope and results of the audit with the independent registered public accounting firm, and review with management and the independent accountants, our interim and year end operating results;

• develop procedures for employees to submit concerns anonymously about questionable accounting or audit matters;

• review our policies on risk assessment and risk management;

• review related party transactions;

• obtain and review a report by the independent registered public accounting firm at least annually, that describes our internal quality-control procedures, any material issues with such procedures, and any steps taken to deal with such issues; and

• approve (or, as permitted, pre-approve) all audit and all permissible non-audit services, other than de minimis non-audit services, to be performed by the independent registered public accounting firm.

Our audit committee will operate under a written charter, to be effective prior to the completion of this offering, that satisfies the applicable rules of the SEC and the listing standards of the             .

Compensation Committee

Our compensation committee is comprised of Messrs. Goetz and Golob, with Mr. Golob serving as chairman. Messrs. Goetz and Golob meet the requirements for independence of compensation committee members under current              listing standards and SEC rules and regulations. We expect to satisfy the member independence requirements for the compensation committee prior to the end of the transition period provided under current              listing standards and SEC rules and regulations for companies completing their initial public offering. Additionally, each member of the compensation committee is also a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Exchange Act, and an outside director, as defined pursuant to Section 162(m) of the Internal Revenue Code, as amended. The purpose of our compensation committee is to discharge the responsibilities of our board of directors relating to compensation of our executive officers. Our compensation committee will, among other things:

• review, approve and determine, or make recommendations to our board of directors regarding, the compensation of our executive officers;

112

• administer our stock and equity incentive plans;

• review and approve and make recommendations to our board of directors regarding incentive compensation and equity plans; and

• establish and review general policies relating to compensation and benefits of our employees.

Our compensation committee will operate under a written charter, to be effective prior to the completion of this offering, that satisfies the applicable rules of the SEC and the listing standards of the             .

Nominating and Corporate Governance Committee

Our nominating and corporate governance committee is comprised of Messrs. Golob and Stitt, with Mr. Stitt serving as chairman. Messrs. Golob and Stitt meet the requirements for independence of nominating and corporate governance committee members under current              listing standards. We expect to satisfy the member independence requirements for the compensation committee prior to the end of the transition period provided under current              listing standards for companies completing their initial public offering. Our nominating and corporate governance committee will, among other things:

• identify, evaluate and select, or make recommendations to our board of directors regarding nominees for election to our board of directors and its committees;

• evaluate the performance and compensation of our board of directors and of individual directors;

• consider and make recommendations to our board of directors regarding the composition of our board of directors and its committees;

• review developments in corporate governance practices;

• evaluate the adequacy of our corporate governance practices and reporting; and

• develop and make recommendations to our board of directors regarding corporate governance guidelines and matters.

Our nominating and corporate governance committee will operate under a written charter, to be effective prior to the completion of this offering, that satisfies the applicable rules of the SEC and the listing standards of the             .

Compensation Committee Interlocks and Insider Participation

None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee.

Director Compensation

Prior to this offering, we had not implemented a formal policy with respect to compensation payable to our non-employee directors for service as directors. We did not provide cash compensation to our non-employee directors during our fiscal 2013 for service as directors. However, in fiscal 2013, we granted equity awards under our 2012 Equity Incentive Plan to Messrs. Allen and Stitt in the amount set forth below for service as directors. In addition to the foregoing amounts, we reimburse our directors for expenses associated with attending meetings of our board of directors and committees of our board of directors. The following table provides information regarding compensation of our directors for service as directors, for fiscal 2013. See “Executive

113

Compensation—2013 Summary Compensation Table” for information regarding compensation of our directors who served as named executive officers.

Name	Option  Awards ($)(1)
Jeffry R. Allen(2)		262,440
Dean M. Drako(3)		—
James J. Goetz(4)		—
David R. Golob(5)		—
William D. Jenkins, Jr.(6)		—
Zachary S. Levow(7)		—
Michael D. Perone(8)		—
Gordon L. Stitt(9)		262,440

(1) The amounts in the “Equity Awards” column do not reflect the actual economic value realized by the directors. They reflect the aggregate grant date fair value of equity awards granted during the fiscal year computed in accordance with FASB ASC Topic 718. The assumptions that we used to calculate these amounts are discussed in Note 7 to our consolidated financial statements appearing at the end of this prospectus. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.

(2) As of February 28, 2013, Mr. Allen had outstanding options to purchase a total of 150,000 shares of our common stock. On May 9, 2012, Mr. Allen was granted an option to purchase 150,000 shares of our common stock. Of the shares underlying the option, 28,125 were vested as of February 28, 2013.

(3) Mr. Drako served as our chief executive officer until his resignation, effective July 2012. See “Executive Compensation – 2013 Summary Compensation Table” for information regarding his compensation in this capacity during fiscal 2013.

(4) As of February 28, 2013, Mr. Goetz did not have outstanding options to purchase our common stock or RSUs.

(5) As of February 28, 2013, Mr. Golob did not have outstanding options to purchase our common stock or RSUs.

(6) Mr. Jenkins has served as our chief executive officer since November 2012. See “Executive Compensation – 2013 Summary Compensation Table.”

(7) Mr. Levow currently serves as our chief technology officer and executive vice president. All compensation paid to Mr. Levow in fiscal 2013 was in connection with his employment as our vice president and chief technology officer and not for his service as a member of our board of directors. As of February 28, 2013, Mr. Levow had outstanding options to purchase a total of 120,000 shares of our common stock and 112,500 unvested RSUs. On November 1, 2012, Mr. Levow was granted 120,000 RSUs, of which 7,500 were vested as of February 28, 2013. The aggregate grant date fair value of the RSUs granted to Mr. Levow in November 2012 was $506,400. On November 20, 2012, Mr. Levow was granted an option to purchase 120,000 shares of our common stock, of which 7,500 were vested as of February 28, 2013. The grant date fair value of the options granted to Mr. Levow in November 2012 was $220,092. See. “Certain Relationships and Related Party Transactions” for information regarding Mr. Levow’s compensation during fiscal 2013.

(8) Mr. Perone currently serves as our chief marketing officer and executive vice president and served in the office of the CEO from April 2012 to November 2012. See “Executive Compensation – 2013 Summary Compensation Table” for information regarding his compensation in this capacity during fiscal 2013.

(9) As of February 28, 2013, Mr. Stitt had outstanding options to purchase a total of 150,000 shares of our common stock. On May 9, 2012, Mr. Stitt was granted an option to purchase 150,000 shares of our common stock. Of the shares underlying the option, 28,125 were vested as of February 28, 2013. Mr. Stitt served in the office of the CEO from April 2012 to November 2012. See “Executive Compensation – 2013 Summary Compensation Table” for information regarding his compensation in this capacity during fiscal 2013.

In connection with this offering, we intend to implement a formal policy pursuant to which our non-employee directors will be eligible to receive equity awards and/or annual cash retainers as compensation for service on our board of directors and committees of our board of directors.

114

EXECUTIVE COMPENSATION

2013 Summary Compensation Table

The following table and narrative summarizes and explains the compensation that we paid to, or that was earned by, each person who acted as our principal executive officer, which included (i) William D. Jenkins, Jr., our current chief executive officer who joined us in November 2012, (ii) David Faugno, Michael D. Perone and Gordon L. Stitt, each of whom served in the office of the CEO from April 2012 to November 2012, and (iii) Dean M. Drako, our former chief executive officer who resigned in July 2012; as well as each of our other two most highly-compensated executive officers, Michael D. Hughes and Diane C. Honda, as required by Item 402(m)(2) of Regulation S-K during our fiscal year ended February 28, 2013. We refer to these officers in this prospectus as our named executive officers, or NEOs.

Name and Principal Position	Fiscal Year		Salary($)			Bonus($)(1)		Equity Awards($)*(2)			Non-Equity Incentive Plan Compensation ($)(3)		All Other Compensation ($)			Total($)
William D. Jenkins Jr.(4)		2013		114,198	(5)		116,000		16,709,316			—		1,950,000	(6)		18,889,514
Chief Executive Officer
David Faugno		2013		230,000			216,000		4,887,203	(7)		—		150,000	(8)		5,483,203
Chief Financial Officer, Vice President and Former Member of the Office of the CEO
Michael D. Perone		2013		250,000			250,000		726,492			—		150,000	(8)		1,376,492
Chief Marketing Officer, Executive Vice President and Former Member of the Office of the CEO
Michael D. Hughes		2013		220,000			63,171		524,880			178,742		—			986,793
Senior Vice President of Worldwide Sales
Diane C. Honda(9)		2013		85,586	(10)		—		275,115			—		—			360,701
Vice President, General Counsel and Secretary
Dean M. Drako(11)		2013		111,058	(12)		—		—			—		2,150,105	(13)		2,261,163
Former Chief Executive Officer
Gordon L. Stitt		2013		—			—		262,440	(14)		—		150,000	(8)		412,440	(14)
Former Member of the Office of the CEO

* The amounts in the “Equity Awards” column do not reflect the actual economic value realized by the NEOs.

(1) The amounts in the “Bonus” column for Messrs. Jenkins, Faugno and Perone reflect bonuses paid pursuant to discretionary bonus arrangements set forth in their respective NEO offer letter agreements. Mr. Jenkins’ bonus reflects a prorated portion of the bonus opportunity set forth in his offer letter agreement. The bonuses were determined by our compensation committee based on a subjective assessment of each individual’s achievement of individual performance objectives. The amount in the “Bonus” column for Mr. Hughes reflects his receipt of a payment in lieu of dividend related to his vested options. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—The Recapitalization.”

(2) These awards reflect the aggregate grant date fair value of equity awards granted during the fiscal year computed in accordance with FASB ASC Topic 718. The assumptions that we used to calculate these amounts are discussed in Note 7 to our consolidated financial statements appearing at the end of this prospectus. These awards vest over a period of four years. For additional information on these awards, see “Executive Compensation—Outstanding Equity Awards at Fiscal Year End.” As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.

(3) The amounts included in the “Non-Equity Incentive Plan Compensation” column represent sales commissions earned and payable.

(4) Mr. Jenkins has served as our chief executive officer since November 2012.

(5) Mr. Jenkins’ salary reflects the prorated portion of his annual base salary of $350,000 paid in fiscal 2013.

115

(6) The amount represents payments made to Mr. Jenkins pursuant to his offer letter to (i) reimburse him for the relocation bonus of $1,057,750 he was required to repay to his former employer and (ii) $892,250 to achieve a tax neutral position associated with the repayment of the relocation bonus.

(7) This amount includes (i) $4,866,953, the grant date fair value of RSUs granted to Mr. Faugno in May 2012 computed in accordance with FASB ASC Topic 718, and (ii) $20,250, the change in grant date fair value of 13,500 unvested options granted to Mr. Faugno in September 2008 which were accelerated in full in April 2012.

(8) From April 2012 to November 2012, Messrs. Faugno, Perone and Stitt served in the office of the CEO. In connection with their service as members of the office of the CEO, each of Messrs. Faugno, Perone and Stitt received a one-time cash payment of $150,000.

(9) Ms. Honda has served as our vice president and general counsel since October 2012.

(10) Ms. Honda’s salary reflects the prorated portion of her annual base salary of $215,000 paid in fiscal 2013.

(11) Mr. Drako served as our chief executive officer until his resignation, effective July 2012.

(12) Mr. Drako received $96,635 in salary prior to his resignation in July 2012. Mr. Drako received an additional lump sum of $14,423 for accrued personal time off in connection with his resignation in July 2012.

(13) Mr. Drako received a lump sum severance payment of $1,150,105 in July 2012, which included $25,105 for 12 months of COBRA premiums for Mr. Drako, in connection with his separation agreement and release in July 2012. Additionally, in October 2012, Mr. Drako received an additional $1,000,000 in connection with his supplemental agreement and release.

(14) All equity awards granted to Mr. Stitt in fiscal 2013 were in connection with his service as a member of our board of directors.

Named Executive Officer Employment Arrangements

William D. Jenkins, Jr.

In June 2013, we entered into an offer letter agreement with William D. Jenkins, Jr., our chief executive officer, which superseded all prior employment letter agreements he had with us. The offer letter agreement has no specific term and constitutes at-will employment. The offer letter agreement provides Mr. Jenkins with an annual base salary of $350,000 and an opportunity to earn an annual incentive bonus of up to 100% of his base salary.

In connection with Mr. Jenkins’ offer letter agreement, Mr. Jenkins was granted an option to purchase 2,760,000 shares of our common stock at an exercise price per share of $4.22, and 2,760,000 RSUs, each of which were granted pursuant to our 2012 Equity Incentive Plan on November 1, 2012. The aggregate grant date value of these awards is included under “Equity Awards” in the Summary Compensation Table above.

Mr. Jenkins’ offer letter agreement further provides that upon a termination of his employment for other than for cause (as such term is defined in his offer letter agreement), death or disability, Mr. Jenkins will be eligible to receive the following separation benefits, subject to him timely executing and not revoking a release of claims in a form acceptable to us:

• continued payment of severance at a rate equal to his then-current base salary for a period of 12 months;

• payment by us of up to 12 months of COBRA premiums to continue health insurance coverage for him and his eligible dependents; and

• accelerated vesting of outstanding equity awards that would have vested had he remained employed with us for an additional six months.

Mr. Jenkins’ offer letter agreement further provides that, upon a change in control (as such term is defined in his offer letter agreement), Mr. Jenkins will be eligible to receive:

• a lump sum payment equal to the base salary and bonus paid to him over the 12 months immediately preceding the date of the change in control; and

• accelerated vesting of all outstanding stock options and the RSU award that was granted to him on November 1, 2012.

116

In addition, pursuant to Mr. Jenkins’ offer letter agreement we agreed to reimburse him for the relocation bonus he was required to repay to his former employer in connection with the acceptance of our offer of employment.

David Faugno

In July 2012, we entered into an offer letter agreement with David Faugno, our chief financial officer and vice president, which superseded all prior employment letter agreements he had with us. The offer letter agreement has no specific term and constitutes at-will employment. The offer letter agreement provides Mr. Faugno with an annual base salary of $250,000 and an opportunity to earn an annual incentive bonus of up to 100% of his base salary.

Mr. Faugno’s offer letter agreement further provides that upon a termination of his employment other than for cause (as such term is defined in his offer letter agreement), including if the termination is a result of death or disability, or a resignation for good reason (as such term is defined in his offer letter agreement), Mr. Faugno will be eligible to receive the following separation benefits, subject to him timely executing and not revoking a release of claims in a form acceptable to us:

• continued payment of severance at a rate equal to his base salary and target bonus as then in effect for a period of 12 months;

• payment by us of up to 12 months of COBRA premiums to continue health insurance coverage for him and his eligible dependents; and

• accelerated vesting of outstanding equity awards that would have vested had he remained employed with us for an additional 12 months (or the greater of (x) 50% of the number of unvested shares subject to his then outstanding equity awards or (y) 12 months, in the event if the termination or resignation occurs within the 18 months following a change in control (as such term is defined in the offer letter agreement)).

Michael D. Perone

In July 2013, we entered into an offer letter agreement with Mr. Perone, our co-founder, executive vice president and chief marketing officer, which superseded all prior employment letter agreements he had with us. The offer letter agreement has no specific term and constitutes at-will employment. The offer letter agreement provides Mr. Perone with an annual base salary of $250,000 and an opportunity to earn an annual incentive bonus of up to 100% of his base salary.

Mr. Perone’s offer letter agreement further provides that upon a termination of his employment other than for cause (as such term is defined in the offer letter agreement) (including, if the termination is a result of death or disability) or a resignation for good reason (as such term is defined in the offer letter agreement), then Mr. Perone will be eligible to receive the following separation benefits, subject to him timely executing and not revoking a release of claims in a form acceptable to us:

• continued payment of severance at a rate equal to his base salary and target bonus as then in effect for a period of 12 months;

• payment by us for up to 12 months of COBRA premiums to continue health insurance coverage for him and his eligible dependents; and

• accelerated vesting of outstanding equity awards that would have vested had he remained employed with us for an additional 12 months (or the greater of (x) 50% of the number of unvested shares subject to his then outstanding equity awards or (y) 12 months, in the event if the termination or resignation occurs within the 18 months following a change in control (as such term is defined in the offer letter agreement)).

117

Michael D. Hughes

In August 2012, we entered into an offer letter agreement with Michael D. Hughes, our senior vice president of worldwide sales. The offer letter agreement has no specific term and constitutes at-will employment. The offer letter agreement provides Mr. Hughes with an annual base salary of $220,000 and an opportunity to earn an annual incentive bonus of up to $180,000.

Mr. Hughes’ offer letter agreement further provides that upon a termination of his employment other than for cause (as such term is defined in his offer letter agreement), death or disability, Mr. Hughes will be eligible to receive the following separation benefits, subject to him timely executing and not revoking a release of claims in a form acceptable to us:

• continued payment of severance at a rate equal to his base salary as then in effect for a period of six months (or 12 months if the termination occurs within the 12 months following a change in control (as such term is defined in his offer letter agreement));

• payment by us of up to six months of COBRA premiums to continue health insurance coverage for him and his eligible dependents (or 12 months if the termination occurs within the 12 months following a change in control); and

• accelerated vesting of outstanding equity awards that would have vested had he remained employed with us for an additional six months (or 12 months if the termination occurs within the 12 months following a change in control).

Diane C. Honda

In September 2012, we entered into an offer letter agreement with Diane C. Honda, our vice president, general counsel and secretary. The offer letter agreement has no specific term and constitutes at-will employment. The offer letter agreement provides Ms. Honda with an annual base salary of $215,000 and an opportunity to earn an annual incentive bonus of up to $96,000.

Ms. Honda’s offer letter agreement further provides that upon a termination of her employment other than for cause (as such term is defined in her offer letter agreement), death or disability, Ms. Honda will be eligible to receive the following separation benefits, subject to her timely executing and not revoking a release of claims in a form acceptable to us:

• continued payment of severance at a rate equal to her base salary as then in effect for a period of six months (or 12 months if the termination occurs within the 12 months following a change in control (as such term is defined in her offer letter agreement));

• payment by us of up to six months of COBRA premiums to continue health insurance coverage for her and her eligible dependents (or 12 months if the termination occurs within the 12 months following a change in control); and

• accelerated vesting of outstanding equity awards that would have vested had she remained employed with us for an additional six months (or 12 months if the termination occurs within the 12 months following a change in control).

Office of the President and Chief Executive Officer

From April 2012 until the appointment of Mr. Jenkins as our chief executive officer in November 2012, Messrs. Faugno, Perone and Stitt served together in the office of the CEO and collectively acted as our chief executive officer. As compensation for their service in such roles, each of Messrs. Faugno, Perone and Stitt received a one-time payment of $150,000.

118

Resignation of Dean M. Drako

In December 2005, we entered into a management retention agreement with Dean M. Drako, our former chief executive officer. In July 2012, Mr. Drako resigned from his employment, and in connection with his resignation we entered into a separation agreement and release with him which entitled him to the following:

• a lump sum payment of $500,000, which represented two times his then-current base salary;

• a lump sum payment of $625,000, which represents the agreed upon pro rata bonus amount earned and not yet paid plus an additional bonus amount; and

• a lump sum payment of $25,105, which is equivalent to 12 months of premiums for his COBRA coverage.

In October 2012, Mr. Drako executed a supplemental agreement and release under which he was entitled to the following:

• a lump sum payment of $1,000,000; and

• the right to participate in the redemption of common stock from our founders in connection with the Recapitalization.

Outstanding Equity Awards at Fiscal Year End

The following table provides information regarding outstanding equity awards held by our NEOs as of February 28, 2013.

	Grant Date		Option Awards									Stock Awards
Name			Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable			Option Exercise Price ($)		Option Expiration Date		Number of Shares of Stock that Have Not Vested			Market Value of Shares of Stock that Have Not Vested ($)
William D. Jenkins, Jr.		11/01/2012		5,924		88,860	(1)		4.22		10/31/2022		—			—
		11/01/2012		166,576		2,498,640	(1)		4.22		10/31/2022		—			—
		11/01/2012		—		—			—		—		2,587,500	(2)		10,919,250
David Faugno		05/18/2012		—		—			—		—		957,482	(3)		3,594,401
Michael D. Perone		11/01/2012		—		—			—		—		112,500	(4)		474,750
		11/20/2012		7,500		112,500	(5)		4.22		11/19/2022		—			—
Michael D. Hughes		11/30/2009		85,313		13,125	(6)		3.25		10/31/2019		—			—
		07/21/2010		64,583		35,417	(7)		3.54		7/20/2020		—			—
		05/18/2012		56,250		243,750	(8)		4.13		05/17/2012		—			—
Diane C. Honda		11/20/2012		—		150,000	(9)		4.22		11/19/2022		—			—
Dean M. Drako		—		—		—			—		—		—			—
Gordon L. Stitt(10)		05/18/2012		28,125		121,875	(11)		4.13		05/17/2012		—			—

(1) This option vests, subject to Mr. Jenkins’ continued role as a service provider to us, with respect to 1/16th of the total shares every three months, beginning on the three-month anniversary of November 5, 2012.

(2) The shares underlying these RSUs vest, subject to Mr. Jenkins’ continued role as a service provider to us, with respect to 1/16th of the total shares every three months, beginning on the three-month anniversary of November 5, 2012.

(3) The shares underlying these RSUs vest, subject to Mr. Faugno’s continued role as a service provider to us, with respect to 1/48th of the total shares every month, beginning on the one-month anniversary of May 18, 2012.

(4) The shares underlying these RSUs vest, subject to Mr. Perone’s continued role as a service provider to us, with respect to 1/48th of the total shares every month, beginning on the one-month anniversary of November 5, 2012.

(5) This option vests, subject to Mr. Perone’s continued role as a service provider to us, with respect to 1/48th of the total shares every month, beginning on the one-month anniversary of November 9, 2012.

(6) This option vests, subject to Mr. Hughes’ continued role as a service provider to us, with respect to 1/4th of the total shares on the one-year anniversary of November 30, 2009, with 1/48th of the total shares vesting monthly thereafter.

119

(7) This option vests, subject to Mr. Hughes’ continued role as a service provider to us, with respect to 1/4th of the total shares on the one-year anniversary of July 21, 2010, with 1/48th of the total shares vesting monthly thereafter.

(8) This option vests, subject to Mr. Hughes’ continued role as a service provider to us, with respect to 1/48th of the total shares every month, beginning on the one-month anniversary of May 9, 2012.

(9) This option vests, subject to Ms. Honda’s continued role as a service provider to us, with respect to 1/4th of the total shares on the one-year anniversary of October 8, 2012, with 1/48th of the total shares vesting monthly thereafter.

(10) All equity awards granted to Mr. Stitt in fiscal 2013 were in connection with his service as a member of our board of directors.

(11) This option vests, subject to Mr. Stitt’s continued role as a service provider to us, with respect to 1/48th of the total shares every month, beginning on the one-month anniversary of May 9, 2012.

Additionally, in January 2009, we granted Mr. Faugno an RSU award which vested upon the satisfaction of both a service condition satisfied over four years, and a liquidity condition. The liquidity condition required the occurrence of a qualifying event, defined as a change of control transaction or the effective date of an initial public offering. In April 2012, we amended the RSU grant to eliminate the liquidity condition and to accelerate the RSU award in full. Furthermore, in connection with the acceleration, we entered into an indemnification agreement with Mr. Faugno, pursuant to which we agreed to indemnify Mr. Faugno from certain taxes, penalties or interest incurred in connection with the amendment and acceleration of the RSU award.

Employee Benefit Plans

2012 Equity Incentive Plan

Our 2012 Equity Incentive Plan, or our 2012 Plan, was adopted by our board of directors on May 18, 2012 and approved by our stockholders on October 25, 2012. Our 2012 Plan was amended on November 1, 2012 by our board of directors and approved by our stockholders on November 29, 2012 to increase the maximum aggregate number of shares issuable under the 2012 Plan. Our 2012 Plan was further amended on July 26, 2013 by our board of directors and approved by our stockholders on             , with such amendments to become effective on the date of the completion of this offering. Our 2012 Plan permits the grant of incentive stock options, within the meaning of Section 422 of the Code, to our employees and any of our parent and subsidiary corporations’ employees, and the grant of nonstatutory stock options, stock appreciation rights, restricted stock and RSUs to our employees, directors and consultants and our parent and subsidiary corporations’ employees and consultants. As of May 31, 2013, we had options to purchase 10,726,791 shares of our common stock, with a weighted-average exercise price of $4.17 per share, and 3,508,828 RSUs outstanding under our 2012 Plan.

Authorized Shares. The maximum aggregate number of shares issuable under the 2012 Plan is              shares of our common stock, plus any shares subject to stock options or similar awards granted under our 2004 Stock Plan that expire or terminate without having been exercised in full or are forfeited to or repurchased by us, with the maximum number of shares to be added to the 2012 Plan equal to              shares. The number of shares available for issuance under the 2012 Plan will be increased on the first day of each fiscal year of ours beginning with the 2015 fiscal year, in an amount equal to the least of (i)              shares, (ii) (    %) of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year or (iii) such number of shares determined by our board of directors.

Shares may be authorized, but unissued, or reacquired shares of our common stock. Shares issued pursuant to awards under the 2012 Plan that expire, become unexercisable without being exercised in full, or are forfeited to or repurchased by us due to failure to vest, shares that are surrendered pursuant to an exchange program, as well as shares used to pay the exercise price of an award or to satisfy the tax withholding obligations related to an award, will become available for future grant under the 2012 Plan. In addition, to the extent that an award is paid out in cash rather than shares, such cash payment will not reduce the number of shares available for issuance under the 2012 Plan. With respect to stock appreciation rights, only shares actually issued pursuant to the award cease to be available under the 2012 Plan.

Plan Administration. Our board of directors or one or more committees appointed by our board of directors will administer the 2012 Plan. In the case of awards intended to qualify as “performance-based compensation”

120

within the meaning of Section 162(m) of the Code, the compensation committee will consist of two or more “outside directors” within the meaning of Section 162(m) of the Code. To the extent desirable to qualify transactions under the 2012 Plan as exempt under Rule 16b-3 of the Securities Exchange Act of 1934, as amended, the transactions will be structured to satisfy the requirements for exemption under Rule 16b-3.

Subject to the provisions of our 2012 Plan, the administrator has the power to determine the fair market value of a share of our common stock; the employees, directors, and consultants to whom awards may be granted; the number of shares of our common stock to be covered by each award under the 2012 Plan; the forms of award agreements for use under the 2012 Plan; the terms and conditions of an exchange program; and other terms, conditions and restrictions applicable to grants made under the 2012 Plan. The administrator has the power to construe and interpret the terms of the 2012 Plan and awards granted under the 2012 Plan. The administrator has the power to prescribe, amend, and rescind rules and regulations relating to the 2012 Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws or qualifying for favorable tax treatment under applicable foreign laws. The administrator may modify or amend each award, including but not limited to the discretionary authority to extend the post-termination exercisability period of awards and to extend the maximum term of an option to the extent prescribed by our 2012 Plan. The administrator may allow you to satisfy withholding tax obligations in a manner prescribed in the 2012 Plan. The administrator has the power to authorize any person to execute on behalf of us any instrument required to effect the grant of an award. The administrator may allow you to defer receipt of payment of cash or delivery of shares of common stock that otherwise would be due to you under an award pursuant to procedures that the administrator determines. The administrator’s decisions are final and binding on all holders of outstanding awards granted under the 2012 Plan.

Stock Options. The administrator may grant incentive and/or nonstatutory stock options under our 2012 Plan, provided that incentive stock options are granted only to our employees or employees of our parent or subsidiary corporations. The exercise price of all options must equal at least the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed 10 years. In addition, an incentive stock option held by a participant who owns more than 10% of the total combined voting power of all classes of our stock or the stock of our parent or subsidiary corporations as of immediately before the grant (a “10% holder”) may not have a term in excess of five years and must have an exercise price of at least 110% of the fair market value of our common stock on the grant date. The administrator will determine the methods of payment of the exercise price of an option, which may include cash, check, shares or other property acceptable to the administrator, as well as other types of consideration permitted by applicable law. Subject to the provisions of our 2012 Plan, the administrator determines the remaining terms of the options. After the termination of service of a participant, the participant may exercise his or her option, to the extent vested as of such date of termination, for the period of time stated in his or her option agreement. However, in no event may an option be exercised later than the expiration of its term. The specific terms of any grant of stock options will be set forth in an award agreement between us and the recipient.

Stock Appreciation Rights. Stock appreciation rights may be granted under our 2012 Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our common stock between the date of grant and the exercise date. Subject to the provisions of our 2012 Plan, the administrator determines the terms of stock appreciation rights, including when such rights vest and become exercisable and whether to settle such awards in cash or with shares of our common stock, or a combination thereof, except that the per share base price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100% of the fair market value per share on the date of grant. The specific terms of any grant of stock appreciation rights will be set forth in an award agreement between us and the recipient.

Restricted Stock. Restricted stock may be granted under our 2012 Plan. Restricted stock awards are grants of shares of our common stock that are subject to various restrictions, including restrictions on transferability and forfeiture provisions. Shares of restricted stock will vest and the restrictions on such shares will lapse, in accordance with terms and conditions established by the administrator. Such terms may include, among other

121

things, vesting upon the achievement of specific performance goals determined by the administrator and/or continued service to us. The administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Recipients of restricted stock awards generally will have voting and dividend rights with respect to such shares upon grant without regard to vesting, unless the administrator provides otherwise. Shares of restricted stock that do not vest for any reason will be forfeited by the recipient and will revert to us. The specific terms of any grant of restricted stock will be set forth in an award agreement between us and the recipient.

Restricted Stock Units. RSUs may be granted under our 2012 Plan. Each RSU granted is a bookkeeping entry representing an amount equal to the fair market value of one share of our common stock. The administrator determines the vesting criteria in its discretion which, depending on the extent to which they are met, will determine the number of shares to be paid out to the participant. The administrator may set vesting criteria based on achievement of company-wide, divisional, business unit or individual goals (including continued employment or service) applicable federal or state securities laws, or any other basis the administrator determines, in its discretion. After the grant of a RSU award, the administrator, in its sole discretion, may reduce or waive any vesting criteria for such award. The administrator determines in its sole discretion whether an award will be settled in shares, cash or a combination of both. The specific terms of any grant of RSUs will be set forth in an award agreement between us and the recipient.

Non-employee Directors. Our 2012 Plan provides that all non-employee directors will be eligible to receive all types of awards (except for incentive stock options) under the 2012 Plan. In connection with this offering, we intend to implement a formal policy pursuant to which our non-employee directors will be eligible to receive equity awards under the 2012 Plan. Our 2012 Plan provides that the number of shares subject to awards granted to a non-employee director in a given fiscal year will not be greater than             , increased to              in the fiscal year of his or her initial service as a non-employee director.

Transferability of Awards. Unless the administrator provides otherwise, awards may not be sold, pledged, assigned, hypothecated, or otherwise transferred in any manner other than by will or by the laws of descent and distribution. In addition, only the recipient of an award may exercise such an award during his or her lifetime.

Certain Adjustments. In the event of certain changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefits available under the 2012 Plan, the administrator will make adjustments to the number and class of shares that may be delivered under the 2012 Plan and/or the number, class and price of shares covered by each outstanding award and the numerical share limits contained in the 2012 Plan.

Merger or Change in Control, Dissolution or Liquidation. Our 2012 Plan provides that in the event of our merger with or into another corporation or other entity or our change in control, as defined under the 2012 Plan, each outstanding award will be treated as the administrator determines, except that if a successor corporation or its parent or subsidiary does not assume or substitute an equivalent award for any outstanding award, then such award will fully vest, all restrictions on such award will lapse, all performance goals or other vesting criteria applicable to such award will be deemed achieved at 100% of target levels and such award will become fully exercisable, if applicable, for a specified period prior to the transaction. The award will then terminate upon the expiration of the specified period of time. If the service of an outside director is terminated on or following a change in control, other than pursuant to a voluntary resignation, his or her awards will become fully vested and exercisable, and all performance goals or other vesting requirements will be deemed achieved at 100% of target levels. In the event of our proposed liquidation or dissolution, the administrator will notify participants as soon as practicable, and all awards will terminate immediately prior to the consummation of such proposed transaction.

Plan Amendment, Termination. The administrator has the authority to amend, suspend or terminate the 2012 Plan provided such action does not impair the existing rights of any participant. Our 2012 Plan will automatically terminate in 2022, unless we terminate it sooner.

122

2004 Stock Plan

Our board of directors adopted, and our stockholders approved, our 2004 Stock Plan, or 2004 Plan, in November 2004. Our 2004 Plan was terminated in connection with the adoption of our 2012 Plan in May 2012. Our 2004 Plan provided for the grant of both incentive stock options, which qualify for favorable tax treatment to their recipients under Section 422 of the Code, and nonstatutory stock options, as well as for the issuance of shares of restricted stock. The granting restrictions, exercise price and other terms for incentive stock options and nonstatutory stock options are similar to those under the 2012 Plan. In the event of a “change in control,” as defined in our 2004 Plan, our 2004 Plan provides that, unless the applicable option agreement provides otherwise, options held by current employees, directors and consultants will vest in full and become immediately exercisable if they are not assumed or substituted. As of May 31, 2013, we had options to purchase 4,453,917 shares of our common stock, with a weighted-average exercise price of $2.70 per share, outstanding under our 2004 Plan.

SignNow 2011 Equity Incentive Plan

The SignNow, Inc. 2011 Equity Incentive Plan, or the SignNow Plan, was assumed by us in connection with our acquisition of SignNow, Inc. in April 2013. The SignNow Plan provides that, in the event of a “corporate transaction,” as defined in the SignNow Plan, each outstanding award will be treated as the administrator determines. The other terms of this plan are similar to those of our 2004 Plan. The SignNow plan permitted the grant of incentive stock options, nonstatutory stock options and restricted stock. No further awards will be granted under the SignNow Plan but any options outstanding under the SignNow Plan remain subject to the terms of the SignNow Plan. As of May 31, 2013, we had options to purchase 174,574 shares of our common stock, with a weighted-average exercise price of $0.50 per share, outstanding under the SignNow Plan.

Purewire, Inc. 2008 Stock Incentive Plan

The Purewire, Inc. 2008 Stock Incentive Plan, or the Purewire Plan, was assumed by us in connection with our acquisition of Purewire, Inc. in October 2009. The terms of this plan are similar to those of our 2004 Plan, except that the Purewire plan also permitted the grant of stock appreciation rights and other stock-based awards. The Purewire Plan was terminated in October 2009, but any stock options and stock appreciation rights outstanding under the Purewire Plan remain subject to the terms of the Purewire Plan. As of May 31, 2013, we had options to purchase 16,390 shares of our common stock, with a weighted-average exercise price of $0.11 per share, outstanding under the Purewire Plan.

401(k) Plan

We maintain a tax-qualified retirement plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees are able to defer eligible compensation subject to applicable annual Code limits. We contribute a certain percentage of matching funds up to a limit of 1.25% (with a maximum payment of $1,000) or, if we meet certain performance objectives, up to a limit of 2.5% (with a maximum payment of $2,000). Employees’ pre-tax contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. Employees are immediately and fully vested in their contributions. The 401(k) plan is intended to be qualified under Section 401(a) of the Code with the 401(k) plan’s related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan.

123

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In addition to the compensation arrangements and indemnification arrangements, discussed, when required, above in the sections titled “Management” and “Executive Compensation” and the registration rights described below in the section titled “Description of Capital Stock—Registration Rights,” the following is a description of each transaction since January 1, 2010, below, and each currently proposed transaction in which:

• we have been or are to be a participant;

• the amounts involved exceeded or will exceed $120,000; and

• any of our directors, executive officers, or stockholders who own greater than 5% of our outstanding capital stock and their affiliates had or will have a direct or indirect material interest.

Recapitalization Transaction

In October 2012, we completed our Recapitalization pursuant to a recapitalization agreement entered into with certain entities affiliated with Francisco Partners and Sequoia Capital, our existing investors, and our founders, Dean M. Drako, Michael D. Perone and Zachary S. Levow. Pursuant to the recapitalization agreement, we (i) declared $130.0 million of cash dividends, (ii) issued and sold 22,727,913 shares of our Series B redeemable convertible preferred stock to entities affiliated with Francisco Partners and Sequoia Capital at a price per share of approximately $5.62, for an aggregate purchase price of $127.5 million and (iii) repurchased 22,727,913 shares of the our common stock from our founders and their affiliates at a price per share of approximately $5.62, for an aggregate repurchase price of $127.5 million. In December 2012, in lieu of dividends, we paid an aggregate of $2.8 million in bonus payments to our employees who held fully vested options to purchase our common stock at the time of the Recapitalization.

Dividend

In connection with the Recapitalization, we declared $130.0 million of cash dividends and distributed them to holders of our capital stock. The following directors, executive officers and greater than 5% stockholders, and their affiliates, received the approximate dividends payments listed below:

Directors, Executive Officers and 5% Stockholders (or Affiliates)	Total Dividend Received
Jeffry and Teri Allen Revocable Trust	$	530,479
Gordon L. Stitt		143,423
Dean M. Drako(1)		30,610,369
David Faugno		1,946,353
Zachary S. Levow(2)		26,813,377
Michael D. Perone(3)		26,813,377
Entities Affiliated with Francisco Partners		21,315,062
Entities Affiliated with Sequoia		14,722,329

(1) Includes dividend payments to Mr. Drako, the Dean M. Drako Living Trust and Mr. Drako’s mother.

(2) Includes dividend payments to Mr. Levow, the 2010 A Trust 1, The 2010 A Trust 2 and Mr. Levow’s spouse.

(3) Includes dividend payments to Mr. Perone, the 2010 Three Year Plan 3 Trust, the 2010 Four Year Plan 3 Trust, the 2010 Three Year Plan 9 Trust, the 2010 Four Year Plan 9 Trust and Mr. Perone’s spouse.

124

Preferred Stock Financing

In connection with the Recapitalization, and immediately following the payment of the dividend, we issued and sold an aggregate of 22,727,913 shares of our Series B redeemable convertible preferred stock at a per share purchase price of approximately $5.62, for an aggregate purchase price of $127.5 million. The participants in our preferred stock financing were entities affiliated with Francisco Partners and Sequoia Capital. David R. Golob, a member of our board of directors, is a partner at Francisco Partners and James J. Goetz, a member of our board of directors, is a managing member of Sequoia Capital. The following table presents the number of shares and the total purchase price paid by these entities:

Investors	Shares of Preferred Stock		Total Purchase Price
Francisco Partners III, L.P.		14,048,028	$	78,834,478
Francisco Partners Parallel Fund III, L.P.		156,918		880,590
Sequoia Capital Growth III Principals Fund		92,157		517,165
Sequoia Capital Growth Partners III		20,410		114,536
Sequoia Capital Growth Fund III		7,754,534		43,516,758
Sequoia Capital Franchise Partners		78,704		441,670
Sequoia Capital Franchise Fund		577,162		3,238,908

Redemption of Common Stock

In connection with the Recapitalization and immediately following the preferred stock financing, we redeemed 22,727,913 shares of our common stock from our founders and their affiliates at a per share purchase price of approximately $5.62, for an aggregate repurchase price of $127.5 million. In connection with this repurchase, the following of our directors, executive officers and greater than 5% stockholders, and their affiliates, received the payments listed below:

Directors, Executive Officers and 5% Stockholders (or Affiliates)	Shares of Common Stock		Total Repurchase Price
Dean M. Drako		2,250,000	$	12,626,511
Dean M. Drako Living Trust		2,250,000		12,626,511
Michael D. Perone		1,402,147		7,868,544
Zachary S. Levow		15,378,794		86,302,447
The Zach Levow 2010 Grantor Retained Annuity Trust		723,486		4,060,046
The Holly Levow 2010 Grantor Retained Annuity Trust		723,486		4,060,046

Loans to Executive Officers

In April 2012, we entered into a promissory note with David Faugno, our chief financial officer and vice president, under which we loaned Mr. Faugno approximately $1.7 million, at an interest rate per annum of 1.15%. The loan was secured against approximately all of Mr. Faugno’s outstanding shares of our common stock. We extended the loan to Mr. Faugno to allow him to meet certain tax obligations associated with the exercise of options to purchase our common stock and the vesting of RSUs. In April 2013, the promissory note was amended to loan an additional $235,000 to Mr. Faugno on the same terms and subject to the same security interest as described above. As of May 31, 2013, the outstanding balance of the loan was approximately $1.97 million, including principal of $1.94 million and accrued interest of $26,000. The loan was repaid in full by Mr. Faugno in July 2013, including all accrued interest.

Investors’ Rights Agreement

We are party to an Amended and Restated Investors’ Rights Agreement, or IRA, dated October 3, 2012, with our founders and their affiliates and the entities affiliated with Francisco Partners and Sequoia Capital who

125

hold shares of our redeemable convertible preferred stock, which provides, among other things, that the holders of our redeemable convertible preferred stock have certain rights relating to the registration of their shares of common stock upon conversion of their redeemable convertible preferred stock. See the section titled “Description of Capital Stock—Registration Rights” for additional information.

Right of First Refusal

Pursuant to our current bylaws, certain of our equity compensation plans and certain agreements with our stockholders, including a right of first refusal and co-sale agreement, we or our assignees have a right to purchase shares of our capital stock which stockholders propose to sell to other parties. This right will terminate upon the completion of this offering. Since January 1, 2010, we have waived or assigned our right of first refusal in connection with the sale of certain shares of our capital stock by certain of our executive officers.

Offer Letter Agreements

In addition to the offer letter agreements with William D. Jenkins, Jr., David Faugno, Michael D. Perone, Michael D. Hughes and Diane C. Honda discussed in the section titled “Executive Compensation—Executive Employment Arrangements,” we have entered into offer letter agreements with the following individual:

Zachary S. Levow

In July 2013, we entered into an offer letter agreement with Mr. Levow, our co-founder, executive vice president and chief technology officer, which superseded all prior employment letter agreements he had with us. The offer letter agreement has no specific term and constitutes at-will employment. The offer letter agreement provides Mr. Levow with an annual base salary of $250,000 and an opportunity to earn an annual incentive bonus of up to 100% of his base salary. Mr. Levow received $250,000 in salary and a $250,000 discretionary bonus in fiscal 2013. The bonus was paid pursuant to discretionary bonus arrangements set forth in his agreement.

Mr. Levow’s offer letter agreement further provides that upon a termination of his employment other than for cause (as such term is defined in the offer letter agreement) (including, if the termination is a result of death or disability) or a resignation for good reason (as such term is defined in the offer letter agreement), then Mr. Levow will be eligible to receive the following separation benefits, subject to him timely executing and not revoking a release of claims in a form acceptable to us:

• continued payment of severance at a rate equal to his base salary and target bonus as then in effect for a period of 12 months;

• payment by us for up to 12 months of COBRA premiums to continue health insurance coverage for him and his eligible dependents; and

• accelerated vesting of outstanding equity awards that would have vested had he remained employed with us for an additional 12 months (or the greater of (x) 50% of the number of unvested shares subject to his then outstanding equity awards or (y) 12 months, in the event if the termination or resignation occurs within the 18 months following a change in control (as such term is defined in the offer letter agreement)).

Other Transactions

In April 2012, we entered into an indemnification agreement with David Faugno in connection with the amendment and acceleration of an RSU grant to eliminate the liquidity condition and to accelerate the RSU award in full. See the narrative discussion in the section titled “Executive Compensation—Outstanding Equity Awards at Fiscal Year End” for additional information.

126

Limitation of Liability and Indemnification of Officers and Directors

Our amended and restated certificate of incorporation and amended and restated bylaws, each to be effective upon the completion of this offering, will provide that we will indemnify our directors and officers, and may indemnify our employees and other agents, to the fullest extent permitted by the Delaware General Corporation Law, which prohibits our amended and restated certificate of incorporation from limiting the liability of our directors for the following:

• any breach of the director’s duty of loyalty to us or to our stockholders;

• acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

• unlawful payment of dividends or unlawful stock repurchases or redemptions; and

• any transaction from which the director derived an improper personal benefit.

If Delaware law is amended to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law, as so amended. Our amended and restated certificate of incorporation does not eliminate a director’s duty of care and, in appropriate circumstances, equitable remedies, such as injunctive or other forms of non-monetary relief, remain available under Delaware law. This provision also does not affect a director’s responsibilities under any other laws, such as the federal securities laws or other state or federal laws. Under our amended and restated bylaws, we will also be empowered to purchase insurance on behalf of any person whom we are required or permitted to indemnify.

In addition to the indemnification required in our amended and restated certificate of incorporation and amended and restated bylaws, we will have entered into an indemnification agreement with each of our officers and directors prior to the completion of this offering. In addition, we plan to enter into indemnification agreements with each of our other directors, as well as our officers before the completion of this offering. These agreements will provide for the indemnification of our directors, officers and some employees for certain expenses and liabilities incurred in connection with any action, suit, proceeding or alternative dispute resolution mechanism, or hearing, inquiry or investigation that may lead to the foregoing, to which they are a party, or are threatened to be made a party, by reason of the fact that they are or were a director, officer, employee, agent or fiduciary of our company, or any of our subsidiaries, by reason of any action or inaction by them while serving as an officer, director, agent or fiduciary, or by reason of the fact that they were serving at our request as a director, officer, employee, agent or fiduciary of another entity. In the case of an action or proceeding by or in the right of our company or any of our subsidiaries, no indemnification will be provided for any claim where a court determines that the indemnified party is prohibited from receiving indemnification. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers.

The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders. A stockholder’s investment may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. There is no pending litigation or proceeding naming any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer.

127

Policies and Procedures for Related Party Transactions

Following the completion of this offering, the audit committee will have the primary responsibility for reviewing and approving or disapproving “related party transactions,” which are transactions between us and related persons in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person will be defined as a director, executive officer, nominee for director, or greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed year, and their immediate family members. Our audit committee charter will provide that the audit committee shall review and approve or disapprove any related party transactions. As of the date of this prospectus, we have not adopted any formal standards, policies or procedures governing the review and approval of related-party transactions, but we expect that our audit committee will do so in the future.

128

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of July 31, 2013, after giving effect to the automatic conversion of all outstanding shares of our redeemable convertible preferred stock into shares common stock, and as adjusted to reflect the sale of common stock in this offering, for:

• each of our current named executive officers;

• each of our current directors;

• all of our current directors and executive officers as a group;

• each person, or group of affiliated persons, known by us to beneficially own more than 5% of our common stock; and

• each selling stockholders.

We have determined beneficial ownership in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Except as indicated by the footnotes below, to our knowledge, the persons and entities named in the table below have sole voting and sole investment power with respect to all shares of common stock that they beneficially owned, subject to applicable community property laws.

Applicable percentage ownership prior to this offering is based on 137,422,643 shares of common stock outstanding at July 31, 2013, after giving effect to the conversion of all outstanding shares of redeemable convertible preferred stock into shares of common stock. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of such person, we deemed to be outstanding all shares of common stock subject to equity awards held by the person that are currently exercisable or exercisable within 60 days of July 31, 2013. We did not deem such shares outstanding, however, for the purpose of computing the percentage ownership of any other person.

Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Barracuda Networks, Inc., 3175 S. Winchester Blvd., Campbell, CA 95008.

Name of Beneficial Owner	Beneficial Ownership Prior to this Offering				Number of Shares Being Offered in the Offering	Beneficial Ownership After this Offering
	Number		Percent			Number	Percent
Named Executive Officers and Directors:
William D. Jenkins, Jr.(1)		880,193		*
David Faugno(2)		1,745,816		1.3
Michael D. Perone(3)		26,690,797		19.4
Dean M. Drako(4)		27,439,053		20.0
Michael D. Hughes(5)		279,688		*
Diane C. Honda		—		—
Gordon L. Stitt(6)		200,000		*
Jeffry R. Allen(7)		604,805		*
David R. Golob(8)		36,497,442		26.6
James J. Goetz(9)		23,920,410		17.4
Zachary S. Levow(10)		11,267,178		8.2
All directors and executive officers as a group (11 Persons)(11)		129,525,382		93.5
5% Stockholders:
Entities Affiliated with Francisco Partners(12)		36,497,422		26.6
Entities Affiliated with Sequoia Capital(13)		23,920,410		17.4
Selling Stockholders:

129

* Represents beneficial ownership of less than one percent (1%).

(1) Consists of (i) 190,193 shares held by Mr. Jenkins and (ii) 690,000 shares issuable upon the exercise of outstanding equity awards exercisable within 60 days of July 31, 2013.

(2) Consists of (i) 696,716 shares held by Mr. Faugno, (ii) 250,000 shares held by the Drop Trust 2012 Two Year Annuity Trust, of which Mr. Faugno is a grantor and a trustee, (iii) 250,000 shares held by the Drop Trust 2012 Three Year Annuity Trust, of which Mr. Faugno is a grantor and a trustee (iv) 250,000 shares held by the Rock Trust 2012 Two Year Annuity Trust, under which Mr. Faugno is a grantor and a trustee, (v) 250,000 shares held by the Rock Trust 2012 Three Year Annuity Trust, under which Mr. Faugno is a grantor and a trustee, and (vi) 49,100 shares issuable upon the exercise of outstanding equity awards exercisable within 60 days of July 31, 2013.

(3) Consists of (i) 16,051,209 shares held by Mr. Perone, (ii) 978,359 shares held by Michelle Perone, Mr. Perone’s spouse, (iii) 1,196,401 shares held by the 2010 Four Year Plan 3 Trust, of which Mr. Perone is a grantor and a trustee, (iv) 629,534 shares held by the 2010 Three Year Plan 3 Trust, of which Mr. Perone is a grantor and a trustee, (v) 1,196,401 shares held by the 2010 Four Year Plan 9 Trust, of which Mr. Perone is a grantor and a trustee, (vi) ,629,534 shares held by the 2010 Three Year Plan 9 Trust, of which Mr. Perone is a grantor and a trustee, (vii) 1,979,359 shares held by Perone 2012 Irrevocable Trust, of which Mr. Perone is a grantor and a trustee, (viii) 4,000,000 shares held by Consulting2 LLC, of which Mr. Perone is the managing member, and (ix) 30,000 shares issuable upon the exercise of outstanding equity awards exercisable within 60 days of July 31, 2013.

(4) Consists of (i) 12,279,524 shares held by the Drako Trust F, of which Mr. Drako is a grantor and a trustee, (ii) 6,904,595 shares held by the DD Investment Management Trust A, of which Mr. Drako is a grantor and a trustee, (iii) 7,184,934 shares held by the Dean M. Drako Living Trust, of which Mr. Drako is a grantor and a trustee, (iv) 720,000 shares held by the DD Investment Trust B, of which Mr. Drako is a grantor and a trustee, and (v) 350,000 shares held by the DD Investment Trust A, of which Mr. Drako is a grantor and a trustee.

(5) Consists of 279,688 shares issuable upon the exercise of outstanding equity awards exercisable within 60 days of July 31, 2013.

(6) Consists of (i) 150,000 shares held by Mr. Stitt and (ii) 50,000 shares issuable upon the exercise of outstanding equity awards exercisable within 60 days of July 31, 2013.

(7) Consists of (i) 554,805 shares held by the Jeffry R. & Teri Allen TTEES The Jeffry & Terri Allen REV TRT DTD 1/29/02, of which Mr. Allen is a grantor and trustee and (ii) 50,000 shares issuable upon the exercise of outstanding equity awards exercisable within 60 days of July 31, 2013.

(8) Consists of the shares listed in footnote 12 below, which are held by entities affiliated with Francisco Partners.

(9) Consists of the shares listed in footnote 13 below, which are held by entities affiliated with Sequoia Capital.

(10) Consists of (i) 9,991,558 shares held by Mr. Levow, (ii) 307,408 shares held by Holly Levow, Mr. Levow’s spouse, (iii) 469,106 shares held by The 2010 A Trust 1, of which Mr. Levow is a grantor and a trustee, (iv) 469,106 shares held by The 2010 A Trust 2, of which Mr. Levow is a grantor and a trustee, and (v) 30,000 shares issuable upon the exercise of outstanding equity awards exercisable within 60 days of July 31, 2013.

(11) Consists of (i) 128,346,594 shares beneficially owned by our current executive officers and directors and (ii) 1,178,788 shares issuable upon exercise of outstanding equity awards exercisable within 60 days of July 31, 2013.

(12) Consists of (i) 16,283 shares held by FP Annual Fund Investors, LLC (“FPAFI”), (ii) 22,167,059 shares held by Francisco Partners, L.P. (“FP I”), (iii) 109,154 shares held by Francisco Partners Fund A, L.P. (“FPFA”), (iv) 14,048,028 shares held by Francisco Partners III, L.P. (“FP III”) and (v) 156,918 shares held by Francisco Partners Parallel Fund III, L.P. (“FPPF III,” and collectively with FPAFI, FP I, FPFA and FP III, the “Francisco Funds”). Francisco Partners GP, LLC is the general partner of FP I and FPFA. Francisco Partners Management, LP is the manager of FPAFI. Francisco Partners GP III, L.P. is the general partner of FP III and FPPF III. With respect to the shares of our capital stock held by the Francisco Funds, each of David R. Golob, Dipanjan Deb, Keith Geeslin and Ezra Perlman may be deemed to share voting and investment power with respect to the shares held by the Francisco Funds. The address of each of the entities listed above is One Letterman Drive, Building C, Suite 410, San Francisco, CA 94129.

(13) Consists of (i) 540,629 shares held of record by Sequoia Capital Franchise Partners, L.P., (ii) 3,964,600 shares held of record by Sequoia Capital Franchise Fund, L.P., (iii) 18,641,936 shares held of record by Sequoia Capital Growth Fund III, L.P., (iv) 140,203 shares held of record by Sequoia Capital Growth Partners III, L.P. and (v) 633,042 shares held of record by Sequoia Capital Growth III Principals Fund, LLC. SCFF Management, LLC is the general partner of each of Sequoia Capital Franchise Fund, L.P. and Sequoia Capital Franchise Partners, L.P. The managing members of SCFF Management, LLC are Douglas Leone, Michael Moritz, Michael Goguen and Mark Stevens. As a result, and by virtue of the relationships described in this footnote, each of the managing members of SCFF Management, LLC may be deemed to share beneficial ownership of the shares held by Sequoia Capital Franchise Fund, L.P. and Sequoia Capital Franchise Partners, L.P. SCGF III Management, LLC is the general partner of Sequoia Capital Growth Fund III, L.P. and Sequoia Capital Growth Partners III, L.P. and is the managing member of Sequoia Capital Growth III Principals Fund, LLC. The managing members of SCGF III Management, LLC are Roelof Botha, J. Scott Carter, James J. Goetz, Michael Goguen, Douglas Leone and Michael Moritz. As a result, and by virtue of the relationships described in this footnote, each of the managing members of SCGF III Management, LLC may be deemed to share voting and investment power with respect to the shares held by Sequoia Capital Growth Fund III, L.P., Sequoia Capital Growth Partners III, L.P. and Sequoia Capital Growth III Principals Fund, LLC. The address of each of the entities identified in this footnote is 3000 Sand Hill Road, Suite 4-250, Menlo Park, California 94025.

130

DESCRIPTION OF CAPITAL STOCK

General

The following description summarizes the most important terms of our capital stock, as they are expected to be in effect upon the completion of this offering. We expect to adopt an amended and restated certificate of incorporation and amended and restated bylaws in connection with the completion of this offering, and this description summarizes the provisions that are expected to be included in such documents. This summary, which includes all of the material terms of our capital stock, is qualified in its entirety by the provisions of our amended and restated certificate of incorporation and amended and restated bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectus is a part. You should refer to our amended and restated certificate of incorporation, amended and restated bylaws and IRA, which are or will be included as exhibits to the registration statement of which this prospectus forms a part, and to the applicable provisions of Delaware law.

Immediately prior to the completion of this offering, our authorized capital stock will consist of              shares of common stock, $0.001 par value per share, and              shares of undesignated preferred stock, $0.001 par value per share. Our board of directors is authorized, without stockholder approval, except as required by the listing standards of the             , to issue additional shares of our capital stock.

As of May 31, 2013, we had outstanding 137,267,637 shares of common stock, held by approximately 224 stockholders of record, and no shares of preferred stock, assuming the automatic conversion of all outstanding shares of our redeemable convertible preferred stock into common stock effective immediately prior to the completion of this offering.

Common Stock

Dividend Rights

Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of our common stock are entitled to receive dividends out of funds legally available if our board of directors, in its discretion, determines to issue dividends and then only at the times and in the amounts that our board of directors may determine. In addition, the terms of our credit facility currently prohibits us from paying cash dividends on our common stock. See the section titled “Dividend Policy” for additional information.

Voting Rights

Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders. We have not provided for cumulative voting for the election of directors in our amended and restated certificate of incorporation. Our amended and restated certificate of incorporation establishes a classified board of directors that is divided into three classes with staggered three-year terms. Only the directors in one class will be subject to election by a plurality of the votes cast at each annual meeting of our stockholders, with the directors in the other classes continuing for the remainder of their respective three-year terms.

No Preemptive or Similar Rights

Our common stock is not entitled to preemptive rights, and is not subject to conversion, redemption or sinking fund provisions.

Right to Receive Liquidation Distributions

If we become subject to a liquidation, dissolution or winding-up, the assets legally available for distribution to our stockholders would be distributable ratably among the holders of our common stock and any participating preferred stock outstanding at that time, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights of and the payment of liquidation preferences, if any, on any outstanding shares of preferred stock.

131

Preferred Stock

Following this offering, our board of directors will be authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series, and to fix the designation, powers, preferences and rights of the shares of each series and any of its qualifications, limitations or restrictions, in each case without further vote or action by our stockholders. Our board of directors can also increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding, without any further vote or action by our stockholders. Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in our control of our company and might adversely affect the market price of our common stock and the voting and other rights of the holders of our common stock. We have no current plan to issue any shares of preferred stock.

Equity Awards

As of May 31, 2013, there were 15,371,672 outstanding options to purchase shares of common stock pursuant to our equity plans, with a weighted average exercise price of $3.70 per share, and 3,508,828 shares of common stock issuable upon the vesting of outstanding RSUs.

Registration Rights

After the completion of this offering, the holders of up to approximately 118,205,694 shares of our common stock (assuming the automatic conversion of all outstanding shares of our redeemable convertible preferred stock into shares of common stock upon the completion of this offering) will be entitled to rights with respect to the registration of their shares under the Securities Act. These registration rights are contained in our IRA and are described in additional detail below. We, along with our founders, and their assigns, and the holders of our redeemable convertible preferred stock are parties to the IRA. We entered into the IRA in connection with the Recapitalization in October 2012. These registration rights will expire (i) five years following the completion of this offering or (ii) with respect to any particular stockholder, when such stockholder is able to sell all of its shares pursuant to Rule 144 of the Securities Act in any 90-day period. We will pay the registration expenses (other than underwriting discounts, selling commissions and stock transfer taxes) of the holders of the shares registered pursuant to the registrations described below. In an underwritten offering, the managing underwriter, if any, has the right, subject to specified conditions, to limit the number of shares such holders may include. In connection with the completion of this offering, each stockholder that has registration rights agreed not to sell or otherwise dispose of any securities without the prior written consent of the underwriters for a period of 180 days after the date of this prospectus, subject to certain terms and conditions. See the section titled “Underwriters” for additional information.

Demand Registration Rights

Six months after the completion of this offering, the holders of at least 20% of the shares entitled to registration rights then outstanding can request that we register the offer and sale of their shares, provided that such registration of shares would result in an anticipated aggregate offering price to the public of at least $80 million. If we determine that it would be seriously detrimental to our stockholders to effect such a demand registration, we have the right to defer such registration, not more than once in any 12-month period, for a period of up to 90 days.

Piggyback Registration Rights

If we propose to register the offer and sale of any of our securities under the Securities Act, in connection with the public offering of such securities, our stockholders with registration rights will be entitled to certain

132

“piggyback” registration rights allowing the holders to include their shares in such registration, subject to certain marketing and other limitations. As a result, whenever we propose to file a registration statement under the Securities Act, other than with respect to a registration related to a company stock plan and a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of our common stock, the holders of these shares are entitled to notice of the registration and have the right, subject to limitations that the underwriters may impose on the number of shares included in the registration, to include their shares in the registration.

S-3 Registration Rights

Our stockholders with registration rights may make a written request that we register the offer and sale of their shares on Form S-3 if we are eligible to file a registration statement on Form S-3 so long as the request covers at least that number of shares with an anticipated aggregate offering price of at least $10 million. These stockholders may make an unlimited number of requests for registration on Form S-3; however, we will not be required to effect a registration on Form S-3 if we have effected two such registrations within the 12-month period preceding the date of the request. Additionally, if we determine that it would be seriously detrimental to our stockholders to effect such a registration, we have the right to defer such registration, not more than once in any 12-month period, for a period of up to 90 days.

Anti-Takeover Provisions

The provisions of Delaware law, our amended and restated certificate of incorporation and our amended and restated bylaws may have the effect of delaying, deferring or discouraging another person from acquiring control of our company. These provisions, which are summarized below, may have the effect of discouraging takeover bids. They are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their terms.

Delaware Law

We are governed by the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a public Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes mergers, asset sales or other transactions resulting in a financial benefit to the stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years of the date on which it is sought to be determined whether such person is an “interested stockholder,” did own, 15% or more of the corporation’s outstanding voting stock. These provisions may have the effect of delaying, deferring or preventing a change in our control.

Amended and Restated Certificate of Incorporation and Amended and Restated Bylaw Provisions

Our amended and restated certificate of incorporation and our amended and restated bylaws include a number of provisions that could deter hostile takeovers or delay or prevent changes in control of our management team, including the following:

• Board of Directors Vacancies. Our amended and restated certificate of incorporation and amended and restated bylaws will authorize only our board of directors to fill vacant directorships, including newly created seats. In addition, the number of directors constituting our board of directors will be permitted to be set only by a resolution adopted by a majority vote of our entire board of directors. These provisions would prevent a stockholder from increasing the size of our board of directors and then

133

gaining control of our board of directors by filling the resulting vacancies with its own nominees. This makes it more difficult to change the composition of our board of directors but promotes continuity of management.

• Classified Board. Our amended and restated certificate of incorporation and amended and restated bylaws will provide that our board is classified into three classes of directors. A third party may be discouraged from making a tender offer or otherwise attempting to obtain control of us as it is more difficult and time consuming for stockholders to replace a majority of the directors on a classified board of directors. See the section titled “Management—Board of Directors” for additional information.

• Stockholder Action; Special Meeting of Stockholders. Our amended and restated certificate of incorporation will provide that our stockholders may not take action by written consent, but may only take action at annual or special meetings of our stockholders. As a result, a holder controlling a majority of our capital stock would not be able to amend our amended and restated bylaws or remove directors without holding a meeting of our stockholders called in accordance with our amended and restated bylaws. Our amended and restated bylaws will further provide that special meetings of our stockholders may be called only by a majority of our board of directors, the chairman of our board of directors, our chief executive officer or our president, thus prohibiting a stockholder from calling a special meeting. These provisions might delay the ability of our stockholders to force consideration of a proposal or for stockholders controlling a majority of our capital stock to take any action, including the removal of directors.

• Advance Notice Requirements for Stockholder Proposals and Director Nominations. Our amended and restated bylaws will provide advance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders or to nominate candidates for election as directors at our annual meeting of stockholders. Our amended and restated bylaws will also specify certain requirements regarding the form and content of a stockholder’s notice. These provisions might preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders if the proper procedures are not followed. We expect that these provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.

• No Cumulative Voting. The Delaware General Corporation Law provides that stockholders are not entitled to the right to cumulate votes in the election of directors unless a corporation’s certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation and amended and restated bylaws will not provide for cumulative voting.

• Amendment of Charter Provisions. Any amendment of the above provisions in our amended and restated certificate of incorporation would require approval by holders of at least two-thirds of our then outstanding common stock.

• Issuance of Undesignated Preferred Stock. Our board of directors will have the authority, without further action by the stockholders, to issue up to              shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by our board of directors. The existence of authorized but unissued shares of preferred stock would enable our board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or other means.

• Choice of Forum. Our amended and restated certificate of incorporation will provide that a state or federal court located within the State of Delaware will be the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty by any director, officer or other employee, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, or any action asserting a claim against us that is governed by the internal affairs doctrine.

134

Transfer Agent and Registrar

Upon the completion of this offering, the transfer agent and registrar for our common stock will be                                       . The transfer agent’s address is             , and its telephone number is             .

Exchange Listing

We intend to apply to list our common stock on the              under the symbol “CUDA”.

135

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common stock, and we cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of our common stock for sale will have on the market price of our common stock prevailing from time to time. Future sales of our common stock in the public market, or the availability of such shares for sale in the public market, could adversely affect market prices prevailing from time to time. As described below, only a limited number of shares will be available for sale shortly after this offering due to contractual and legal restrictions on resale. Nevertheless, sales of our common stock in the public market after such restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market price at such time and our ability to raise equity capital in the future.

Following the completion of this offering, and after giving effect to the automatic conversion of all outstanding shares of redeemable convertible preferred stock which will occur upon the completion of this offering, based on the number of shares of our capital stock outstanding as of May 31, 2013, we will have a total of              shares of our common stock outstanding. Of these outstanding shares, all of the shares of common stock sold in this offering will be freely tradable, except that any shares purchased in this offering by our affiliates, as that term is defined in Rule 144 under the Securities Act, would only be able to be sold in compliance with the Rule 144 limitations described below.

The remaining outstanding shares of our common stock will be deemed “restricted securities” as defined in Rule 144. Restricted securities may be sold in the public market only if they are registered or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act, which rules are summarized below. In addition, holders of substantially all of our equity securities are subject to market stand-offs or have entered into or will enter into lock-up agreements with the underwriters under which they have agreed, subject to specific exceptions, not to sell any of our stock for at least 180 days following the date of this prospectus, as described below. As a result of these agreements and the provisions of our IRA described above under “Description of Capital Stock—Registration Rights,” subject to the provisions of Rule 144 or Rule 701, based on an assumed offering date of             , shares will be available for sale in the public market as follows:

• beginning on the date of this prospectus, the              shares of common stock sold in this offering will be immediately available for sale in the public market;

• beginning 181 days after the date of this prospectus,              additional shares of common stock will become eligible for sale in the public market, of which              shares will be held by affiliates and subject to the volume and other restrictions of Rule 144, as described below; and

• the remainder of the shares of common stock will be eligible for sale in the public market from time to time thereafter, subject in some cases to the volume and other restrictions of Rule 144, as described below.

Rule 144

In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell such shares without complying with the manner of sale, volume limitation, or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then such person is entitled to sell such shares without complying with any of the requirements of Rule 144.

136

In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon expiration of the lock-up agreements described above, within any three-month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of:

• 1% of the number of shares of common stock then outstanding, which will equal approximately              shares immediately after this offering; or

• the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

Rule 701

Rule 701 generally allows a stockholder who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of our company during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume limitation or notice provisions of Rule 144. Rule 701 also permits affiliates of our company to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. However, all holders of Rule 701 shares are required to wait until 90 days after the date of this prospectus before selling such shares pursuant to Rule 701.

Lock-Up Agreements and Market Stand-Off Provisions

We, the selling stockholders, all of our directors and officers, and the holders of substantially all of our common stock, or securities exercisable for or convertible into our common stock outstanding immediately prior to this offering have previously entered into market stand-off agreements with us or have agreed that, without the prior written consent of Morgan Stanley & Co. LLC on behalf of the underwriters, we and they will not, during the period ending 180 days after the date of this prospectus:

• offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock;

• enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock, whether any such transaction described in these first two bullets is to be settled by delivery of common stock or such other securities, in cash or otherwise; or

• in our case, file any registration statement with the Securities and Exchange Commission relating to the offering of and, in the case of a security holder, make any demand for or exercise any right with respect to, the registration of, any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock,

whether any such transaction described above is to be settled by delivery of common stock or such other securities, in cash or otherwise. This agreement is subject to certain exceptions as set forth in the section entitled “Underwriters.”

Registration Rights

On the date beginning 180 days after the date of this prospectus, our stockholders with registration rights, or their transferees, will be entitled to various rights with respect to the registration of these shares under the Securities Act. Registration of these shares under the Securities Act would result in these shares becoming fully tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by affiliates. See the section titled “Description of Capital Stock—Registration Rights” for additional information.

137

Registration Statements on Form S-8

Upon the completion of this offering, we intend to file a registration statement on Form S-8 under the Securities Act to register all of the shares of common stock issued or reserved for issuance under our 2012 Plan, 2004 Plan, SignNow Plan and Purewire Plan. Shares covered by this registration statement will be eligible for sale in the public market, upon the expiration or release from the terms of the lock-up agreements and subject to vesting of such shares.

138

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS

The following is a summary of the material U.S. federal income tax consequences to non-U.S. holders (as defined below) of the ownership and disposition of our common stock, but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended, or the Code, Treasury regulations promulgated thereunder, administrative rulings, and judicial decisions, all as of the date hereof. These authorities may be changed, possibly retroactively, so as to result in U.S. federal income tax consequences different from those set forth below.

This summary also does not address the tax considerations arising under the laws of any non-U.S., state or local jurisdiction, or under U.S. federal gift and estate tax laws, except to the limited extent set forth below. In addition, this discussion does not address tax considerations applicable to an investor’s particular circumstances or to investors that may be subject to special tax rules, including, without limitation:

• banks, insurance companies, or other financial institutions;

• persons subject to the alternative minimum tax or the Medicare contribution tax on net investment income;

• tax-exempt organizations;

• controlled foreign corporations, passive foreign investment companies, and corporations that accumulate earnings to avoid U.S. federal income tax;

• dealers in securities or currencies;

• traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

• persons that own, or are deemed to own, more than five percent of our capital stock (except to the extent specifically set forth below);

• certain former citizens or long-term residents of the United States;

• persons who hold our common stock as a position in a hedging transaction, “straddle,” “conversion transaction,” or other risk reduction transaction;

• persons who do not hold our common stock as a capital asset within the meaning of Section 1221 of the Code; or

• persons deemed to sell our common stock under the constructive sale provisions of the Code.

In addition, if a partnership or entity classified as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership. Accordingly, partnerships that hold our common stock, and partners in such partnerships, should consult their tax advisors.

You are urged to consult your tax advisor with respect to the application of the U.S. federal income tax laws to your particular situation, as well as any tax consequences of the purchase, ownership, and disposition of our common stock arising under the U.S. federal estate or gift tax rules or under the laws of any state, local, non-U.S., or other taxing jurisdiction or under any applicable tax treaty.

Non-U.S. Holder Defined

For purposes of this discussion, you are a non-U.S. holder if you are any holder other than:

• an individual citizen or resident of the United States (for tax purposes);

139

• a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United States or any political subdivision thereof;

• an estate whose income is subject to U.S. federal income tax regardless of its source; or

• a trust (x) whose administration is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (y) which has made an election to be treated as a U.S. person.

Distributions

We do not anticipate making any distributions on our common stock following the completion of this offering. However, if we do make distributions on our common stock, those payments will constitute dividends for U.S. tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed both our current and our accumulated earnings and profits, they will constitute a return of capital and will first reduce your basis in our common stock, but not below zero, and then will be treated as gain from the sale of stock.

Any dividend paid to you generally will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable income tax treaty. In order to receive a reduced treaty rate, you must provide us with an IRS Form W-8BEN or other appropriate version of IRS Form W-8 certifying qualification for the reduced rate. A non-U.S. holder of shares of our common stock eligible for a reduced rate of U.S. withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS. If the non-U.S. holder holds the stock through a financial institution or other agent acting on the non-U.S. holder’s behalf, the non-U.S. holder will be required to provide appropriate documentation to the agent, which then will be required to provide certification to us or our paying agent, either directly or through other intermediaries.

Dividends received by you that are effectively connected with your conduct of a U.S. trade or business (and, if an income tax treaty applies, such dividends that are attributable to a permanent establishment maintained by you in the U.S.), are includible in your gross income in the taxable year received, and are exempt from such withholding tax. In order to obtain this exemption, you must provide us with an IRS Form W-8ECI or other applicable IRS Form W-8 properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are taxed at the same graduated rates applicable to U.S. persons, net of certain deductions and credits, subject to an applicable income tax treaty providing otherwise. In addition, if you are a corporate non-U.S. holder, dividends you receive that are effectively connected with your conduct of a U.S. trade or business may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable income tax treaty.

Gain on Disposition of Common Stock

You generally will not be required to pay U.S. federal income tax on any gain realized upon the sale or other disposition of our common stock unless:

• the gain is effectively connected with your conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, the gain is attributable to a permanent establishment maintained by you in the United States);

• you are an individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met; or

• our common stock constitutes a U.S. real property interest by reason of our status as a “United States real property holding corporation,” or USRPHC, for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding your disposition of, or your holding period for, our common stock.

140

We believe that we are not currently and will not become a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of our other business assets, there can be no assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however, as long as our common stock is regularly traded on an established securities market, such common stock will be treated as U.S. real property interests only if you actually or constructively hold more than five percent of such regularly traded common stock at any time during the shorter of the five-year period preceding your disposition of, or your holding period for, our common stock.

If you are a non-U.S. holder described in the first bullet above, you will be required to pay tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates, and a corporate non-U.S. holder described in the first bullet above also may be subject to the branch profits tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty. If you are an individual non-U.S. holder described in the second bullet above, you will be required to pay a flat 30% tax on the gain derived from the sale, which tax may be offset by U.S. source capital losses for the year. You should consult any applicable income tax or other treaties that may provide for different rules.

Federal Estate Tax

Our common stock beneficially owned by an individual who is not a citizen or resident of the United States (as defined for U.S. federal estate tax purposes) at the time of their death will generally be includable in the decedent’s gross estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provides otherwise.

Backup Withholding and Information Reporting

Generally, we must report annually to the IRS the amount of dividends paid to you, your name and address, and the amount of tax withheld, if any. A similar report will be sent to you. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in your country of residence.

Payments of dividends or of proceeds on the disposition of stock made to you may be subject to information reporting and backup withholding at a current rate of 28% unless you establish an exemption, for example, by properly certifying your non-U.S. status on a Form W-8BEN or another appropriate version of IRS Form W-8. Notwithstanding the foregoing, backup withholding and information reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that you are a U.S. person.

Backup withholding is not an additional tax; rather, the U.S. income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund, or credit may generally be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner.

Foreign Accounts

A U.S. federal withholding tax of 30% may apply to dividends and the gross proceeds of a sale or other disposition of our common stock paid to a “foreign financial institution” (as specially defined under applicable rules), unless such institution enters into an agreement with the U.S. government to withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding the U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners). A U.S. federal withholding tax of 30% will also generally apply to dividends and the gross proceeds of a sale or other disposition of our common stock paid to a non-financial foreign entity unless such entity provides the withholding agent with a certification identifying the

141

direct and indirect U.S. owners of the entity. These withholding obligations with respect to payments of dividends on our common stock will not begin until July 1, 2014 and with respect to payments of the gross proceeds of a sale or other disposition of our common stock will not begin until January 1, 2017. Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of such taxes. An intergovernmental agreement between the United States and an applicable foreign country may modify the requirements described in this paragraph. Prospective investors are encouraged to consult with their own tax advisors regarding the possible implications of these rules on their investment in our common stock.

The preceding discussion of U.S. federal tax considerations is for general information only. It is not tax advice. Each prospective investor should consult its own tax advisor regarding the particular U.S. federal, state and local and non-U.S. tax consequences of purchasing, holding and disposing of our common stock, including the consequences of any proposed change in applicable laws.

142

UNDERWRITING

Under the terms and subject to the conditions contained in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and Merrill Lynch, Pierce Fenner & Smith Incorporated are acting as representatives, have severally agreed to purchase, and we and the selling stockholders have agreed to sell to them, severally, the number of shares indicated below:

Name	Number of Shares
Morgan Stanley & Co. LLC
J.P. Morgan Securities LLC
Merrill Lynch, Pierce, Fenner & Smith                  Incorporated
William Blair & Company, L.L.C.
Lazard Capital Markets LLC.
Pacific Crest Securities LLC
Total

The underwriters and the representatives are collectively referred to as the “underwriters” and the “representatives,” respectively. The underwriters are offering the shares of common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ over-allotment option described below. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased.

The underwriters initially propose to offer part of the shares of common stock directly to the public at the initial public offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $         a share under the initial public offering price. Any underwriter may allow a concession not in excess of $         a share to other underwriters or to certain dealers. After the initial offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the representative. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.

We and the selling stockholders have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to             additional shares of common stock at the initial public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of common stock as the number listed next to the underwriter’s name in the preceding table bears to the total number of shares of common stock listed next to the names of all underwriters in the preceding table.

143

The following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us and the selling stockholders. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase up to an additional             shares of our common stock.

	Total
	Per Share	No Exercise	Full Exercise
Public offering price	$	$	$
Underwriting discounts and commissions paid by:
Us
The selling stockholders
Proceeds, before expenses, to us
Proceeds, before expenses, to selling stockholders

The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $         million, which includes legal, accounting and printing costs and various other fees associated with the registration and listing of our common stock.

The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares of common stock offered by them.

We intend to apply to have our common stock quoted on             under the trading symbol “CUDA”.

We, the selling stockholders, all of our directors and officers, and the holders of substantially all of our common stock, or securities exercisable for or convertible into our common stock outstanding immediately prior to this offering have agreed that, without the prior written consent of Morgan Stanley & Co. LLC on behalf of the underwriters, we and they will not, during the period ending 180 days after the date of this prospectus.

• offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase lend or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or other securities convertible into or exercisable or exchangeable for common stock;

• enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock, whether any such transaction described in these first two bullets is to be settled by delivery of common stock or such other securities, in cash or otherwise; or

• in our case, file any registration statement with the SEC relating to the offering of and, in the case of a security holder, make any demand for or exercise any right with respect to, the registration of, any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock.

The foregoing may be waived by Morgan Stanley & Co. LLC in its sole discretion, in whole or in part, at any time with or without notice. The restrictions described in the immediately preceding paragraph shall not apply to:

• sales and transfers of shares of common stock pursuant to the underwriting agreement;

• transfers by a security holder of shares of common stock or any security convertible into or exercisable or exchangeable for common stock (i) to immediate family member of a security holder or to a trust, or other entity formed for estate planning purposes, formed for the direct or indirect benefit of an immediate family member, (ii) by bona fide gift, will or intestacy, (iii) if a security holder is a corporation, partnership or other business entity (A) to another corporation, partnership or other entity that controls, is controlled by or is under common control with such security holder or (B) as part of a disposition, transfer or distribution by such security holder to its limited partners or equity holders or (iv) if a security holder is a trust, to a trustor or beneficiary of the trust, provided that in the case of any

144

such transfer or distribution, (1) each transferee, trustee, donee or distributee shall sign and deliver a lock up agreement for the balance of the 180-day restricted period, (2) such transfer shall not involve a disposition of value, (3) in the case of any transfer or distribution pursuant clauses (i), (ii) or (iv) above, no filing under Section 16(a) of the Exchange Act reporting a reduction in beneficial ownership of shares of common stock shall be voluntarily made during the 180-day restricted period and if a security holder is required to file a report under Section 16(a) of the Exchange Act reporting a reduction in beneficial ownership of shares of common stock during the 180-day restricted period, the security holder shall include a statement in such report to the effect that such transfer is not a transfer for value and (4) in the case of any transfer or distribution pursuant to clause (iii) above, no filing under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of shares of common stock, shall be required or shall be voluntarily made during the 180-day restricted period;

• transfers by a security holder of shares of common stock or any securities convertible into common stock to us upon a vesting event of our securities or upon the exercise of options or warrants to purchase our securities, in each case on a “cashless” or “net exercise” basis or to cover tax withholding obligations of the security holder in connection with such vesting or exercise, provided if the security holder is required to file a report under Section 16(a) of the Exchange Act reporting a reduction in beneficial ownership of shares of common stock during the 180-day restricted period, the security holder shall include a statement in such report to the effect that the purpose of such transfer was to cover tax withholding obligations of the security holder in connection with such vesting or exercise;

• the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of common stock, provided that such plan does not provide for the transfer of common stock during the 180-day restricted period and to the extent a public announcement or filing under the Exchange Act, if any, is required of or voluntarily made by or on behalf of a security holder or us regarding the establishment of such plan, such announcement or filing shall include a statement to the effect that no transfer of common stock may be made under such plan during the 180-day restricted period;

• transfers by a security holder of shares of common stock or any security convertible into or exercisable or exchangeable for common stock to us, pursuant to agreements under which we have the option to repurchase such shares upon termination of service of a security holder;

• the conversion of our outstanding preferred stock into shares of our common stock, provided that such shares of common stock remain subject to the restrictions described above;

• transfers by a security holder of shares of common stock or any security convertible into or exercisable or exchangeable for common stock that occurs by operation of law, such as pursuant to a domestic order or in connection with a divorce settlement; provided that (i) such shares of common stock or securities remain subject to the restrictions described above, and (ii) if the security holder is required to file a report under Section 16(a) of the Exchange Act reporting a reduction in beneficial ownership of shares of common stock during the 180-day restricted period, the security holder shall include a statement in such report to the effect that such transfer occurred by operation of law, such as pursuant to a domestic order or in connection with a divorce settlement;

• the issuance by us of shares of common stock upon the exercise of an option or warrant or the conversion or vesting of a security outstanding on the date hereof;

• the issuance and grant by us of options, restricted stock, restricted stock units or other stock-based compensation pursuant to equity compensation plans in existence on the date of this prospectus and, in each case, described herein; provided that any recipients thereof enter into lock-up agreements with respect to the remaining 180-day restricted period or, in the case of the issuance of options, such options do not become exercisable during the 180-day restricted period;

• the sale or issuance of or entry into an agreement to sell or issue shares of common stock or securities convertible into or exercisable for common stock in connection with any (i) mergers, (ii) acquisition of

145

securities, businesses, property, technologies or other assets, (iii) joint ventures, (iv) strategic alliances, commercial relationships or other collaborations, (v) equipment leasing arrangements (vi) debt financing or (vii) the assumption of employee benefit plans in connection with mergers or acquisitions; provided, that the aggregate number of shares of common stock or securities convertible into or exercisable for common stock (on an as-converted or as-exercised basis, as the case may be) that we may sell or issue or agree to sell or issue shall not exceed         % of the total number of shares of our common stock issued and outstanding immediately following the completion of the transactions (determined on a fully-diluted basis and as adjusted for stock splits, stock dividends and other similar events after the date of this prospectus); and provided further, that each recipient of shares of common stock or securities convertible into or exercisable for common stock shall execute a lock-up agreement with respect to the remaining 180-day restricted period; and

• the filing of one or more registration statements with the Securities and Exchange Commission on Form S-8 with respect to shares of common stock issued or issuable under any equity compensation plan in effect on the date of this prospectus.

In order to facilitate our initial public offering of common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in our initial public offering. In addition, to stabilize the price of common stock, the underwriters may bid for, and purchase, shares of common stock in the open market. The underwriting syndicate also may reclaim selling concessions allowed to an underwriter or a dealer for distributing common stock in the offering, if the syndicate repurchases previously distributed common stock to cover syndicate short positions or to stabilize the price of common stock. These activities may raise or maintain the market price of common stock above independent market levels or prevent or retard a decline in the market price of the common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time. The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

We, the selling stockholders and the several underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.

A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in our initial public offering. The representatives may agree to allocate a number of shares of common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform,

146

various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses. During 2012, Morgan Stanley & Co. LLC provided financial advisory services to us in connection with the Recapitalization for which it received a customary fee.

In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments (directly, as collateral securing other obligations or otherwise). The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

In the ordinary course of business, we have sold, and may in the future sell, products or services to one or more of the underwriters or their respective affiliates in arms-length transactions on market competitive terms.

Lazard Frères & Co. LLC referred this transaction to Lazard Capital Markets LLC and will receive a referral fee from Lazard Capital Markets LLC in connection therewith.

Pricing of the Offering

Prior to our initial public offering, there has been no public market for our common stock. The initial public offering price will be determined by negotiations between us, the selling stockholders and the representatives of the underwriters. Among the factors considered in determining the initial public offering price were our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours. The estimated initial public offering price range set forth on the cover page of this preliminary prospectus is subject to change as a result of market conditions and other factors. Neither we nor the underwriters can assure investors that an active trading market for the shares will develop, or that after the offering the shares will trade in the public market at or above the initial public offering price.

Selling Restrictions

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Member State it has not made and will not make an offer of securities to the public in that Member State, except that it may, with effect from and including such date, make an offer of securities to the public in that Member State:

• at any time to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

• at any time to any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than €43,000,000 and (iii) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or

• at any time in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of the above, the expression an “offer of securities to the public” in relation to any securities in any Member State means the communication in any form and by any means of sufficient

147

information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in that Member State.

United Kingdom

This prospectus and any other material in relation to the shares described herein is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospective Directive (“qualified investors”) that also (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, or the Order, (ii) who fall within Article 49(2)(a) to (d) of the Order or (iii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”). The shares are only available to, and any invitation, offer or agreement to purchase or otherwise acquire such shares will be engaged in only with, relevant persons. This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this prospectus or any of its contents.

Hong Kong

The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571 Laws of Hong Kong) and any rules made thereunder.

Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (SFA), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the shares under Section 275 except: (i) to an institutional investor under Section 274 of the

148

SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (ii) where no consideration is given for the transfer; or (iii) by operation of law.

Japan

The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

Notice to Prospective Investors in Australia

No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission (“ASIC”), in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001 (the “Corporations Act”), and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.

Any offer in Australia of the shares may only be made to persons (the “Exempt Investors”) who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.

The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions.

This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.

Notice to Prospective Investors in Switzerland

The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (SIX) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

149

Neither this document nor any other offering or marketing material relating to the offering, the company, or the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, or the FINMA, and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or the CISA. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of the shares.

Notice to Prospective Investors in the Dubai International Financial Centre

This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority, or the DFSA. This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.

150

LEGAL MATTERS

Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto, California, which has acted as our counsel in connection with this offering, will pass upon the validity of the shares of common stock being offered by this prospectus. The underwriters have been represented by Fenwick & West LLP, Mountain View, California.

EXPERTS

The consolidated financial statements of Barracuda Networks, Inc. at February 29, 2012 and February 28, 2013, and for each of the three years in the period ended February 28, 2013, appearing in this prospectus and registration statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our common stock, we refer you to the registration statement, including the exhibits filed as a part of the registration statement. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has been filed. You may obtain copies of this information by mail from the Public Reference Section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549, at prescribed rates. You may obtain information on the operation of the public reference rooms by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements, and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov.

As a result of this offering, we will become subject to the information and reporting requirements of the Securities Exchange Act of 1934 and, in accordance with this law, will file periodic reports, proxy statements, and other information with the SEC. These periodic reports, proxy statements, and other information will be available for inspection and copying at the SEC’s public reference facilities and the website of the SEC referred to above. We also maintain a website at www.barracuda.com. Upon completion of this offering, you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on our website is not a part of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only.

151

BARRACUDA NETWORKS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Comprehensive Income (Loss)	F-5
Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit	F-6
Consolidated Statements of Cash Flows	F-9
Notes to Consolidated Financial Statements	F-10

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of Barracuda Networks, Inc.

We have audited the accompanying consolidated balance sheets of Barracuda Networks, Inc. as of February 29, 2012 and February 28, 2013, and the related consolidated statements of operations, comprehensive income (loss), redeemable convertible preferred stock and stockholders’ deficit and cash flows for each of the three years in the period ended February 28, 2013. Our audits also included the financial statement schedule listed at Item 16(b). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Barracuda Networks, Inc. at February 29, 2012 and February 28, 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended February 28, 2013, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

San Jose, California

July 29, 2013

F-2

BARRACUDA NETWORKS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	February 28/29,						May 31,			Pro forma Stockholders’ Equity as of May 31, 2013
	2012			2013			2013
							(unaudited)			(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	126,507		$	30,095		$	20,531
Marketable securities		2,276			1,550			1,422
Accounts receivable, net of allowance for doubtful accounts of $1,339, $1,252 and $1,287 (unaudited) as of February 29, 2012, February 28, 2013 and May 31, 2013, respectively		22,536			24,066			25,369
Inventories		5,416			5,138			5,501
Prepaid income taxes		2,157			1,120			3,535
Deferred costs		14,034			20,119			21,535
Deferred income taxes		30,794			26,158			26,157
Other current assets		2,904			3,216			3,690
Total current assets		206,624			111,462			107,740
Property and equipment		15,184			16,972			17,816
Deferred costs, noncurrent		15,220			19,351			21,021
Deferred income taxes, noncurrent		3,184			21,065			20,376
Other noncurrent assets		1,660			1,637			1,783
Intangible assets, net		13,597			7,983			12,198
Goodwill		28,430			33,778			35,615
Total assets	$	283,899		$	212,248		$	216,549
Liabilities, redeemable convertible preferred stock, and stockholders’ deficit
Current liabilities:
Accounts payable	$	9,566		$	12,756		$	9,298
Accrued payroll and related benefits		9,665			9,967			8,836
Other accrued liabilities		4,076			9,925			6,311
Deferred revenue		121,928			146,257			151,900
Deferred income taxes		—			132			132
Note payable		209			222			226
Total current liabilities		145,444			179,259			176,703
Long-term liabilities:
Deferred revenue, noncurrent		95,281			114,986			122,544
Deferred income taxes, non current		979			660			658
Note payable, noncurrent		5,086			4,872			4,812
Other long-term liabilities		4,682			4,537			4,556
Commitments and contingencies
Redeemable convertible preferred stock:
$0.001 par value; 31,500,000 shares authorized as of February 29, 2012; 52,878,666 shares authorized as of February 28, 2013 and May 31, 2013 (unaudited); 31,150,753 shares issued and outstanding as of February 29, 2012; 52,878,666 shares issued and outstanding as of February 28, 2013 and May 31, 2013 (unaudited); aggregate liquidation preference of $219,430 as of February 28, 2013 and May 31, 2013 (unaudited); no shares issued and outstanding pro forma (unaudited)		40,010			167,554			167,554		$	—
Stockholders’ deficit:
Common stock, $0.001 par value; 160,000,000 shares authorized; 101,427,783, 84,272,820, 84,388,971 and 137,267,637 shares issued and outstanding as of February 29, 2012, February 28, 2013, May 31, 2013 (unaudited) and pro forma (unaudited), respectively (including 54,760 shares subject to repurchase at February 29, 2012 and no shares subject to repurchase at February 28, 2013 and May 31, 2013)		101			84			84			137
Additional paid-in capital		13,378			23,024			25,311			192,812
Accumulated other comprehensive loss		(521	)		(1,112	)		(1,494	)		(1,494	)
Accumulated deficit		(19,219	)		(279,131	)		(281,535	)		(281,535	)
Total stockholders’ deficit controlling interest		(6,261	)		(257,135	)		(257,634	)		(90,080	)
Total stockholders’ deficit noncontrolling interest		(1,322	)		(2,485	)		(2,644	)		(2,644	)
Total stockholders’ deficit		(7,583	)		(259,620	)		(260,278	)	$	(92,724	)
Total liabilities, redeemable convertible preferred stock, and stockholders’ deficit	$	283,899		$	212,248		$	216,549

See accompanying notes.

F-3

BARRACUDA NETWORKS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Year Ended February 28/29,								Three Months Ended May 31,
	2011		2012			2013			2012			2013
									(unaudited)
Revenue:
Appliance	$	52,477	$	43,258		$	59,528		$	13,318		$	17,503
Subscription		89,655		117,662			139,403			32,691			38,774
Total revenue:		142,132		160,920			198,931			46,009			56,277
Cost of revenue		31,972		34,966			45,088			10,274			13,074
Gross profit		110,160		125,954			153,843			35,735			43,203
Operating expenses:
Research and development		23,979		27,824			35,167			7,656			10,842
Sales and marketing		69,963		84,885			102,329			24,027			28,836
General and administrative		13,021		14,428			28,777			6,420			6,678
Total operating expenses		106,963		127,137			166,273			38,103			46,356
Income (loss) from operations		3,197		(1,183	)		(12,430	)		(2,368	)		(3,153	)
Other income (expense), net		282		476			(839	)		(1,074	)		(457	)
Income (loss) before income taxes and noncontrolling interest		3,479		(707	)		(13,269	)		(3,442	)		(3,610	)
Provision (benefit) for income taxes		1,136		(453	)		(5,084	)		(902	)		(1,047	)
Consolidated net income (loss)		2,343		(254	)		(8,185	)		(2,540	)		(2,563	)
Net loss attributable to noncontrolling interest		620		859			794			206			159
Net income (loss) attributable to Barracuda Networks, Inc.	$	2,963	$	605		$	(7,391	)	$	(2,334	)	$	(2,404	)
Net income (loss) attributable to common stockholders (Note 1)	$	2,281	$	466		$	(9,203	)	$	(2,334	)	$	(2,404	)
Net income (loss) per share attributable to common stockholders:
Basic	$	0.02	$	0.00		$	(0.10	)	$	(0.02	)	$	(0.03	)
Diluted	$	0.02	$	0.00		$	(0.10	)	$	(0.02	)	$	(0.03	)
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
Basic		100,890		101,488			96,094			101,385			84,301
Diluted		134,943		136,066			96,094			101,385			84,301
Pro forma net loss per share attributable to common stockholders:
Basic and diluted						$	(0.05	)				$	(0.02	)
Pro forma weighted-average shares outstanding used to compute net loss per share attributable to common stockholders:
Basic and diluted							135,461						137,180

See accompanying notes.

F-4

BARRACUDA NETWORKS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

	Year Ended February 28/29,								Three Months Ended May 31,
	2011		2012			2013			2012			2013
									(unaudited)
Net income (loss) attributable to Barracuda Networks, Inc.	$	2,963	$	605		$	(7,391	)	$	(2,334	)	$	(2,404	)
Other comprehensive income, net of tax:
Change in net foreign currency translation adjustment		411		(85	)		(511	)		(958	)		(315	)
Available-for-sale investments:
Change in net unrealized gains (losses) (net of tax effect of $80, $519, $40, $484, $41)		130		(846	)		(66	)		(790	)		(67	)
Less: reclassification adjustment for net (gains) losses included in net income (net of tax effect of $0, $328, $8, $0, $0)		—		528			(14	)		—			—
Net change		130		(318	)		(80	)		(790	)		(67	)
Other comprehensive income (loss)		541		(403	)		(591	)		(1,748	)		(382	)
Comprehensive income (loss) attributable to Barracuda Networks, Inc.	$	3,504	$	202		$	(7,982	)	$	(4,082	)	$	(2,786	)

See accompanying notes.

F-5

BARRACUDA NETWORKS, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(in thousands, except share data)

					Stockholders’ Deficit
	Series A Redeemable Convertible Preferred Stock				Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Deficit Controlling Interest			Total Stockholders’ Deficit Noncontrolling Interest			Total Stockholders’ Deficit
	Shares		Amount		Shares			Amount
Balance at February 28, 2010		30,150,753	$	40,010		100,679,549		$	101	$	10,421		$	(659	)	$	(22,787	)	$	(12,924	)	$	2,242		$	(10,682	)
Issuance of common stock		—		—		581,587			—		919			—			—			919			—			919
Repurchase of common stock		—		—		(15,000	)		—		(30	)		—			—			(30	)		—			(30	)
Stock-based compensation expense		—		—		—			—		1,976			—			—			1,976			—			1,976
Excess tax benefits from employee stock-based option plan		—		—		—			—		14			—			—			14			—			14
Noncontrolling interest		—		—		—			—		(24	)		—			—			(24	)		(135	)		(159	)
Change in unrealized gain on available-for-sale securities, net of tax effect		—		—		—			—		—			130			—			130			—			130
Foreign currency translation adjustment		—		—		—			—		—			411			—			411			94			505
Net income (loss)		—		—		—			—		—			—			2,963			2,963			(620	)		2,343
Balance at February 28, 2011		30,150,753		40,010		101,246,136			101		13,276			(118	)		(19,824	)		(6,565	)		1,581			(4,984	)
Issuance of common stock		—		—		438,550			—		1,462			—			—			1,462			—			1,462
Employee loans for purchase of stock		—		—		—			—		(255	)		—			—			(255	)		—			(255	)
Repurchase of common stock		—		—		(256,903	)		—		(1,186	)		—			—			(1,186	)		—			(1,186	)
Stock-based compensation expense		—		—		—			—		1,871			—			—			1,871			—			1,871
Excess tax benefits from employee stock-based option plan		—		—		—			—		82			—			—			82			—			82
Noncontrolling interest		—		—		—			—		(1,872	)		—			—			(1,872	)		(2,114	)		(3,986	)
Change in unrealized gain on available-for-sale securities, net of tax effect		—		—		—			—		—			(318	)		—			(318	)		—			(318	)
Foreign currency translation adjustment		—		—		—			—		—			(85	)		—			(85	)		70			(15	)
Net income (loss)		—		—		—			—		—			—			605			605			(859	)		(254	)
Balance at February 29, 2012		30,150,753	$	40,010		101,427,783		$	101	$	13,378		$	(521	)	$	(19,219	)	$	(6,261	)	$	(1,322	)	$	(7,583	)

See accompanying notes.

F-6

BARRACUDA NETWORKS, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT (CONTINUED)

(in thousands, except share data)

									Stockholders’ Deficit
	Series A Redeemable Convertible Preferred Stock				Series B Redeemable Convertible Preferred Stock				Common Stock						Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Deficit Controlling Interest			Total Stockholders’ Deficit Noncontrolling Interest			Total Stockholders’ Deficit
	Shares		Amount		Shares		Amount		Shares			Amount
Balance at February 29, 2012		30,150,753	$	40,010		—	$	—		101,427,783		$	101		$	13,378		$	(521	)	$	(19,219	)	$	(6,261	)	$	(1,322	)	$	(7,583	)
Issuance of common stock		—		—		—		—		5,589,950			6			8,745			—			—			8,751			—			8,751
Repurchase of common stock		—		—		—		—		(22,744,913	)		(23	)		(5,069	)		—			(122,521	)		(127,613	)		—			(127,613	)
Issuance of Series B Preferred Stock		—		—		22,727,913		125,732		—			—			—			—			—			—			—			—
Employee loans for purchase of stock																(2,861	)								(2,861	)					(2,861	)
Accretion of preferred stock to redemption value				—				1,812								(1,812	)								(1,812	)					(1,812	)
Stock-based compensation expense		—		—		—		—		—			—			8,787			—			—			8,787			—			8,787
Excess tax benefits from employee stock-based option plan		—		—		—		—		—			—			1,687			—			—			1,687			—			1,687
Cash dividend declared		—		—		—		—		—			—			—			—			(130,000	)		(130,000	)		—			(130,000	)
Noncontrolling interest		—		—		—		—		—			—			169			—			—			169			(369	)		(200	)
Change in unrealized gain on available-for-sale securities, net of tax effect		—		—						—			—			—			(80	)		—			(80	)		—			(80	)
Foreign currency translation adjustment		—		—		—		—		—			—			—			(511	)		—			(511	)		—			(511	)
Net loss		—		—		—		—		—			—			—			—			(7,391	)		(7,391	)		(794	)		(8,185	)
Balance at February 28, 2013		30,150,753	$	40,010		22,727,913	$	127,544		84,272,820		$	84		$	23,024		$	(1,112	)	$	(279,131	)	$	(257,135	)	$	(2,485	)	$	(259,620	)

F-7

BARRACUDA NETWORKS, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT (CONTINUED)

(in thousands, except share data)

									Stockholders’ Deficit
	Series A Redeemable Convertible Preferred Stock				Series B Redeemable Convertible Preferred Stock				Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Deficit Controlling Interest			Total Stockholders’ Deficit Noncontrolling Interest			Total Stockholders’ Deficit
	Shares		Amount		Shares		Amount		Shares			Amount
Balance at February 28, 2013		30,150,753		40,010		22,727,913		127,544		84,272,820			84	$	23,024			(1,112	)		(279,131	)		(257,135	)		(2,485	)		(259,620	)
Issuance of common stock (unaudited)		—		—		—		—		148,911			—		(458	)		—			—			(458	)		—			(458	)
Repurchase of common stock (unaudited)		—		—		—		—		(32,760	)		—		(138	)		—			—			(138	)		—			(138	)
Employee loans for purchase of stock (unaudited)		—		—		—		—		—					(14	)		—			—			(14	)		—			(14	)
Stock-based compensation expense (unaudited)		—		—		—		—		—			—		2,497			—			—			2,497			—			2,497
Excess tax benefits from employee stock-based option plan (unaudited)		—		—		—		—		—			—		11			—			—			11			—			11
Repayment of employee loans (unaudited)		—		—		—		—		—			—		260			—			—			260			—			260
Options assumed in acquisition (unaudited)		—		—		—		—		—			—		129			—			—			129						129
Change in unrealized gain on available-for-sale securities, net of tax effect (unaudited)		—		—		—		—		—			—		—			(67	)		—			(67	)		—			(67	)
Foreign currency translation adjustment (unaudited)		—		—		—		—		—			—		—			(315	)		—			(315	)		—			(315	)
Net loss (unaudited)		—		—		—		—		—			—		—			—			(2,404	)		(2,404	)		(159	)		(2,563	)
Balance at May 31, 2013 (unaudited)		30,150,753	$	40,010		22,727,913	$	127,544		84,388,971		$	84	$	25,311		$	(1,494	)	$	(281,535	)	$	(257,634	)	$	(2,644	)	$	(260,278	)

See accompanying notes.

F-8

BARRACUDA NETWORKS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended February 28/29,									Three Months Ended May 31,
	2011			2012			2013			2012			2013
										(unaudited)
Operating activities
Consolidated net income (loss)	$	2,343		$	(254	)	$	(8,185	)	$	(2,540	)	$	(2,563	)
Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:
Depreciation and amortization		7,653			8,124			8,333			1,998			2,245
Stock-based compensation expense		1,976			1,871			8,787			3,241			2,497
Excess tax benefits from employee stock-based option plan		(14	)		(82	)		(1,687	)		(1,687	)		(11	)
Loss on disposal of property and equipment		—			240			60			43			14
(Gain) loss on sale of marketable securities		—			(852	)		25			—			—
Deferred income taxes		(8,338	)		(11,367	)		(13,374	)		482			47
Changes in operating assets and liabilities:
Accounts receivable		(1,699	)		(4,025	)		(1,582	)		359			(1,200	)
Inventory		(588	)		(1,219	)		278			(14	)		(363	)
Income taxes, net		1,701			2,210			4,403			(1,446	)		(4,746	)
Deferred costs		(5,063	)		(10,931	)		(10,214	)		(3,649	)		(3,086	)
Other current assets		609			150			(60	)		(763	)		(513	)
Other noncurrent assets		(576	)		(172	)		(61	)		(840	)		(207	)
Accounts payable		3,081			2,085			3,206			(2,301	)		(3,490	)
Accrued payroll and related benefits		(165	)		443			2,791			2,130			(1,119	)
Other accrued liabilities		(1,772	)		1,274			2,349			896			(554	)
Other long-term liabilities		(4	)		(200	)		114			10			21
Deferred revenue		37,765			56,631			44,192			14,276			13,222
Net cash provided by operating activities		36,909			43,926			39,375			10,195			194
Investing activities
Purchase of marketable securities		—			(1,666	)		—			—			—
Proceeds from sales of marketable securities		6,000			1,189			575			—			—
Purchase of investment in nonmarketable equity security		—			(750	)		—			—			—
Purchase of property and equipment		(2,487	)		(8,510	)		(4,722	)		(609	)		(1,663	)
Purchase of intangible assets		(275	)		(366	)		—			—			—
Business combinations, net of cash acquired		(287	)		(1,017	)		(4,357	)		(4,356	)		(6,176	)
Net cash provided by (used in) investing activities		2,951			(11,120	)		(8,504	)		(4,965	)		(7,839	)
Financing activities
Proceeds from issuance of common stock		349			161			2,203			1,740			(472	)
Dividends paid		—			—			(128,385	)		—			(1,419	)
Proceeds from issuance of Series B stock, net of issuance costs		—			—			125,732			—
Issuance costs on line of credit		—			—			(313	)		—			—
Repurchase of common stock		(30	)		(1,186	)		(127,613	)		(69	)		(138	)
Excess tax benefits from employee stock-based option plan		14			82			1,687			1,687			11
Repayment of employee loans		—			—			—			—			260
Payments under capital lease and long-term debt		(193	)		(81	)		(222	)		(28	)		(56	)
Repayment of note payable		(1,431	)		(38	)		—			—			—
Purchase of noncontrolling interest		(159	)		(3,986	)		(200	)		—			—
Net cash (used in) provided by financing activities		(1,450	)		(5,048	)		(127,111	)		3,330			(1,814	)
Effect of exchange rate changes on cash and cash equivalents		37			7			(172	)		(185	)		(105	)
Net increase (decrease) in cash and cash equivalents		38,447			27,765			(96,412	)		8,375			(9,564	)
Cash and cash equivalents at beginning of period		60,295			98,742			126,507			126,507			30,095
Cash and cash equivalents at end of period	$	98,742		$	126,507		$	30,095		$	134,882		$	20,531
Supplemental cash flow disclosures
Cash paid during the period for:
Interest paid	$	21		$	36		$	485		$	82		$	118
Income taxes, net of tax refunds	$	7,384		$	8,142		$	3,408		$	153		$	3,615
Noncash financing and investing activities:
Issuance of shares in business combination	$	287		$	—		$	3,528		$	—		$	—
Assumption of note payable in connection with the purchase of land and buildings	$	—		$	5,332		$	—		$	—		$	—
Accretion of issuance costs	$	—		$	—		$	1,812		$	—		$	—

See accompanying notes.

F-9

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

1. Organization and Summary of Significant Accounting Policies

Nature of Operations

Barracuda Networks, Inc., also referred to in this report as “we,” “our” or “us,” headquartered in Campbell, California, designs and delivers powerful yet easy-to-use security and storage solutions. We offer cloud-connected solutions that help our customers address security threats, improve network performance and protect and store their data. Our solutions are designed to simplify IT operations for our customers, allowing them to enhance their return on technology investment. We refer to the fiscal years ended February 28, 2011, February 29, 2012 and February 28, 2013 as fiscal 2011, fiscal 2012 and fiscal 2013, respectively.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of Barracuda Networks, Inc. and our wholly and majority-owned subsidiaries. All significant intercompany accounts and transactions are eliminated.

Unaudited Interim Consolidated Financial Information

The accompanying interim consolidated balance sheet as of May 31, 2013, the consolidated statements of operations, comprehensive loss and cash flows for the three month periods ended May 31, 2012 and 2013, the consolidated statement of redeemable convertible preferred stock and stockholders’ deficit for the three month period ended May 31, 2013 and the related footnote disclosures are unaudited. In management’s opinion, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of our statement of financial position as of May 31, 2013 and our results of operations, comprehensive loss and cash flows for the three month periods ended May 31, 2012 and 2013. The results for the three month period ended May 31, 2013 are not necessarily indicative of the results expected for the full fiscal year.

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 revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to the fair values of stock-based awards, income taxes and contingent liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates.

Unaudited Pro Forma Consolidated Balance Sheet

In July 2013, our board of directors approved the filing of a registration statement with the Securities and Exchange Commission (“SEC”) to sell shares of our common stock to the public. If the contemplated offering is completed, we expect that all 52,878,666 shares of redeemable convertible preferred stock would convert into 52,878,666 shares of common stock based on the shares of redeemable convertible preferred stock outstanding as of May 31, 2013. The unaudited pro forma stockholders’ equity as of May 31, 2013 gives effect to the automatic conversion of all outstanding shares of our redeemable convertible preferred stock into shares of common stock to additional paid-in capital in stockholders’ equity (deficit).

F-10

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

1. Organization and Summary of Significant Accounting Policies (continued)

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on deposit with banks and money market funds with an original maturity of three months or less.

Marketable Securities

Marketable securities, other than auction-rate securities, have been classified as available-for-sale securities in the accompanying consolidated financial statements. Available-for-sale securities are carried at fair value, and realized gains and losses and declines in value determined to be other than temporary are included in other income (expense), net in the accompanying consolidated statements of operations. Interest income on securities classified as available-for-sale securities is also included in other income (expense), net. The cost of securities sold is based on the specific-identification method.

Fair Value

The carrying value of our financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and note payable, approximates fair values.

Concentration of Credit Risk and Significant Customers

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents, marketable securities and accounts receivable.

We primarily invest only in high-quality credit instruments and maintain our cash, cash equivalents and marketable securities with high-quality institutions. Deposits held with banks, including those held in foreign branches of global banks, may exceed the amount of insurance provided on such deposits. These deposits may be redeemed upon demand and bear minimal risk.

Our accounts receivable are derived from customers located in North America and certain foreign countries and regions, including Europe, the Middle East, Latin America and Asia-Pacific. Sales to foreign customers accounted for 32%, 29% and 26% of total revenue for fiscal 2011, 2012 and 2013, respectively. We perform ongoing credit evaluations of our customers’ financial condition and typically require no collateral from our customers. No single customer or distribution partner accounted for over 10% of receivables at February 29, 2012 and February 28, 2013.

One distribution partner accounted for 13% and 16% of total revenue in fiscal 2013 and the three months ended May 31, 2013, respectively. No single customer or distribution partner accounted for greater than 10% of total revenue in fiscal 2011 or 2012.

We currently depend on a single source or a limited number of sources for certain components used in the manufacture of our appliances. The inability of any supplier to fulfill our supply requirements could negatively impact future operating results.

Inventories

Inventories are recorded at the lower of cost (using the first-in, first-out method) or market.

F-11

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

1. Organization and Summary of Significant Accounting Policies (continued)

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Land is not depreciated. Depreciation is calculated using the straight-line method over the following estimated useful lives:

Asset Classification	Estimated Useful Life
Buildings	39 years
Computer equipment and software	3 years
Vehicles, machinery and equipment	3 years
Leasehold improvements	Lesser of the useful life of the asset, generally 5 years, or remaining lease term

Intangible Assets and Impairment of Long-Lived Assets

Intangible assets consist of customer relationships, trade names, acquired technology, developed software, in-process research and development and patents. Intangible assets are recorded at fair values at the date of the acquisition and, for those assets having finite useful lives, are amortized using the straight-line method over their estimated useful lives, which range from two to seven years. In-process research and development is recorded as an indefinite-lived asset until the underlying project is completed, at which time the intangible asset is amortized over the estimated useful life. We periodically review our intangible and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. No impairment charges were recorded in the three-year period ended February 28, 2013 and the three months ended May 31, 2013.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed. We test goodwill for impairment at least annually or more frequently if events or changes in circumstances indicate that this asset may be impaired. These tests are based on our single operating segment and reporting unit structure. No impairment charges were recorded in the three-year period ended February 28, 2013 and the three months ended May 31, 2013.

Deferred Offering Costs

Deferred offering costs, consisting of legal, accounting and filing fees relating to our initial public offering, are capitalized. The deferred offering costs will be offset against initial public offering proceeds upon the completion of the offering. In the event the offering is terminated, deferred offering costs will be expensed. As of May 31, 2013, we had capitalized $70,691 of deferred offering costs, which is classified as a noncurrent asset in the consolidated balance sheets. No amounts were deferred as of February 28, 2013.

Revenue Recognition

We typically provide access to our solutions through appliances and related subscription agreements, whereby the customer is charged an upfront fee for the appliance and is required to purchase a related subscription agreement. The subscription agreements are subject to customer renewal at the end of each subscription period. Our appliances contain hardware and embedded proprietary software. The subscriptions,

F-12

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

1. Organization and Summary of Significant Accounting Policies (continued)

referred to as Barracuda Energize Updates, provide hourly spam, anti-malware and security updates, and are required to be purchased to access our solutions. The subscriptions also entitle customers to phone support and software updates on a when and if available basis. We have determined that the elements of our customer arrangements, including the appliance and subscription, do not qualify for treatment as a separate unit of accounting. Accordingly, all fees received under our customer agreements are accounted for as a single unit of accounting, and, except for any up-front fees for the appliance, such fees are recognized ratably on a daily basis over the term of the subscription agreement. Subscription revenue also includes revenue from fixed term licenses of our virtual appliance software support and maintenance. Recognition of revenue commences when there is persuasive evidence of an arrangement, the fee is fixed and determinable, collectability is deemed reasonably assured and the services have commenced.

We receive an upfront fee from customers for delivery and transfer of title for their appliance. No further fees related to the appliance are required to be paid by the customer in subsequent periods. Because the appliance does not have value to the customer on a stand-alone basis and requires a subscription agreement to access our solutions, the delivery of the appliance does not represent the culmination of a separate earnings process associated with the payment of the up-front fee. Accordingly, the amount of the up-front fee is recorded as deferred revenue upon invoicing and the amount is recognized as revenue ratably on a daily basis over the estimated average customer relationship period of three years.

Customers have a 30-day right to return, after which time the arrangement is non-cancelable. We make estimates and maintain a reserve for expected customer cancellations. These estimates involve inherent uncertainties and management judgment.

Deferred Revenue

Deferred revenue represents amounts billed to customers or payments received from customers for which revenue has not yet been recognized. Deferred revenue that is expected to be recognized as revenue within one year is recorded as current deferred revenue and the remaining portion is recorded as noncurrent deferred revenue.

Warranty and Instant Replacement Service

We provide a standard one-year warranty on our appliances. We also offer separately priced extended warranty contracts on our appliances, which entitle customers to expedited replacement hardware, with next business day shipping, on our appliances. Such separately-priced extended warranty contracts are available to customers coterminous with the standard one-year warranty. Revenue from extended warranty contracts is recognized ratably over the contractual term. Costs associated with our standard warranty and extended warranty contracts are expensed as incurred.

Deferred Appliance Costs

We receive an up-front fee from our customers related to the sale of our appliance. We defer the costs of the appliance, including shipping costs, as they are directly related to the revenues that we derive from the sale of the appliance. Such deferred costs are amortized ratably over the estimated average customer relationship period of three years. Amortization of deferred appliance costs is included in costs of revenues in the accompanying consolidated statements of operations.

F-13

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

1. Organization and Summary of Significant Accounting Policies (continued)

Deferred Commissions

We capitalize commission costs that are incremental and directly related to the acquisition of customer contracts. Sales commissions are deferred when earned and amortized over the same period that revenues are recognized. Commission payments are paid in full after the customer has paid. Amortization of deferred commission costs is included in sales and marketing costs in the accompanying consolidated statements of operations.

Income Taxes

We account for income taxes using the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements or in our tax returns. Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe, based upon the weight of available evidence, that it is more likely than not that all or a portion of deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected from each subsidiary and considering prudent and feasible tax planning strategies.

We account for uncertainty in income taxes recognized in our financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon examination by the taxing authorities, based on the technical merits of the position. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties.

Software Development Costs

Software development costs incurred prior to the establishment of technological feasibility are charged to research and development expense as incurred. Technological feasibility is established upon completion of a working model, which is typically demonstrated by initial beta shipment. Software development costs incurred subsequent to the time a product’s technological feasibility has been established through the time the product is available for general release to customers are capitalized if material. No software development costs have been capitalized in the periods presented.

Advertising Costs

We expense advertising costs as incurred. Advertising expense totaled $44.8 million, $46.5 million and $52.9 million for fiscal 2011, 2012 and 2013, respectively.

F-14

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

1. Organization and Summary of Significant Accounting Policies (continued)

Stock-Based Compensation

We use the Black-Scholes-Merton option-pricing model to estimate the fair value of our employee stock options on the dates of grant. The resulting cost is recognized on a straight-line basis over the vesting period of the stock options. The grant date fair value of restricted stock units is based on the fair value of our common stock.

Foreign Currency Translation

For those subsidiaries whose functional currency is not the U.S. dollar, assets and liabilities are translated into U.S. dollar equivalents at the exchange rate in effect on the balance sheet date and revenues and expenses are translated into U.S. dollars using the average exchange rate over the period. Resulting currency translation adjustments are recorded in accumulated other comprehensive income (loss) in the consolidated balance sheets.

Accumulated Other Comprehensive Income (Loss)

The accumulated other comprehensive loss balance consists of unrealized gains and losses on available-for-sale securities and translation gains and losses related to our international subsidiaries with functional currencies other than the U.S. dollar, primarily the euro.

Net Income (Loss) Per Share

Basic and diluted net income (loss) per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. Our Series A and Series B redeemable convertible preferred stock are participating securities. In the event a dividend is declared or paid on our common stock, holders of Series A and Series B redeemable convertible preferred stock are entitled to a proportionate share of such dividend in proportion to the holders of common stock on an as-if converted basis.

Under the two-class method, basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period. Net income (loss) attributable to common stockholders is determined by allocating undistributed earnings between common and redeemable convertible preferred stockholders. Diluted net income (loss) per share attributable to common stockholders is computed by using the weighted average number of shares of common stock outstanding, including potential dilutive common shares assuming the dilutive effect of outstanding stock options, restricted stock units, common stock subject to repurchase or forfeiture and redeemable convertible preferred stock using the treasury stock method. For periods in which there is a net loss, the number of shares used in the computation of diluted net loss per share is the same as that used for the computation of basic net loss per share, as the inclusion of dilutive securities would be antidilutive. Under the two-class method, the net loss attributable to common stockholders is not allocated to the convertible redeemable preferred stock as the convertible redeemable preferred stock do not have a contractual obligation to share in our losses.

F-15

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

1. Organization and Summary of Significant Accounting Policies (continued)

The following table presents the calculation of historical basic and diluted net income (loss) per share attributable to common stockholders under the two-class method (in thousands, except per share amounts):

	Year Ended February 28/29,									Three Months Ended May 31,
	2011			2012			2013			2012			2013
Basic:
Net income (loss) attributable to common stockholders:
Net income (loss) attributable to Barracuda Networks, Inc.	$	2,963		$	605		$	(7,391	)	$	(2,334	)	$	(2,404	)
Accretion to redemption value of redeemable convertible preferred stock		—			—			(1,812	)		—			—
Undistributed earnings allocated to redeemable convertible preferred stockholders		(682	)		(139	)		—			—			—
Net income (loss) attributable to common stockholders	$	2,281		$	466		$	(9,203	)	$	(2,334	)	$	(2,404	)
Shares used to compute net income (loss) per share attributable to common stockholders:
Weighted average common shares outstanding		101,095			101,595			96,112			101,435			84,301
Less: Weighted average shares subject to repurchase or forfeiture		(205	)		(107	)		(18	)		(50	)		—
Weighted average shares used to compute net income (loss) per share, basic		100,890			101,488			96,094			101,385			84,301
Diluted:
Net income (loss) attributable to Barracuda Networks, Inc.	$	2,963		$	605		$	(7,391	)	$	(2,334	)	$	(2,404	)
Accretion to redemption value of redeemable convertible preferred stock		—			—			(1,812	)		—			—
Net income (loss) attributable to common stockholders	$	2,963		$	605		$	(9,203	)	$	(2,334	)	$	(2,404	)
Weighted average common shares used to compute net income (loss) per share, basic		100,890			101,488			96,094			101,385			84,301
Add weighted average effect of dilutive securities:
Stock options and restricted stock units		3,697			4,320			—			—			—
Common stock subject to repurchase or forfeiture		205			107			—			—			—
Redeemable convertible preferred stock		30,151			30,151			—			—			—
Weighted average shares used to compute net income (loss) per share, diluted		134,943			136,066			96,094			101,385			84,301
Net income (loss) per share attributable to common stockholders:
Basic	$	0.02		$	0.00		$	(0.10	)	$	(0.02	)	$	(0.03	)
Diluted	$	0.02		$	0.00		$	(0.10	)	$	(0.02	)	$	(0.03	)

F-16

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

1. Organization and Summary of Significant Accounting Policies (continued)

Unaudited Pro Forma Net Loss per Share

Pro forma basic and diluted net loss per share have been computed to give effect to the conversion of our redeemable convertible preferred stock into common stock as of the beginning of the period presented or the original issuance date, if later. The following table shows our calculation of pro forma basic and diluted net loss per share (in thousands, except per share data):

	Year Ended			Three Months Ended
	February 28, 2013			May 31, 2013
Numerator:
Net loss attributable to Barracuda Networks, Inc.	$	(7,391	)	$	(2,404	)
Denominator:
Shares used to compute net loss per share, basic and diluted		96,094			84,301
Pro forma adjustment to reflect weighted average effect of assumed conversion of redeemable convertible preferred stock		39,367			52,879
Weighted average shares used to compute pro forma net loss per share, basic and diluted		135,461			137,180
Pro forma net loss per share, basic and diluted	$	(0.05	)	$	(0.02	)

Effect of Recent Accounting Pronouncements

In June 2011, the FASB issued ASU No. 2011-05, Topic 220—Presentation of Comprehensive Income (ASU 2011-05), which requires companies to present net income and other comprehensive income in one continuous statement or in two separate, but consecutive, statements. In addition, in December 2011, the FASB issued ASU No. 2011-12, Topic 220—Comprehensive Income (ASU 2011-12), which defers the requirement to present components of reclassifications of other comprehensive income on the face of the income statement. We adopted these standards in fiscal 2013. Our adoption of the additional disclosures is reflected in a separate statement, Consolidated Statements of Comprehensive Income (Loss).

2. Balance Sheet Information

Cash, Cash Equivalents and Marketable Securities

	February 28/29,				May 31,
	2012		2013		2013
	(in thousands)
Cash and cash equivalents:
Cash	$	22,778	$	20,812	$	13,939
Money market funds		103,729		9,283		6,592
Total cash and cash equivalents	$	126,507	$	30,095	$	20,531
Marketable securities:
Auction-rate securities	$	388	$	—	$	—
Equity securities		1,888		1,550		1,422
Total marketable securities	$	2,276	$	1,550	$	1,422

F-17

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

2. Balance Sheet Information (continued)

The following table summarizes our marketable securities:

	February 29, 2012
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
Auction-rate securities	$	400	$	—	$	(12	)	$	388
Equity securities		1,668		220		—			1,888
	$	2,068	$	220	$	(12	)	$	2,276
	February 28, 2013
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
Equity securities	$	1,458	$	92	$	—		$	1,550
	May 31, 2013
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
Equity securities	$	1,440	$	—	$	(18	)	$	1,422

Fair Value Measurements

We determine the fair values of our financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value assumes that the transaction to sell the asset or transfer the liability occurs in the principal or most advantageous market for the asset or liability and establishes that the fair value of an asset or liability shall be determined based on the assumptions that market participants would use in pricing the asset or liability. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value:

Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2: Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

Level 3: Inputs are unobservable inputs based on our assumptions.

F-18

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

2. Balance Sheet Information (continued)

Cash equivalents and marketable securities are classified within Level 1 because they are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs. Our investments in auction-rate securities are classified within Level 3 because they are valued using a discounted cash flow model. Some of the inputs to this model are unobservable in the market and are significant. We have no financial assets or liabilities measured utilizing Level 2 inputs.

Financial assets measured at fair value on a recurring basis are summarized below:

	Level 1		Level 2		Level 3		Total February 29, 2012
	(in thousands)
Money market funds	$	103,729	$	—	$	—	$	103,729
Auction-rate securities		—		—		388		388
Equity securities		1,888		—		—		1,888
	$	105,617	$	—	$	388	$	106,005
	Level 1		Level 2		Level 3		Total February 28, 2013
	(in thousands)
Money market funds	$	9,283	$	—	$	—	$	9,283
Equity securities		1,550		—		—		1,550
	$	10,833	$	—	$	—	$	10,833
	Level 1		Level 2		Level 3		Total May 31, 2013
	(in thousands)
Money market funds	$	6,592	$	—	$	—	$	6,592
Equity securities		1,422		—		—		1,422
	$	8,014	$	—	$	—	$	8,014

Inventories

Inventories consisted of the following:

	February 28/29,				May 31,
	2012		2013		2013
	(in thousands)
Raw materials	$	3,109	$	3,042	$	3,549
Finished goods		2,307		2,096		1,952
Total inventories	$	5,416	$	5,138	$	5,501

F-19

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

2. Balance Sheet Information (continued)

Deferred Costs

Deferred costs consisted of the following:

	February 28/29,				May 31,
	2012		2013		2013
	(in thousands)
Appliance	$	21,857	$	27,751	$	29,881
Commissions		7,397		11,719		12,675
Total deferred costs	$	29,254	$	39,470	$	42,556

Property and Equipment

Property and equipment consisted of the following:

	February 28/29,				May 31,
	2012		2013		2013
	(in thousands)
Land	$	5,100	$	5,100	$	5,100
Building		6,549		6,549		6,549
Computer hardware and software		6,882		8,656		10,169
Vehicles, machinery and equipment		1,372		1,478		1,503
Leasehold improvements		237		1,488		1,576
		20,140		23,271		24,897
Less: accumulated depreciation		4,956		6,299		7,081
	$	15,184	$	16,972	$	17,816

Depreciation expense was $1.6 million, $2.1 million and $2.8 million for fiscal 2011, 2012 and 2013, respectively.

Investment in Nonmarketable Equity Security

In October 2011, we acquired stock in a privately held company for $750,000, which represents an ownership interest of approximately 24%. Under the equity method of accounting, we recognize our proportional share of earnings and losses of the investee in our financial statements and adjust the carrying amount of our investment accordingly. For fiscal 2012 and 2013, our proportionate share of the investee’s losses was not material.

The investment is classified in other noncurrent assets in the consolidated balance sheets.

F-20

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

2. Balance Sheet Information (continued)

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax, were as follows (in thousands, unaudited):

	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Available-for- Sale Investments			Total
Balance as of February 28, 2013	$	(1,169	)	$	57		$	(1,112	)
Other comprehensive loss before reclassifications		(315	)		(67	)		(382)
Amounts reclassified from accumulated other comprehensive loss		—			—			—
Other comprehensive loss		(315	)		(67	)		(382	)
Balance as of May 31, 2013	$	(1,484	)	$	(10	)	$	(1,494	)

3. Acquisitions

SignNow

On April 24, 2013, we completed our acquisition of SignNow, Inc. (“SignNow”), a privately-held provider of mobile eSignature applications located in California. The acquisition of SignNow will enable us to expand our cloud-based offerings. We acquired all outstanding stock of SignNow for aggregate cash consideration of approximately $6.7 million. In addition, $4.5 million of cash consideration is contingent upon the continued employment of certain key employees of SignNow and is recognized as compensation expense over the requisite service period. We assumed $0.6 million of unvested SignNow stock options, which will be recorded as stock compensation expense over the weighted-average remaining service period of approximately 3.2 years.

We recorded the assets acquired and liabilities assumed at their estimated fair value, with the difference between the fair value of the net assets acquired and the purchase consideration reflected as goodwill.

The fair value of assets acquired and liabilities assumed was based upon a preliminary valuation and our estimates and assumptions are subject to change within the measurement period. The primary areas of the purchase price that are not yet finalized are related to income taxes and residual goodwill.

The following table reflects the preliminary fair values of assets acquired and liabilities assumed as of the acquisition date (in thousands):

Cash	$	56
Accounts receivable		110
Developed technology		4,780
Customer relationships		510
Trade name		390
Goodwill		1,899
Accrued expenses		(340	)
Deferred tax liability		(686	)
Total value of assets acquired and liabilities assumed	$	6,719

F-21

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

3. Acquisitions (continued)

The goodwill of $1.9 million is primarily attributed to the synergies expected to arise after the acquisition. No goodwill was deemed to be deductible for income tax purposes.

Included in our results of operations for the three months ended May 31, 2013 are $0.1 million and $0.3 million of revenue and net loss, respectively, attributable to SignNow since the April 24, 2013 date of acquisition. The following table presents our unaudited pro forma revenue and net loss for fiscal 2013 and the three months ended May 31, 2012 assuming the acquisition had occurred on March 1, 2012, and for the three months ended May 31, 2013:

	Fiscal 2013			Three Months Ended May 31,
				2012			2013
	(in thousands)
Pro forma revenue	$	199,006		$	46,009		$	56,402
Pro forma net loss attributable to Barracuda Networks, Inc.	$	(10,873	)	$	(3,271	)	$	(2,821	)

BitLeap, LLC

In September 2008, we acquired BitLeap, LLC, a privately held company, and were required to pay contingent consideration in cash and stock based upon the attainment of certain earnings milestones over a period of four years ended September 2012. During fiscal 2012 and 2013, we recorded $5.1 million and $5.6 million, respectively, of such consideration, which became due and was recorded as additional goodwill. No additional contingent consideration is due under this arrangement.

4. Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for fiscal 2012, 2013 and the three months ended May 31, 2013 are summarized below:

	February 28/29,						May 31,
	2012			2013			2013
	(in thousands)
Balance at beginning of fiscal period	$	23,584		$	28,430		$	33,778
Contingent consideration earned		5,057			5,580			—
Goodwill acquired		—			—			1,899
Effect of foreign exchange rates		(211	)		(232	)		(62	)
Balance at end of fiscal period	$	28,430		$	33,778		$	35,615

F-22

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

4. Goodwill and Intangible Assets (continued)

Intangible assets subject to amortization are summarized below:

	February 29, 2012
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
	(in thousands)
Acquired developed technology	$	21,480	$	12,833	$	8,647
Software license		400		400		—
Customer relationships		6,895		3,661		3,234
Patents		1,625		502		1,123
Trade name		619		498		121
Acquired developed software		200		137		63
	$	31,219	$	18,031	$	13,188

	February 28, 2013
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
	(in thousands)
Acquired developed technology	$	21,403	$	16,910	$	4,493
Software license		400		400		—
Customer relationships		6,814		4,708		2,106
Patents		1,625		687		938
Trade name		273		259		14
Acquired developed software		200		177		23
	$	30,715	$	23,141	$	7,574

	May 31, 2013
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
	(in thousands)
Acquired developed technology	$	26,162	$	17,991	$	8,171
Software license		400		400		—
Customer relationships		7,303		4,985		2,318
Patents		1,625		734		891
Trade name		662		266		396
Acquired developed software		200		187		13
	$	36,352	$	24,563	$	11,789

In addition to the above, we maintain other intangible assets not subject to amortization, principally related to the domain name www.barracuda.com, of $409,000 as of February 29, 2013, February 28, 2013 and May 31, 2013.

Acquired developed technology, software license, customer relationships, patents, trade name and acquired developed software are amortized on a straight-line basis and have weighted-average useful lives from the date of

F-23

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

4. Goodwill and Intangible Assets (continued)

purchase of 5.0 years, 5.0 years, 5.8 years, 9.0 years, 3.7 years and 5.0 years, respectively, as of February 28, 2013, and 5.0 years, 5.0 years, 5.9 years, 9.0 years, 7.4 years and 5.0 years, respectively, as of May 31, 2013.

Amortization expense for fiscal 2011, 2012 and 2013, and the three months ended May 31, 2013 was $6.0 million, $6.0 million, $5.5 million and $1.4 million respectively.

As of February 28, 2013, amortization expense for intangible assets for each of the next five years is as follows: $4.5 million in fiscal 2014, $1.9 million in fiscal 2015, $0.6 million in fiscal 2016, $0.4 million in fiscal 2017, $0.1 million in fiscal 2018 and $0.1 million thereafter.

5. Recapitalization Transaction

In October 2012, we completed our recapitalization pursuant to a recapitalization agreement entered into with our founders and their affiliates and certain of our existing investors. As part of the recapitalization agreement, we (i) declared $130.0 million of cash dividends, which was recorded as an increase to accumulated deficit, (ii) sold 22,727,913 shares of our Series B redeemable convertible preferred stock (“Series B Preferred Stock”) to certain of our existing investors at a price per share of approximately $5.62, for an aggregate purchase price of $127.5 million and (iii) repurchased 22,727,913 shares of common stock from our founders and their affiliates at a price per share of approximately $5.62, which was determined to be the fair value after giving consideration to the control premium, for an aggregate repurchase price of $127.5 million. The shares of our common stock which we repurchased were subsequently cancelled.

6. Redeemable Convertible Preferred Stock

Significant terms of Series A redeemable convertible preferred stock (“Series A Preferred Stock”) and Series B Preferred Stock (collectively “Preferred Stock”), are as follows:

Conversion—Each share of Series A Preferred Stock and Series B Preferred Stock is convertible at the option of the holder into common stock using a conversion rate of $1.327 and $5.61178 per share, respectively, and will automatically convert into common stock in the event of an underwritten public offering of our common stock or upon the request of at least two thirds of the Preferred Stock then outstanding.

Voting—Preferred Stock has voting rights, on an as-if-converted basis, identical to common stock and shall vote together with common stock, and not as separate classes.

Dividends—Any dividends declared or paid in any fiscal year shall be made among the holders of Preferred Stock and common stock then outstanding in proportion to the greatest number of shares of common stock that would be held by each such holder if all Preferred Stock were converted at the then-effective conversion rate.

Liquidation—In the event of liquidation, the holders of Series B Preferred Stock are entitled to receive in preference to any distribution to Series A Preferred Stock or common stock holders, a liquidation preference equal to the greater of (i) $7.01472 and (ii) the amount to which such holder of Series B Preferred Stock would be entitled to receive upon a liquidation if such holders of Series B Preferred Stock was converted into common stock, plus any dividends declared but unpaid on such shares. The holders of Series A Preferred Stock are entitled to receive in preference to any distribution to holders of common stock, a liquidation preference equal to the greater of (i) $1.99 and (ii) the amount to which such holder of Series A Preferred Stock would be entitled to

F-24

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

6. Redeemable Convertible Preferred Stock (continued)

receive upon a liquidation if such holders of Series A Preferred Stock were converted into common stock, plus any dividends declared but unpaid on such shares. Any surplus assets or funds will then be distributed ratably between the holders of common stock.

If assets and funds are insufficient to meet the liquidation preference of the Preferred Stock such assets and funds will first be distributed ratably between the holders of the Series B Preferred Stock in proportion to the full amounts they would otherwise be entitled to receive and then to holders of Series A Preferred Stock in proportion to the full amounts they would otherwise be entitled to receive.

Redemption—In October 2017, all outstanding shares of Preferred Stock are eligible to be redeemed for cash in full upon a written notice by at least two-thirds of the holders of the outstanding Preferred Stock. In the event of redemption, each holder of the Preferred Stock would be entitled to receive the original issue price per share ($1.327 for each Series A Preferred Stock and $5.61178 for each Series B Preferred Stock), plus all unpaid dividends on such shares that have been declared.

Costs related to the issuance of Preferred Stock have been accreted to additional paid-in capital.

7. Stockholders’ Deficit

Authorized Stock

Holders of our common stock are entitled to one vote per share on all matters to be voted upon by our stockholders.

Fair Value of Common Stock

Given the absence of a public trading market, our Board of Directors considered numerous objective and subjective factors to determine the fair value of our common stock at each grant date. These factors included, but were not limited to, (i) contemporaneous valuations of common stock performed by unrelated third-party specialists; (ii) the prices for our Preferred Stock sold to outside investors; (iii) the rights, preferences and privileges of our Preferred Stock relative to our common stock; (iv) the lack of marketability of our common stock; (v) developments in the business; and (vi) the likelihood of achieving a liquidity event, such as an initial public offering or a merger or acquisition of our company, given prevailing market conditions.

Stock Option Plan and Restricted Stock Units

Our 2004 Stock Option Plan (the 2004 Plan) authorized the Board of Directors to grant incentive stock options and nonstatutory stock options, as well as for the issuance of shares of restricted stock, or RSU, to employees, directors, and consultants. In May 2012, our Board of Directors approved the termination of the 2004 Plan and the introduction of the 2012 Equity Incentive Plan (the 2012 Plan), which provides for the grant of stock options, stock appreciation rights, restricted stock and restricted stock units to employees, directors and consultants.

We estimate the fair value of stock options using the Black-Scholes-Merton option-pricing formula and a single-option-award approach. We amortize the fair value of an award expected to vest on a straight-line basis

F-25

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

7. Stockholders’ Deficit (continued)

over the requisite service period of the award, which is generally the period from the grant date to the end of the vesting period. The weighted-average expected option term for such options is calculated as the average of the contractual term and the average vesting period. Estimated volatility is based upon the historical volatility of similar entities whose share prices are publicly available. The risk-free interest rate is based on the yield curve of a zero-coupon U.S. Treasury bond on the date the stock option award is granted, with a maturity equal to the expected term of the stock option award. We use historical data to estimate the number of future stock option forfeitures.

The following assumptions were used to estimate the fair value of employee stock option grants:

	Year Ended February 28/29,
	2011			2012			2013
Expected volatility		50	%		41–46	%		44	%
Expected term (in years)		6.25			6.25			6.25
Risk-free interest rate		2.02	%		1.84	%		0.97	%
Dividend yield		—			—			—
Weighted-average estimated fair value of stock options granted during the year	$	1.85		$	1.68		$	1.78

The following table summarizes stock option activity under our plans:

	Options Outstanding
	Available for Grant			Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value(1)
									(in years)		(in thousands)
Balance at February 29, 2012		380,528			8,722,582		$	2.23
Authorized		12,759,151			—			—
Granted		(10,494,000	)		10,494,000			4.16
Exercised(2)		—			(3,946,087	)		1.48
Canceled/forfeited		663,193			(663,193	)		3.91
Balance at February 28, 2013		3,308,872			14,607,302			3.74
As of February 28, 2013:
Vested and exercisable		—			4,904,773		$	2.87		6.37	$	6,989
Vested and expected to vest		—			13,636,514			3.68		8.21		8,353

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the fair value of our common stock at February 28, 2013.

(2) Includes stock options vested during the period that were early exercised.

For the three months ended May 31, 2013, options to purchase 615,000 shares of common stock were granted and options to purchase 179,191 shares of common stock were assumed in the acquisition of SignNow (Note 3).

F-26

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

7. Stockholders’ Deficit (continued)

During fiscal 2011, 2012 and 2013, the total grant-date fair value of stock options vested was $1.7 million, $1.5 million and $3.7 million, respectively. During fiscal 2011, 2012, and 2013, the aggregate intrinsic value of stock option awards exercised, which is measured as the difference between the exercise price and the value of our common stock at the date of exercise, was $1.5 million, $0.6 million and $10.3 million, respectively.

As of February 28, 2013, there was $14.8 million of unrecognized compensation cost related to outstanding employee stock options, net of forecasted forfeitures, expected to be recognized over a weighted-average period of 3.27 years. To the extent the forfeiture rate is different from what management has anticipated, stock-based compensation related to these awards will be different from management’s expectations.

The following table summarizes RSU activity under our plans:

	Unvested Restricted Stock Units
	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at February 29, 2012		600,000		$	2.90
Granted		4,178,439			4.21
Vested		(1,008,457	)		3.43
Unvested at February 28, 2013		3,769,982			4.21
Expected to vest after February 28, 2013		3,347,772			4.21

As of February 28, 2013, there was $13.4 million of unrecognized compensation cost related to unvested employee RSUs, net of forecasted forfeitures. This amount is expected to be recognized over a weighted-average period of 3.59 years. To the extent the actual forfeiture rate is different from what we have estimated, stock-based compensation related to these awards will be different from our expectations.

Total stock-based compensation expense has been classified as follows in the accompanying consolidated statements of operations:

	Year Ended February 28/29,
	2011		2012		2013
	(in thousands)
Cost of revenue	$	84	$	51	$	146
Research and development		848		766		2,059
Sales and marketing		627		527		1,182
General and administrative		417		527		5,400
Total compensation expense	$	1,976	$	1,871	$	8,787

F-27

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

8. Income Taxes

Income (loss) before income taxes and noncontrolling interest consists of the following:

	Year Ended February 28/29,
	2011			2012			2013
	(in thousands)
United States	$	8,218		$	5,226		$	(9,206	)
Foreign		(4,739	)		(5,933	)		(4,063	)
Total	$	3,479		$	(707	)	$	(13,269	)

The provision (benefit) for income taxes consists of the following:

	Year Ended February 28/29,
	2011			2012			2013
	(in thousands)
Current:
Federal	$	7,816		$	9,860		$	6,824
State		1,223			537			940
Foreign		435			517			526
Total		9,474			10,914			8,290
Deferred:
Federal		(6,759	)		(9,501	)		(11,507	)
State		(461	)		(770	)		(617	)
Foreign		(1,118	)		(1,096	)		(1,250	)
Total		(8,338	)		(11,367	)		(13,374	)
Total provision (benefit) for income taxes	$	1,136		$	(453	)	$	(5,084	)

F-28

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

8. Income Taxes (continued)

Deferred tax assets (liabilities) comprise the following:

	February 28/29,
	2012			2013
	(in thousands)
Deferred tax assets:
Deferred revenue	$	28,851		$	41,577
Reserves and other		5,069			5,277
Research and development credits		1,895			2,003
Net operating losses		6,870			6,389
Total deferred tax assets		42,685			55,246
Valuation allowance		(6,867	)		(7,008	)
Total deferred tax assets, net of valuation allowance		35,818			48,238
Deferred tax liabilities:
Depreciation and amortization		(2,819	)		(1,807	)
Total deferred tax liabilities		(2,819	)		(1,807	)
Net deferred tax assets	$	32,999		$	46,431

The following is a reconciliation of the statutory federal income tax to our effective tax rate:

	Year Ended February 28/29,
	2011			2012			2013
	(in thousands)
Tax at federal statutory rate	$	1,218		$	(247	)	$	(4,644	)
State taxes, net of federal benefit		333			(423	)		(11	)
Nondeductible meals and entertainment		115			146			289
Stock-based compensation		641			461			910
Foreign rate differential		976			1,373			535
Research and development credit		(608	)		(726	)		(1,331	)
Domestic production activities deduction		(900	)		(1,023	)		(760	)
Other		(639	)		(14	)		(72	)
	$	1,136		$	(453	)	$	(5,084	)

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of deferred assets will be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

Based on the available objective evidence, management believes it is more likely than not that a portion of our net deferred tax assets may not be realized in the future. Accordingly, a valuation allowance of $7.0 million is provided against our deferred tax assets, primarily related to foreign net operating losses and California research credits acquired as part of our acquisitions. The net change in valuation allowance for fiscal 2013 was an increase of approximately $0.1 million related to a change in the estimated utilization of the foreign net operating loss.

F-29

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

8. Income Taxes (continued)

As of February 28, 2013, we had approximately $1.1 million of federal and approximately $7.5 million of state net operating loss carryforwards available. If not utilized, the federal net operating losses expire in various fiscal years ending between fiscal 2019 and fiscal 2029. The state net operating losses expire in various fiscal years ending between fiscal 2014 and fiscal 2029. We have foreign net operating losses of approximately $22.9 million. Of these, approximately $19.1 million of the net operating losses can be carried forward indefinitely. The remaining foreign net operating losses expire in various fiscal years, starting with fiscal 2014, if not utilized.

We had research and development credit carryforwards of approximately $0.3 million, $2.7 million and $0.1 million for federal, California and other state income tax purposes, respectively. If not utilized, the federal research and development credit begins to expire in fiscal 2028, while the California credit can be carried forward indefinitely. If not utilized, other state research and development credit begins to expire in fiscal 2021.

Utilization of our net operating loss and credit carryforwards may be subject to annual limitations due to ownership change provisions by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization.

As of February 28, 2013, we have $4.4 million of cumulative undistributed earnings of our foreign subsidiaries. Deferred tax liabilities have not been recognized for undistributed earnings of foreign subsidiaries because we intend to permanently reinvest such undistributed earnings outside the United States. If these foreign earnings were to be repatriated in the future, the related U.S. tax liability may be reduced by any foreign income taxes previously paid on these earnings. Determination of the amount of an unrecognized deferred tax liability related to these earnings is not practicable.

Our total unrecognized tax benefits as of fiscal 2011, 2012 and 2013, were $3.0 million, $4.2 million and $4.0 million, respectively. Total unrecognized tax benefits that, if recognized, would affect our effective tax rate were $2.4 million, $2.5 million and $3.1 million as of fiscal 2011, 2012 and 2013, respectively.

The following table summarizes the activity related to our gross unrecognized tax benefits (in thousands):

	Year Ended February 28/29,
	2011			2012			2013
Balance at beginning of year	$	1,878		$	3,026		$	4,150
Tax positions related to the current year:
Additions		1,197			978			1,122
Tax positions related to prior years:
Additions		44			1,009			76
Deductions		(51	)		(528	)		(1,341	)
Settlements with taxing authorities
Releases—statute of limitations expired		(42	)		(335	)		(36	)
Balance at the end of the year	$	3,026		$	4,150		$	3,971

We recognize interest and/or penalties related to uncertain tax positions in income tax expense. To the extent accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and

F-30

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

8. Income Taxes (continued)

reflected as a reduction of the overall income tax provision in the period that such determination is made. During fiscal 2011, 2012 and 2013, interest and penalties recorded in the consolidated statements of operations were $63,000, $8,000 and $92,000, respectively. The amounts of accrued interest and penalties recorded on the consolidated balance sheets as of February 29, 2012 and February 28, 2013, were approximately $354,000 and $446,000, respectively. We do not believe there will be material changes in our unrecognized tax positions over the next 12 months.

We file income tax returns in the U.S. federal jurisdiction, various states, and certain foreign jurisdictions. The statute of limitations remains open to audit for fiscal 2009 through fiscal 2013 in the U.S. federal and state jurisdictions, and for fiscal 2008 through fiscal 2013 in foreign jurisdictions.

9. Segment Information

Our chief operating decision maker reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating our financial performance. Accordingly, we have determined that we operate in a single reporting segment.

Revenue by geographic region is presented as follows:

	Year Ended February 28/29,
	2011		2012		2013
	(in thousands)
North America	$	96,584	$	113,934	$	147,231
United States		90,590		106,760		138,879
Other		5,994		7,174		8,352
Latin America		3,118		3,183		3,290
Asia-Pacific		10,994		12,475		14,497
EMEA		31,436		31,328		33,913
Total	$	142,132	$	160,920	$	198,931

Revenue earned in any one foreign country did not exceed 10% of total revenue in fiscal 2011, 2012, or 2013.

Long-lived assets, excluding intercompany receivables, investments in subsidiaries, intangible assets and deferred tax assets, by geographic region are presented as follows:

	February 28/29,
	2012		2013
	(in thousands)
United States	$	30,478	$	34,873
International		2,186		3,087
Total	$	32,664	$	37,960

F-31

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

10. Borrowings

Note Payable

In December 2011, as part of the purchase of land and buildings in California related to our headquarters, we assumed a note payable of $5.3 million with a financial institution bearing interest at 6.23% per annum. The estimated fair value of the note payable approximates its carrying value. The debt is repayable in equal monthly payments of principal and interest of $44,445, with a final payment of unpaid principal and interest in July 2017. Penalty interest of 0.0625% is due on default of payments, and prepayment of amounts owed are subject to a prepayment fee calculated as the greater of a) 1% of the principal being repaid and b) the present value of the future principal and interest payments less the principal repaid. Interest expense for fiscal 2012 and 2013, was $28,000 and $357,000, respectively, and was recorded as other income, net, in the consolidated statement of operations.

Minimum principal payments for our note payable are as follows (in thousands):

Fiscal Years Ending February 28/29
2014	$	222
2015		237
2016		252
2017		268
2018		4,115
	$	5,094

Credit Facility

In connection with the recapitalization agreement (Note 5), we entered into a $40.0 million credit facility with Silicon Valley Bank (“SVB”) consisting of a revolving loan facility which includes a letter of credit sub facility of up to $10.0 million. The credit facility expires in October 2014. The credit facility is secured by substantially all of our assets, and contains restrictive covenants as described in the agreement. These covenants require us to maintain a minimum adjusted EBITDA, as defined in the credit facility, in excess of $25.0 million for any trailing four quarter period and a minimum adjusted quick ratio in excess of 0.5 as of the last day of each month. The minimum required adjusted quick ratio will increase to 1.1 over the term of the credit facility. The adjusted quick ratio is calculated as the ratio of qualified cash plus net billed accounts receivable to consolidated current liabilities plus revolving credit extensions under the credit facility, less (i) any deferred payments in connection with permitted acquisitions and (ii) the current portion of deferred revenue. We were in compliance with each of these covenants as of May 31, 2013. The terms of the credit facility require payment of an unused line fee of 0.375% per quarter of the unused portion. ABR loans under the credit facility bear interest at a rate per annum equal to the highest of the prime rate, the federal funds effective rate plus 0.5% and the eurodollar rate for a one-month interest period plus 1%. Eurodollar loans under the credit facility bear interest at a rate per annum equal to the eurodollar rate plus 1.5%. The adjusted credit facility also sets forth specified events of default. No amounts had been drawn under the credit facility as of February 28, 2013 and May 31, 2013.

11. Commitments and Contingencies

Lease Arrangements

We lease facilities and equipment under noncancelable operating lease arrangements with various expiration dates through fiscal 2018. We account for rent of our facilities on a straight-line basis over the respective lease terms. Rent expense was approximately $2.7 million, $2.6 million and $2.0 million in fiscal 2011, 2012 and 2013, respectively.

F-32

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

11. Commitments and Contingencies (continued)

Minimum payments under our operating leases agreements are as follows (in thousands):

Fiscal Years Ending February 28/29
2014	$	1,842
2015		1,631
2016		1,289
2017		1,035
2018		633
	$	6,430

Subsequent to May 31, 2013, we signed a lease for offices in San Jose, California. Minimum payments under the agreement are $0 in fiscal 2014 and 2015, $0.2 million in fiscal 2016, $0.5 million in fiscal 2017, $0.5 million in fiscal 2018 and $0.3 million thereafter.

Other Commitments

We purchase components from a variety of suppliers. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, we place purchase orders with our suppliers to procure inventory. As of February 28, 2013, we had total noncancelable purchase commitments for inventory of $3.5 million.

Legal Matters

In late 2011, following a voluntary internal review of our compliance with U.S. export control and sanctions laws, our management team became aware that certain of our physical appliances had been sold indirectly into embargoed countries via our distributors and resellers, potentially in violation of U.S. export control and economic sanctions laws. In addition, certain of our solutions incorporate encryption components and may be exported from the U.S. only with the required approvals; in the past, we may have exported products prior to receiving these required authorizations. After completion of a comprehensive internal investigation conducted by outside counsel, we submitted voluntary disclosures regarding these matters to the U.S. Commerce Department, Bureau of Industry and Security (“BIS”), and to the U.S. Treasury Department, Office of Foreign Assets Control (“OFAC”). These disclosures summarized potential violations of export controls and economic sanctions laws, including reexports by third parties and provision of services to end users in embargoed countries including Iran, Sudan and Syria. If we are found to have violated U.S. export control laws, we may be subject to various penalties available under the laws, the amount of which is currently not estimable.

From time to time, we are party to litigation and subject to claims that arise in the ordinary course of our business, including actions with respect to employment claims and other matters. Although the results of litigation and claims are inherently unpredictable, we believe that the final outcome of such matters will not have a material adverse effect on our business, consolidated financial position, results of operations or cash flows.

F-33

BARRACUDA NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of May 31, 2013 and for the three months ended May 31, 2012 and 2013 is unaudited)

12. Employee Benefit Plan

Our 401(k) tax-deferred savings plan (the “401(k) Plan”) permits participants to make contributions by salary deduction pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended. Under the 401(k) Plan, participating employees may defer a portion of their pre-tax earnings, up to the IRS annual contribution limit. In April 2013 our Board of Directors approved our matching of employee contributions up to 2.5% of each employee’s eligible earnings, 1.25% of which is a guaranteed contribution match and 1.25% is matched if performance goals are met.

13. Subsequent Events

We evaluated subsequent events through July 29, 2013, which is the date the financial statements were available to be issued.

14. Subsequent Events (unaudited)

On August 13, 2013, Parallel Networks, LLC, or Parallel Networks, which we believe is a non-practicing entity, filed a lawsuit against us in the U.S. District Court for the District of Delaware, Parallel Networks, LLC v. Barracuda Networks, Inc., Case No. 1:13-cv-01412-UNA, alleging that certain of our appliances infringe two of their U.S. patents: U.S. Pat. No. 7,571,217, titled “Method and System for Uniform Resource Locator Transformation,” and U.S. Pat. No. 8,352,570, titled “Method and System for Uniform Resource Locator Transformation.” Parallel Networks has asserted similar claims against other companies, including Array Networks, Inc., Brocade Communications Systems, Inc., Citrix Systems, Inc., Riverbed Technology, Inc. and SAP AG. This matter is in its earliest stages, but we intend to vigorously defend the lawsuit. Given the early stage of the litigation, we are unable to estimate a possible loss or range of possible loss.

F-34

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth all expenses to be paid by the Registrant, other than underwriting discounts and commissions, upon completion of this offering. All amounts shown are estimates except for the SEC registration fee and the FINRA filing fee.

SEC registration fee		*
FINRA filing fee		*
Exchange listing fee		*
Printing and engraving		*
Legal fees and expenses		*
Accounting fees and expenses		*
Blue sky fees and expenses (including legal fees)		*
Transfer agent and registrar fees and expenses		*
Miscellaneous		*
Total	$	*

* To be filed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

On completion of this offering, the Registrant’s amended and restated certificate of incorporation will contain provisions that eliminate, to the maximum extent permitted by the General Corporation Law of the State of Delaware, the personal liability of the Registrant’s directors and executive officers for monetary damages for breach of their fiduciary duties as directors or officers. The Registrant’s amended and restated certificate of incorporation and bylaws will provide that the Registrant must indemnify its directors and executive officers and may indemnify its employees and other agents to the fullest extent permitted by the General Corporation Law of the State of Delaware.

Sections 145 and 102(b)(7) of the General Corporation Law of the State of Delaware provide that a corporation may indemnify any person made a party to an action by reason of the fact that he or she was a director, executive officer, employee or agent of the corporation or is or was serving at the request of a corporation against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, except that, in the case of an action by or in right of the corporation, no indemnification may generally be made in respect of any claim as to which such person is adjudged to be liable to the corporation.

The Registrant has entered into indemnification agreements with its directors and executive officers in addition to the indemnification provided for in its amended and restated certificate of incorporation and bylaws, and the Registrant intends to enter into indemnification agreements with any new directors and executive officers in the future.

The Registrant has purchased and intends to maintain insurance on behalf of each and any person who is or was a director or officer of the Registrant against any loss arising from any claim asserted against him or her and incurred by him or her in any such capacity, subject to certain exclusions.

II-1

The Underwriting Agreement (Exhibit 1.1 hereto) provides for indemnification by the underwriters of the Registrant and its executive officers and directors, and by the Registrant of the underwriters, for certain liabilities, including liabilities arising under the Securities Act.

See also the undertakings set out in response to Item 17 herein.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since March 1, 2011, we have issued the following securities that were not registered under the Securities Act:

Sale of Series B Preferred Stock

On October 3, 2012, we issued 22,727,913 shares of our Series B redeemable convertible preferred stock to seven accredited investors at a per share purchase price of approximately $5.62, for an aggregate purchase price of $127.5 million.

Option and Common Stock Issuances

From March 1, 2011 to August 31, 2013, we issued an aggregate of 1,146,966 shares of common stock upon the settlement of the RSUs issued to certain of our officers, directors, employees and consultants under our 2004 Plan and 2012 Equity Incentive Plan.

From March 1, 2011 to August 31, 2013, we granted stock options to purchase an aggregate of 12,230,691 shares of our common stock to certain of our officers, directors, employees and consultants under our 2004 Stock Plan, our SignNow Option Plan and our 2012 Equity Incentive Plan at exercise prices per share ranging from $0.51 to $5.85. In addition, we have granted 4,178,439 RSUs to certain of our officers, directors, employees and consultants under our 2012 Equity Incentive Plan.

On April 30, 2013, we assumed options to purchase 179,191 shares of our common stock in connection with our acquisition of SignNow, Inc.

None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering, and the registrant believes the transactions were exempt from the registration requirements of the Securities Act in reliance on Section 4(2) thereof and Rule 701 thereunder as transactions by an issuer not involving a public offering.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits.

See Exhibit Index immediately following the Signature Pages.

(b) Financial Statement Schedules.

The following schedule is filed as part of this registration statement: Schedule II—Valuation and Qualifying Accounts.

All other financial statement schedules have been omitted because the information called for is not required or is shown either in the consolidated financial statements or in the notes thereto.

II-2

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

	Year Ended February 28/29,
	2011			2012			2013
	(in thousands)
Allowance for doubtful accounts:
Beginning balance	$	1,129		$	924		$	1,339
Charged to costs and expenses		305			424			(77	)
Bad debt write-offs		(510	)		(9	)		(10	)
Ending balance	$	924		$	1,339		$	1,252
Sales return reserve:
Beginning balance	$	1,538		$	1,724		$	1,977
Charged to deferred revenue		9,226			11,347			13,072
Sales returns		(9,040	)		(11,094	)		(12,678	)
Ending balance	$	1,724		$	1,977		$	2,371

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-3

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in Campbell, California, on the         day of                     2013.

BARRACUDA NETWORKS, INC.
By:
	William D. Jenkins, Jr.
	Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints William D. Jenkins Jr. and David Faugno, and each of them, as his true and lawful attorney-in-fact and agent with full power of substitution, for him in any and all capacities, to sign any and all amendments to this registration statement (including post-effective amendments or any abbreviated registration statement and any amendments thereto filed pursuant to Rule 462(b) increasing the number of securities for which registration is sought), and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact, proxy, and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact, proxy and agent, or his substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement on Form S-1 has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
William D. Jenkins, Jr.	Chief Executive Officer and Director (Principal Executive Officer)	, 2013
David Faugno	Chief Financial Officer and Vice President (Principal Financial Officer)	, 2013
Dustin Driggs	Corporate Controller (Principal Accounting Officer)	, 2013
Jeffry R. Allen	Director	, 2013
Dean M. Drako	Director	, 2013
James J. Goetz	Director	, 2013
David R. Golob	Director	, 2013

II-4

Signature	Title	Date
Zachary S. Levow	Director	, 2013
Michael D. Perone	Director	, 2013
Gordon L. Stitt	Director	, 2013

II-5

EXHIBIT INDEX

Exhibit Number	Description
1.1**	Form of Underwriting Agreement
3.1*	Amended and Restated Certificate of Incorporation of the registrant, as currently in effect.
3.2**	Form of Amended and Restated Certificate of Incorporation of the registrant, to be in effect upon the completion of this offering.
3.3*	Bylaws of the registrant, as currently in effect.
3.4**	Form of Amended and Restated Bylaws of the registrant, to be in effect upon the completion of this offering.
4.1*	Amended and Restated Investors’ Rights Agreement dated as of October 3, 2012, between the registrant and the other parties thereto
4.2**	Specimen common stock certificate of the registrant
5.1**	Form of Opinion of Wilson Sonsini Goodrich & Rosati, P.C.
10.1*	Form of Indemnification Agreement between the registrant and its directors and officers
10.2	2004 Stock Option Plan, and form of agreements thereunder
10.3**	2012 Equity Incentive Plan, as amended, and form of agreements thereunder
10.4	SignNow 2011 Equity Incentive Plan, form of agreements thereunder
10.5	Purewire, Inc. 2008 Stock Incentive Plan, form of agreements thereunder
10.6*	Offer Letter, between the registrant and William D. Jenkins, Jr., dated June 7, 2013
10.7*	Offer Letter, between the registrant and David Faugno, dated June 30, 2012
10.8*	Offer Letter, between the registrant and Michael D. Perone, dated July 24, 2013
10.9*	Offer Letter, between the registrant and Diane C. Honda, dated September 13, 2012
10.10*	Offer Letter, between the registrant and Michael D. Hughes, dated August 25, 2012
10.11*	Offer Letter, between the registrant and Zachary S. Levow, dated July 24, 2013
10.12	Purchase and Sale Agreement and Escrow Instructions dated as of July 31, 2011, between the registrant and Bryan Family Partnership II, Ltd.
10.13*	Credit Agreement dated as of October 3, 2012, between the registrant and Silicon Valley Bank
10.14*	Lease dated as of June 19, 2013, between the registrant and M West Propco XVII, LLC
10.15†	Recapitalization Agreement dated as of August 23, 2012, among the registrant and the other parties thereto
10.16†	Amendment No. 1 and Waivers to Recapitalization Agreement, dated as of October 3, 2012, among the registrant and the other parties thereto
10.17	Lease dated as of May 24, 2012, between the registrant and 317 Maynard LLC
10.18	Indemnification Agreement date as of April 13, 2012, between the registrant and David Faugno
21.1*	List of subsidiaries of registrant
23.1**	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
23.2**	Consent of Wilson Sonsini Goodrich & Rosati, P.C. (included in Exhibit 5.1)
24.1**	Power of Attorney (included in pages II-4 and II-5 to this registration statement on Form S-1)
99.1	Consent of Compass Intelligence

* Previously Filed.

** To be filed by amendment.

† Portions of this exhibit have been omitted pending a determination by the Securities and Exchange Commission as to whether these portions should be granted confidential treatment.

EX-10.2

Exhibit 10.2

BARRACUDA NETWORKS, INC.

2004 STOCK PLAN

Adopted: November 17, 2004

Approved By Stockholders: November 17, 2004

Termination Date: May 18, 2012

1. Purposes of the Plan. The purposes of this Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company’s business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant. Stock Purchase Rights may also be granted under the Plan.

2. Definitions. As used herein, the following definitions shall apply:

(a) “Administrator” means the Board or any of its Committees as shall be administering the Plan in accordance with Section 4 hereof.

(b) “Applicable Laws” means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Options or Stock Purchase Rights are granted under the Plan.

(c) “Board” means the Board of Directors of the Company.

(d) “Change in Control” means the occurrence of any of the following events:

(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities, except that any change in the beneficial ownership of the securities of the Company as a result of a private financing of the Company that is approved by the Board, shall not be deemed to be a Change in Control; or

(ii) The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or

(iii) The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

(e) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code.

A-1

(f) “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof.

(g) “Common Stock” means the Common Stock of the Company.

(h) “Company” means Barracuda Networks, Inc., a California corporation.

(i) “Consultant” means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entity.

(j) “Director” means a member of the Board.

(k) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

(l) “Employee” means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

(m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(n) “Exchange Program” means a program under which (a) outstanding Options are surrendered or cancelled in exchange for Options of the same type (which may have lower exercise prices and different terms), Options of a different type, and/or cash, and/or (b) the exercise price of an outstanding Option is reduced. The terms and conditions of any Exchange Program will be determined by the Administrator in its sole discretion.

(o) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination; or

(iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.

(p) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

(q) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

(r) “Option” means a stock option granted pursuant to the Plan.

A-2

(s) “Option Agreement” means a written or electronic agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.

(t) “Optioned Stock” means the Common Stock subject to an Option or a Stock Purchase Right.

(u) “Optionee” means the holder of an outstanding Option or Stock Purchase Right granted under the Plan.

(v) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(w) “Plan” means this 2004 Stock Plan.

(x) “Restricted Stock” means Shares issued pursuant to a Stock Purchase Right or Shares of restricted stock issued pursuant to an Option.

(y) “Restricted Stock Purchase Agreement” means a written or electronic agreement between the Company and the Optionee evidencing the terms and restrictions applying to Shares purchased under a Stock Purchase Right. The Restricted Stock Purchase Agreement is subject to the terms and conditions of the Plan and the notice of grant.

(z) “Securities Act” means the Securities Act of 1933, as amended.

(aa) “Service Provider” means an Employee, Director or Consultant.

(bb) “Share” means a share of the Common Stock, as adjusted in accordance with Section 13 below.

(cc) “Stock Purchase Right” means a right to purchase Common Stock pursuant to Section 11 below.

(dd) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

3. Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan, the maximum aggregate number of Shares that may be subject to Options or Stock Purchase Rights and sold under the Plan is 11,400,000 Shares. The Shares may be authorized but unissued, or reacquired Common Stock.

If an Option or Stock Purchase Right expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Exchange Program, the unpurchased Shares that were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon exercise of either an Option or Stock Purchase Right, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if unvested Shares of Restricted Stock are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan.

A-3

4. Administration of the Plan.

(a) Administrator. The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws.

(b) Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

(i) to determine the Fair Market Value;

(ii) to select the Service Providers to whom Options and Stock Purchase Rights may from time to time be granted hereunder;

(iii) to determine the number of Shares to be covered by each such award granted hereunder;

(iv) to approve forms of agreement for use under the Plan;

(v) to determine the terms and conditions of any Option or Stock Purchase Right granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options or Stock Purchase Rights may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or Stock Purchase Right or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

(vi) to institute an Exchange Program;

(vii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;

(viii) to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or Stock Purchase Right that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and

(ix) to construe and interpret the terms of the Plan and Options granted pursuant to the Plan.

(c) Effect of Administrator’s Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees.

5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

6. Limitations.

(a) Incentive Stock Option Limit. Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding

A-4

such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

(b) At-Will Employment. Neither the Plan nor any Option or Stock Purchase Right shall confer upon any Optionee any right with respect to continuing the Optionee’s relationship as a Service Provider with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate such relationship at any time, with or without cause, and with or without notice.

7. Term of Plan. Subject to stockholder approval in accordance with Section 19, the Plan shall become effective upon its adoption by the Board. Unless sooner terminated under Section 15, it shall continue in effect for a term of ten (10) years from the later of (i) the effective date of the Plan, or (ii) the earlier of the most recent Board or stockholder approval of an increase in the number of Shares reserved for issuance under the Plan.

8. Term of Option. The term of each Option shall be stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.

9. Option Exercise Price and Consideration.

(a) Exercise Price. The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:

(i) In the case of an Incentive Stock Option

(1) granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(2) granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

(ii) In the case of a Nonstatutory Stock Option

(1) granted to a Service Provider who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(2) granted to any other Service Provider, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant.

A-5

(iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above in accordance with and pursuant to a transaction described in Section 424 of the Code.

(b) Forms of Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist of, without limitation, (1) cash, (2) check, (3) promissory note, (4) other Shares, provided Shares acquired directly from the Company (x) have been owned by the Optionee, and not subject to a substantial risk of forfeiture, for more than six months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (5) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, (6) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws or (7) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company.

10. Exercise of Option.

(a) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. An Option may not be exercised for a fraction of a Share. Except in the case of Options granted to officers, Directors and Consultants, Options shall become exercisable at a rate of no less than 20% per year over five (5) years from the date the Options are granted.

An Option shall be deemed exercised when the Company receives (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 13 of the Plan.

Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(b) Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, such Optionee may exercise his or her Option within thirty (30) days of termination, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). Unless the Administrator provides otherwise, if on the date of termination the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to

A-6

the Plan on the date that is one (1) month following the Optionee’s termination. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(c) Disability of Optionee. If an Optionee ceases to be a Service Provider as a result of the Optionee’s Disability, the Optionee may exercise his or her Option within six (6) months of termination, or such longer period of time as specified in the Option Agreement, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). Unless the Administrator provides otherwise, if on the date of termination the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan on the date that is one (1) month following the Optionee’s termination. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(d) Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised within six (6) months following Optionee’s death, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement) by the Optionee’s designated beneficiary, provided such beneficiary has been designated prior to Optionee’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Optionee, then such Option may be exercised by the personal representative of the Optionee’s estate or by the person(s) to whom the Option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution. Unless the Administrator provides otherwise, if, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan on the date that is one (1) month following the Optionee’s termination. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(e) Leaves of Absence.

(i) Unless the Administrator provides otherwise, vesting of Options granted hereunder to officers and Directors shall be suspended during any unpaid leave of absence.

(ii) A Service Provider shall not cease to be an Employee in the case of (A) any leave of absence approved by the Company or (B) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor.

(iii) For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the 91st day of such leave, any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option.

11. Stock Purchase Rights.

(a) Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing or electronically of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid, and the time within which such

A-7

person must accept such offer. The terms of the offer shall comply in all respects with Section 260.140.42 of Title 10 of the California Code of Regulations. The offer shall be accepted by execution of a Restricted Stock Purchase Agreement in the form determined by the Administrator.

(b) Repurchase Option. Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall grant the Company a repurchase option exercisable within 90 days of the voluntary or involuntary termination of the purchaser’s service with the Company for any reason (including death or disability). Unless the Administrator provides otherwise, the purchase price for Shares repurchased pursuant to the Restricted Stock Purchase Agreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine. Except with respect to Shares purchased by officers, Directors and Consultants, the repurchase option shall in no case lapse at a rate of less than 20% per year over five (5) years from the date of purchase.

(c) Other Provisions. The Restricted Stock Purchase Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion.

(d) Rights as a Stockholder. Once the Stock Purchase Right is exercised, the purchaser shall have rights equivalent to those of a stockholder and shall be a stockholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 13 of the Plan.

12. Limited Transferability of Options and Stock Purchase Rights. Unless determined otherwise by the Administrator, Options and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the Optionee, only by the Optionee. If the Administrator in its sole discretion makes an Option or Stock Purchase Right transferable, such Option or Stock Purchase Right may only be transferred (i) by will, (ii) by the laws of descent and distribution, or (iii) to family members (within the meaning of Rule 701 of the Securities Act) through gifts or domestic relations orders, as permitted by Rule 701 of the Securities Act.

13. Adjustments; Dissolution or Liquidation; Merger or Change in Control.

(a) Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, may (in its sole discretion) adjust the number and class of shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Option or Stock Purchase Right; provided, however, that the Administrator shall make such adjustments to the extent required by Section 25102(o) of the California Corporations Code.

(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Option or Stock Purchase Right will terminate immediately prior to the consummation of such proposed action.

A-8

(c) Merger or Change in Control. In the event of a merger of the Company with or into another corporation, or a Change in Control, each outstanding Option and Stock Purchase Right shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation in a merger or Change in Control refuses to assume or substitute for the Option or Stock Purchase Right, then the Optionee shall fully vest in and have the right to exercise the Option or Stock Purchase Right as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option or Stock Purchase Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or Change in Control, the Administrator shall notify the Optionee in writing or electronically that the Option or Stock Purchase Right shall be fully exercisable for a period of time as determined by the Administrator, and the Option or Stock Purchase Right shall terminate upon expiration of such period for no consideration, unless otherwise determined by the Administrator. For the purposes of this paragraph, the Option or Stock Purchase Right shall be considered assumed if, following the merger or Change in Control, the option or right confers the right to purchase or receive, for each Share subject to the Option or Stock Purchase Right immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or Stock Purchase Right, for each Share subject to the Option or Stock Purchase Right, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of common stock in the merger or Change in Control.

14. Time of Granting Options and Stock Purchase Rights. The date of grant of an Option or Stock Purchase Right shall, for all purposes, be the date on which the Administrator makes the determination granting such Option or Stock Purchase Right, or such later date as is determined by the Administrator. Notice of the determination shall be given to each Service Provider to whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of such grant.

15. Amendment and Termination of the Plan.

(a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

(b) Stockholder Approval. The Board shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination.

16. Conditions Upon Issuance of Shares.

(a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option or Stock Purchase Right unless the exercise of such Option or Stock Purchase Right and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

A-9

(b) Investment Representations. As a condition to the exercise of an Option or Stock Purchase Right, the Administrator may require the person exercising such Option or Stock Purchase Right to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

17. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

18. Reservation of Shares. The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

19. Stockholder Approval. The Plan shall be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval shall be obtained in the degree and manner required under Applicable Laws.

20. Information to Optionees. The Company shall provide to each Optionee and to each individual who acquires Shares pursuant to the Plan, not less frequently than annually during the period such Optionee has one or more Options or Stock Purchase Rights outstanding, and, in the case of an individual who acquires Shares pursuant to the Plan, during the period such individual owns such Shares, copies of annual financial statements. The Company shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information.

A-10

BARRACUDA NETWORKS, INC.

2004 STOCK PLAN

STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms defined in the 2004 Stock Plan shall have the same defined meanings in this Stock Option Agreement.

21. NOTICE OF STOCK OPTION GRANT

Name:

Address:

The undersigned Optionee has been granted an Option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows:

Date of Grant
Vesting Commencement Date
Exercise Price per Share	$
Total Number of Shares Granted
Total Exercise Price	$
Type of Option:		Incentive Stock Option
		Nonstatutory Stock Option
Term/Expiration Date:
Vesting Schedule:

This Option shall be exercisable, in whole or in part, according to the following vesting schedule:

[Twenty-five percent (25%) of the Shares subject to the Option shall vest on the one (1) year anniversary of the Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall vest each month thereafter on the same day of the month as the Vesting Commencement Date, subject to Optionee continuing to be a Service Provider through each such date.]

Termination Period:

This Option shall be exercisable for [three (3) months] after Optionee ceases to be a Service Provider. Upon Optionee’s death or Disability, this Option may be exercised for [one (1) year] after Optionee ceases to be a Service Provider. In no event may Optionee exercise this Option after the Term/Expiration Date as provided above.

22. AGREEMENT

(a) Grant of Option. The Plan Administrator of the Company hereby grants to the Optionee named in the Notice of Grant (the “Optionee”), an option (the “Option”) to purchase the number of Shares set forth in the Notice of Grant, at the exercise price per Share set forth in the Notice of Grant (the “Exercise Price”), and subject to the terms and conditions of the Plan, which is incorporated herein by reference. By accepting this Option, the Optionee acknowledges and agrees that the Optionee currently is not entitled to any option other than this Option, including any option described in the Optionee’s offer letter or otherwise, whether orally or in writing, and the Optionee waives any and all claims regarding any such options.

Subject to Section 15(c) of the Plan, in the event of a conflict between the terms and conditions of the Plan and this Option Agreement, the terms and conditions of the Plan shall prevail.

If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds the $100,000 rule of Code Section 422(d), this Option shall be treated as a Nonstatutory Stock Option (“NSO”).

(b) Exercise of Option.

(i) Right to Exercise. This Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and with the applicable provisions of the Plan and this Option Agreement.

(ii) Method of Exercise. This Option shall be exercisable by delivery of an exercise notice in the form attached as Exhibit A (the “Exercise Notice”) which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price.

No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares.

(c) Optionee’s Representations. In the event the Shares have not been registered under the Securities Act of 1933, as amended, at the time this Option is exercised, the Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit B.

(d) Lock-Up Period. Optionee hereby agrees that Optionee shall not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Common Stock (or other securities) of the Company or enter into any swap, hedging or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Common Stock (or other securities) of the Company held by Optionee (other than those included in the registration) for a period

-2-

specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed one hundred eighty (180) days following the effective date of any registration statement of the Company filed under the Securities Act.

Optionee agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. In addition, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, Optionee shall provide, within ten (10) days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company’s securities pursuant to a registration statement filed under the Securities Act. The obligations described in this Section shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said one hundred eighty (180) day period. Optionee agrees that any transferee of the Option or shares acquired pursuant to the Option shall be bound by this Section.

(e) Method of Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee:

(i) cash or check;

(ii) consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan; or

(iii) surrender of other Shares which, (i) in the case of Shares acquired from the Company, either directly or indirectly, have been owned by the Optionee, and not subject to a substantial risk of forfeiture, for more than six (6) months on the date of surrender, and (ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Exercised Shares.

(f) Restrictions on Exercise. This Option may not be exercised until such time as the Plan has been approved by the shareholders of the Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any Applicable Law.

(g) Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by Optionee. The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

(h) Term of Option. This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option.

(i) Tax Obligations.

(i) Withholding Taxes. Optionee agrees to make appropriate arrangements with the Company (or the Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise. Optionee acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise.

-3-

(ii) Notice of Disqualifying Disposition of ISO Shares. If the Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (1) the date two years after the Date of Grant, or (2) the date one year after the date of exercise, the Optionee shall immediately notify the Company in writing of such disposition. Optionee agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the Optionee.

(j) Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This agreement is governed by the internal substantive laws but not the choice of law rules of California.

(k) No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below.

OPTIONEE	BARRACUDA NETWORKS, INC.
Signature	By
Print Name	Title
Residence Address

-4-

EXHIBIT A

BARRACUDA NETWORKS, INC.

2004 STOCK PLAN

EXERCISE NOTICE

BARRACUDA NETWORKS, INC.

Address:                                         

Attention:                                         

1. Exercise of Option. Effective as of today,             ,             , the undersigned (“Optionee”) hereby elects to exercise Optionee’s option to purchase              shares of the Common Stock (the “Shares”) of Barracuda Networks, Inc. (the “Company”) under and pursuant to the 2004 Stock Plan (the “Plan”) and the Stock Option Agreement dated             ,              (the “Option Agreement”).

2. Delivery of Payment. Optionee herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement, and any and all withholding taxes due in connection with the exercise of the Option.

3. Representations of Optionee. Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions.

4. Rights as Shareholder. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Shares shall be issued to the Optionee as soon as practicable after the Option is exercised in accordance with the Option Agreement. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance except as provided in Section 13 of the Plan.

5. Company’s Right of First Refusal. Before any Shares held by Optionee or any transferee (either being sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section (the “Right of First Refusal”).

(a) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating: (i) the Holder’s bona fide intention to sell or otherwise transfer such Shares; (ii) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (iii) the number of Shares to be transferred to each Proposed Transferee; and (iv) the bona fide cash price or other consideration for which the Holder proposes to transfer the Shares (the “Offered Price”), and the Holder shall offer the Shares at the Offered Price to the Company or its assignee(s).

(b) Exercise of Right of First Refusal. At any time within thirty (30) days after receipt of the Notice, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all, but not less than all, of the Shares proposed to be transferred to any one or more of the Proposed Transferees, at the purchase price determined in accordance with subsection (c) below.

(c) Purchase Price. The purchase price (“Purchase Price”) for the Shares purchased by the Company or its assignee(s) under this Section shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of the Company in good faith.

(d) Payment. Payment of the Purchase Price shall be made, at the option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an assignee, to the assignee), or by any combination thereof within thirty (30) days after receipt of the Notice or in the manner and at the times set forth in the Notice.

(e) Holder’s Right to Transfer. If all of the Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice, that any such sale or other transfer is effected in accordance with any applicable securities laws and that the Proposed Transferee agrees in writing that the provisions of this Section shall continue to apply to the Shares in the hands of such Proposed Transferee. If the Shares described in the Notice are not transferred to the Proposed Transferee within such period, a new Notice shall be given to the Company, and the Company and/or its assignees shall again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred.

(f) Exception for Certain Family Transfers. Anything to the contrary contained in this Section notwithstanding, the transfer of any or all of the Shares during the Optionee’s lifetime or on the Optionee’s death by will or intestacy to the Optionee’s immediate family or a trust for the benefit of the Optionee’s immediate family shall be exempt from the provisions of this Section. “Immediate Family” as used herein shall mean spouse, lineal descendant or antecedent, father, mother, brother or sister. In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of this Section, and there shall be no further transfer of such Shares except in accordance with the terms of this Section.

(g) Termination of Right of First Refusal. The Right of First Refusal shall terminate as to any Shares upon the earlier of (i) the first sale of Common Stock of the Company to the general public, or (ii) a Change in Control in which the successor corporation has equity securities that are publicly traded.

6. Tax Consultation. Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.

7. Restrictive Legends and Stop-Transfer Orders.

(a) Legends. Optionee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR,

-2-

IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER FOR A PERIOD NOT TO EXCEED 180 DAYS FOLLOWING THE EFFECTIVE DATE OF THE UNDERWRITTEN PUBLIC OFFERING OF THE COMPANY’S SECURITIES AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT THE CONSENT OF THE COMPANY OR THE MANAGING UNDERWRITER.

(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Exercise Notice or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

8. Successors and Assigns. The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this Exercise Notice shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Notice shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns.

9. Interpretation. Any dispute regarding the interpretation of this Exercise Notice shall be submitted by Optionee or by the Company forthwith to the Administrator which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Administrator shall be final and binding on all parties.

10. Governing Law; Severability. This Exercise Notice is governed by the internal substantive laws but not the choice of law rules, of California. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Exercise Notice will continue in full force and effect.

11. Entire Agreement. The Plan and Option Agreement are incorporated herein by reference. This Exercise Notice, the Plan, the Option Agreement and the Investment Representation Statement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

-3-

Submitted by:	Accepted by:
OPTIONEE	BARRACUDA NETWORKS, INC.
Signature	By
Print Name	Title
Address:	Address:
	Date Received

-4-

EXHIBIT B

INVESTMENT REPRESENTATION STATEMENT

OPTIONEE:

COMPANY:                      BARRACUDA NETWORKS, INC.

SECURITY:                      COMMON STOCK

NUMBER OF

SHARES:

DATE:

In connection with the purchase of the above-listed Securities, the undersigned Optionee represents to the Company the following:

1. Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

2. Optionee acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee’s investment intent as expressed herein. In this connection, Optionee understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Optionee’s representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future. Optionee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Optionee further acknowledges and understands that the Company is under no obligation to register the Securities. Optionee understands that the certificate evidencing the Securities will be imprinted with any legend required under applicable state securities laws.

3. Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Securities being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than two years, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of the paragraph immediately above.

4. Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available in such event.

Signature of Optionee:
Date:	,

-2-

EX-10.4

Exhibit 10.4

SIGNNOW, INC.

2011 EQUITY INCENTIVE PLAN

1. Purposes of the Plan. The purposes of this 2011 Equity Incentive Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees and Consultants, and to promote the success of the Company’s business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant of an Option and subject to the applicable provisions of Section 422 of the Code and the regulations promulgated thereunder. Restricted Stock may also be granted under the Plan.

2. Definitions. As used herein, the following definitions shall apply:

(a) “Administrator” means the Board or a Committee.

(b) “Affiliate” means (i) an entity other than a Subsidiary which, together with the Company, is under common control of a third person or entity and (ii) an entity other than a Subsidiary in which the Company and /or one or more Subsidiaries own a controlling interest.

(c) “Applicable Laws” means all applicable laws, rules, regulations and requirements, including, but not limited to, all applicable U.S. federal or state laws, any Stock Exchange rules or regulations, and the applicable laws, rules or regulations of any other country or jurisdiction where Options or Restricted Stock are granted under the Plan or Participants reside or provide services, as such laws, rules, and regulations shall be in effect from time to time.

(d) “Award” means any award of an Option or Restricted Stock under the Plan.

(e) “Board” means the Board of Directors of the Company.

(f) “California Participant” means a Participant whose Award is issued in reliance on Section 25102(o) of the California Corporations Code.

(g) “Cashless Exercise” means a program approved by the Administrator in which payment of the Option exercise price or tax withholding obligations or other required deductions may be satisfied, in whole or in part, with Shares subject to the Option, including by delivery of an irrevocable direction to a securities broker (on a form prescribed by the Company) to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of such amount.

(h) “Cause” for termination of a Participant’s Continuous Service Status will exist (unless another definition is provided in an applicable Option Agreement, Restricted Stock Purchase Agreement, employment agreement or other applicable written agreement) if the Participant’s Continuous Service Status is terminated for any of the following reasons: (i) any material breach by Participant of any material written agreement between Participant and the

Company and Participant’s failure to cure such breach within 30 days after receiving written notice thereof; (ii) any failure by Participant to comply with the Company’s material written policies or rules as they may be in effect from time to time; (iii) neglect or persistent unsatisfactory performance of Participant’s duties and Participant’s failure to cure such condition within 30 days after receiving written notice thereof; (iv) Participant’s repeated failure to follow reasonable and lawful instructions from the Board or Chief Executive Officer and Participant’s failure to cure such condition within 30 days after receiving written notice thereof; (v) Participant’s conviction of, or plea of guilty or nolo contendre to, any felony or crime that results in, or is reasonably expected to result in, a material adverse effect on the business or reputation of the Company; (vi) Participant’s commission of or participation in an act of fraud against the Company; (vii) Participant’s intentional material damage to the Company’s business, property or reputation; or (viii) Participant’s unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company. For purposes of clarity, a termination without “Cause” does not include any termination that occurs as a result of Participant’s death or Disability. The determination as to whether a Participant’s Continuous Service Status has been terminated for Cause shall be made in good faith by the Company and shall be final and binding on the Participant. The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time, and the term “Company” will be interpreted to include any Subsidiary, Parent, Affiliate, or any successor thereto, if appropriate.

(i) “Change of Control” means (i) a sale of all or substantially all of the Company’s assets other than to an Excluded Entity (as defined below), (ii) a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, limited liability company or other entity other than an Excluded Entity, or (iii) the consummation of a transaction, or series of related transactions, in which any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of all of the Company’s then outstanding voting securities.

Notwithstanding the foregoing, a transaction shall not constitute a Change of Control if its purpose is to (A) change the jurisdiction of the Company’s incorporation, (B) create a holding company that will be owned in substantially the same proportions by the persons who hold the Company’s securities immediately before such transaction, or (C) obtain funding for the Company in a financing that is approved by the Company’s Board. An “Excluded Entity” means a corporation or other entity of which the holders of voting capital stock of the Company outstanding immediately prior to such transaction are the direct or indirect holders of voting securities representing at least a majority of the votes entitled to be cast by all of such corporation’s or other entity’s voting securities outstanding immediately after such transaction.

(j) “Code” means the Internal Revenue Code of 1986, as amended.

(k) “Committee” means one or more committees or subcommittees of the Board consisting of two (2) or more Directors (or such lesser or greater number of Directors as shall constitute the minimum number permitted by Applicable Laws to establish a committee or sub-committee of the Board) appointed by the Board to administer the Plan in accordance with Section 4 below.

-2-

(l) “Common Stock” means the Company’s common stock, par value $0.0001 per share, as adjusted in accordance with Section 11 below.

(m) “Company” means SignNow, Inc., a Delaware corporation.

(n) “Consultant” means any person or entity, including an advisor but not an Employee, that renders, or has rendered, services to the Company, or any Parent, Subsidiary or Affiliate and is compensated for such services, and any Director whether compensated for such services or not.

(o) “Continuous Service Status” means the absence of any interruption or termination of service as an Employee or Consultant. Continuous Service Status as an Employee or Consultant shall not be considered interrupted or terminated in the case of: (i) Company approved sick leave; (ii) military leave; (iii) any other bona fide leave of absence approved by the Company, provided that, if an Employee is holding an Incentive Stock Option and such leave exceeds 3 months, such Employee’s service as an Employee shall be deemed terminated on the 1st day following such 3-month period and the Incentive Stock Option shall thereafter automatically become a Nonstatutory Stock Option in accordance with Applicable Laws, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to a written Company policy. Also, Continuous Service Status as an Employee or Consultant shall not be considered interrupted or terminated in the case of a transfer between locations of the Company or between the Company, its Parents, Subsidiaries or Affiliates, or their respective successors, or a change in status from an Employee to a Consultant or from a Consultant to an Employee.

(p) “Director” means a member of the Board.

(q) “Disability” means “disability” within the meaning of Section 22(e)(3) of the Code.

(r) “Employee” means any person employed by the Company, or any Parent, Subsidiary or Affiliate, with the status of employment determined pursuant to such factors as are deemed appropriate by the Company in its sole discretion, subject to any requirements of Applicable Laws, including the Code. The payment by the Company of a director’s fee shall not be sufficient to constitute “employment” of such director by the Company or any Parent, Subsidiary or Affiliate.

(s) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(t) “Fair Market Value” means, as of any date, the per share fair market value of the Common Stock, as determined by the Administrator in good faith on such basis as it deems appropriate and applied consistently with respect to Participants. Whenever possible, the determination of Fair Market Value shall be based upon the per share closing price for the Shares as reported in The Wall Street Journal for the applicable date.

-3-

(u) “Family Members” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships) of the Participant, any person sharing the Participant’s household (other than a tenant or employee), a trust in which these persons (or the Participant) have more than 50% of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than 50% of the voting interests.

(v) “Incentive Stock Option” means an Option intended to, and which does, in fact, qualify as an incentive stock option within the meaning of Section 422 of the Code.

(w) “Involuntary Termination” means (unless another definition is provided in the applicable Option Agreement, Restricted Stock Purchase Agreement, employment agreement or other applicable written agreement) the termination of a Participant’s Continuous Service Status other than for (i) death, (ii) Disability or (iii) for Cause by the Company or a Parent, Subsidiary, Affiliate or successor thereto, as appropriate.

(x) “Listed Security” means any security of the Company that is listed or approved for listing on a national securities exchange or designated or approved for designation as a national market system security on an interdealer quotation system by the Financial Industry Regulatory Authority (or any successor thereto).

(y) “Nonstatutory Stock Option” means an Option that is not intended to, or does not, in fact, qualify as an Incentive Stock Option.

(z) “Option” means a stock option granted pursuant to the Plan.

(aa) “Option Agreement” means a written document, the form(s) of which shall be approved from time to time by the Administrator, reflecting the terms of an Option granted under the Plan and includes any documents attached to or incorporated into such Option Agreement, including, but not limited to, a notice of stock option grant and a form of exercise notice.

(bb) “Option Exchange Program” means a program approved by the Administrator whereby outstanding Options (i) are exchanged for Options with a lower exercise price, Restricted Stock, cash or other property or (ii) are amended to decrease the exercise price as a result of a decline in the Fair Market Value.

(cc) “Optioned Stock” means Shares that are subject to an Option or that were issued pursuant to the exercise of an Option.

(dd) “Optionee” means an Employee or Consultant who receives an Option.

(ee) “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, at the time of grant of the Award, each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.

-4-

(ff) “Participant” means any holder of one or more Awards or Shares issued pursuant to an Award.

(gg) “Plan” means this 2011 Equity Incentive Plan.

(hh) “Restricted Stock” means Shares acquired pursuant to a right to purchase or receive Common Stock granted pursuant to Section 8 below.

(ii) “Restricted Stock Purchase Agreement” means a written document, the form(s) of which shall be approved from time to time by the Administrator, reflecting the terms of Restricted Stock granted under the Plan and includes any documents attached to such agreement.

(jj) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, as amended from time to time, or any successor provision.

(kk) “Share” means a share of Common Stock, as adjusted in accordance with Section 11 below.

(ll) “Stock Exchange” means any stock exchange or consolidated stock price reporting system on which prices for the Common Stock are quoted at any given time.

(mm) “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of grant of the Award, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

(nn) “Ten Percent Holder” means a person who owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Parent or Subsidiary measured as of an Award’s date of grant.

3. Stock Subject to the Plan. Subject to the provisions of Section 11 below, the maximum aggregate number of Shares that may be issued under the Plan is 2,976,744 Shares, all of which Shares may be issued under the Plan pursuant to Incentive Stock Options. The Shares issued under the Plan may be authorized, but unissued, or reacquired Shares. If an Award should expire or become unexercisable for any reason without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares that were subject thereto shall, unless the Plan shall have been terminated, become available for future grant under the Plan. In addition, any Shares which are retained by the Company upon exercise of an Award in order to satisfy the exercise or purchase price for such Award or any withholding taxes due with respect to such Award shall be treated as not issued and shall continue to be available under the Plan and Shares issued under the Plan and later forfeited to the Company due to the failure to vest or repurchased by the Company at the original purchase price paid to the Company for the Shares

-5-

(including, without limitation, upon forfeiture to or repurchase by the Company in connection with the termination of a Participant’s Continuous Service Status) shall again be available for future grant under the Plan.

4. Administration of the Plan.

(a) General. The Plan shall be administered by the Board, a Committee appointed by the Board, or any combination thereof, as determined by the Board. The Plan may be administered by different administrative bodies with respect to different classes of Participants and, if permitted by Applicable Laws, the Board may authorize one or more officers of the Company to make Awards under the Plan to Employees and Consultants (who are not subject to Section 16 of the Exchange Act) within parameters specified by the Board.

(b) Committee Composition. If a Committee has been appointed pursuant to this Section 4, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. From time to time the Board may increase the size of any Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies (however caused) and dissolve a Committee and thereafter directly administer the Plan, all to the extent permitted by Applicable Laws and, in the case of a Committee administering the Plan in accordance with the requirements of Rule 16b-3 or Section 162(m) of the Code, to the extent permitted or required by such provisions.

(c) Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its sole discretion:

(i) to determine the Fair Market Value in accordance with Section 2(t) above, provided that such determination shall be applied consistently with respect to Participants under the Plan;

(ii) to select the Employees and Consultants to whom Awards may from time to time be granted;

(iii) to determine the number of Shares to be covered by each Award;

(iv) to approve the form(s) of agreement(s) and other related documents used under the Plan;

(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder, which terms and conditions include but are not limited to the exercise or purchase price, the time or times when Awards may vest and/or be exercised (which may be based on performance criteria), the circumstances (if any) when vesting will be accelerated or forfeiture restrictions will be waived, and any restriction or limitation regarding any Award, Optioned Stock, or Restricted Stock;

(vi) to amend any outstanding Award or agreement related to any Optioned Stock or Restricted Stock, including any amendment adjusting vesting (e.g., in connection with a

-6-

change in the terms or conditions under which such person is providing services to the Company), provided that no amendment shall be made that would materially and adversely affect the rights of any Participant without his or her consent;

(vii) to determine whether and under what circumstances an Option may be settled in cash under Section 7(c)(iii) below instead of Common Stock;

(viii) subject to Applicable Laws, to implement an Option Exchange Program and establish the terms and conditions of such Option Exchange Program without consent of the holders of capital stock of the Company, provided that no amendment or adjustment to an Option that would materially and adversely affect the rights of any Participant shall be made without his or her consent;

(ix) to approve addenda pursuant to Section 14 below or to grant Awards to, or to modify the terms of, any outstanding Option Agreement or Restricted Stock Purchase Agreement or any agreement related to any Optioned Stock or Restricted Stock held by Participants who are foreign nationals or employed outside of the United States with such terms and conditions as the Administrator deems necessary or appropriate to accommodate differences in local law, tax policy or custom which deviate from the terms and conditions set forth in this Plan to the extent necessary or appropriate to accommodate such differences; and

(x) to construe and interpret the terms of the Plan, any Option Agreement or Restricted Stock Purchase Agreement, and any agreement related to any Optioned Stock or Restricted Stock, which constructions, interpretations and decisions shall be final and binding on all Participants.

(d) Indemnification. To the maximum extent permitted by Applicable Laws, each member of the Committee (including officers of the Company, if applicable), or of the Board, as applicable, shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or pursuant to the terms and conditions of any Award except for actions taken in bad faith or failures to act in bad faith, and (ii) any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided that such member shall give the Company an opportunity, at its own expense, to handle and defend any such claim, action, suit or proceeding before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Articles of Incorporation, Certificate of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any other power that the Company may have to indemnify or hold harmless each such person.

5. Eligibility.

-7-

(a) Recipients of Grants. Nonstatutory Stock Options and Restricted Stock may be granted to Employees and Consultants. Incentive Stock Options may be granted only to Employees, provided that Employees of Affiliates shall not be eligible to receive Incentive Stock Options.

(b) Type of Option. Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.

(c) ISO $100,000 Limitation. Notwithstanding any designation under Section 5(b) above, to the extent that the aggregate Fair Market Value of Shares with respect to which options designated as incentive stock options are exercisable for the first time by any Optionee during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess options shall be treated as nonstatutory stock options. For purposes of this Section 5(c), incentive stock options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares subject to an incentive stock option shall be determined as of the date of the grant of such option.

(d) No Employment Rights. Neither the Plan nor any Award shall confer upon any Employee or Consultant any right with respect to continuation of an employment or consulting relationship with the Company (any Parent, Subsidiary or Affiliate), nor shall it interfere in any way with such Employee’s or Consultant’s right or the Company’s (Parent’s, Subsidiary’s or Affiliate’s) right to terminate his or her employment or consulting relationship at any time, with or without cause.

6. Term of Plan. The Plan shall become effective upon its adoption by the Board and shall continue in effect for a term of 10 years unless sooner terminated under Section 13 below.

7. Options.

(a) Term of Option. The term of each Option shall be the term stated in the Option Agreement; provided that the term shall be no more than 10 years from the date of grant thereof or such shorter term as may be provided in the Option Agreement and provided further that, in the case of an Incentive Stock Option granted to a person who at the time of such grant is a Ten Percent Holder, the term of the Option shall be 5 years from the date of grant thereof or such shorter term as may be provided in the Option Agreement.

(b) Option Exercise Price and Consideration.

(i) Exercise Price. The per Share exercise price for the Shares to be issued pursuant to the exercise of an Option shall be such price as is determined by the Administrator and set forth in the Option Agreement, but shall be subject to the following:

(1) In the case of an Incentive Stock Option

a. granted to an Employee who at the time of grant is a Ten Percent Holder, the per Share exercise price shall be no less than 110% of the Fair Market Value on the date of grant;

-8-

b. granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value on the date of grant;

(2) Except as provided in subsection (3) below, in the case of a Nonstatutory Stock Option the per Share exercise price shall be such price as is determined by the Administrator, provided that, if the per Share exercise price is less than 100% of the Fair Market Value on the date of grant, it shall otherwise comply with all Applicable Laws, including Section 409A of the Code; and

(3) Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction.

(ii) Permissible Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option and to the extent required by Applicable Laws, shall be determined at the time of grant) and may consist entirely of (1) cash; (2) check; (3) to the extent permitted under, and in accordance with, Applicable Laws, delivery of a promissory note with such recourse, interest, security and redemption provisions as the Administrator determines to be appropriate (subject to the provisions of Section 152 of the General Corporation Law); (4) cancellation of indebtedness; (5) other previously owned Shares that have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which the Option is exercised; (6) a Cashless Exercise; (7) such other consideration and method of payment permitted under Applicable Laws; or (8) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company and the Administrator may, in its sole discretion, refuse to accept a particular form of consideration at the time of any Option exercise.

(c) Exercise of Option.

(i) General.

(1) Exercisability. Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator, consistent with the terms of the Plan and reflected in the Option Agreement, including vesting requirements and/or performance criteria with respect to the Company, and Parent, Subsidiary or Affiliate, and/or the Optionee.

(2) Leave of Absence. The Administrator shall have the discretion to determine whether and to what extent the vesting of Options shall be tolled during any leave of absence; provided, however, that in the absence of such determination, vesting of Options shall be tolled during any leave (unless otherwise required by Applicable Laws). Notwithstanding the foregoing, in the event of military leave, vesting shall toll during any unpaid portion of such leave, provided that, upon an Optionee’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and

-9-

Reemployment Rights Act), he or she shall be given vesting credit with respect to Options to the same extent as would have applied had the Optionee continued to provide services to the Company (or any Parent, Subsidiary or Affiliate, if applicable) throughout the leave on the same terms as he or she was providing services immediately prior to such leave.

(3) Minimum Exercise Requirements. An Option may not be exercised for a fraction of a Share. The Administrator may require that an Option be exercised as to a minimum number of Shares, provided that such requirement shall not prevent an Optionee from exercising the full number of Shares as to which the Option is then exercisable.

(4) Procedures for and Results of Exercise. An Option shall be deemed exercised when written notice of such exercise has been received by the Company in accordance with the terms of the Option Agreement by the person entitled to exercise the Option and the Company has received full payment for the Shares with respect to which the Option is exercised and has paid, or made arrangements to satisfy, any applicable taxes, withholding, required deductions or other required payments in accordance with Section 9 below. The exercise of an Option shall result in a decrease in the number of Shares that thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(5) Rights as Holder of Capital Stock. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a holder of capital stock shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 11 below.

(ii) Termination of Continuous Service Status. The Administrator shall establish and set forth in the applicable Option Agreement the terms and conditions upon which an Option shall remain exercisable, if at all, following termination of an Optionee’s Continuous Service Status, which provisions may be waived or modified by the Administrator at any time. To the extent that an Option Agreement does not specify the terms and conditions upon which an Option shall terminate upon termination of an Optionee’s Continuous Service Status, the following provisions shall apply:

(1) General Provisions. If the Optionee (or other person entitled to exercise the Option) does not exercise the Option to the extent so entitled within the time specified below, the Option shall terminate and the Optioned Stock underlying the unexercised portion of the Option shall revert to the Plan. In no event may any Option be exercised after the expiration of the Option term as set forth in the Option Agreement (and subject to this Section 7).

(2) Termination other than Upon Disability or Death or for Cause. In the event of termination of an Optionee’s Continuous Service Status other than under the circumstances set forth in the subsections (3) through (5) below, such Optionee may exercise any outstanding Option at any time within 3 months following such termination to the extent the Optionee is vested in the Optioned Stock.

-10-

(3) Disability of Optionee. In the event of termination of an Optionee’s Continuous Service Status as a result of his or her Disability, such Optionee may exercise any outstanding Option at any time within 12 months following such termination to the extent the Optionee is vested in the Optioned Stock.

(4) Death of Optionee. In the event of the death of an Optionee during the period of Continuous Service Status since the date of grant of any outstanding Option, or within 3 months following termination of the Optionee’s Continuous Service Status, the Option may be exercised by any beneficiaries designated in accordance with Section 15 below, or if there are no such beneficiaries, by the Optionee’s estate, or by a person who acquired the right to exercise the Option by bequest or inheritance, at any time within 12 months following the date the Optionee’s Continuous Service Status terminated, but only to the extent the Optionee is vested in the Optioned Stock.

(5) Termination for Cause. In the event of termination of an Optionee’s Continuous Service Status for Cause, any outstanding Option (including any vested portion thereof) held by such Optionee shall immediately terminate in its entirety upon first notification to the Optionee of termination of the Optionee’s Continuous Service Status for Cause. If an Optionee’s Continuous Service Status is suspended pending an investigation of whether the Optionee’s Continuous Service Status will be terminated for Cause, all the Optionee’s rights under any Option, including the right to exercise the Option, shall be suspended during the investigation period. Nothing in this Section 7(c)(ii)(5) shall in any way limit the Company’s right to purchase unvested Shares issued upon exercise of an Option as set forth in the applicable Option Agreement.

(iii) Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares an Option previously granted under the Plan based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made.

8. Restricted Stock.

(a) Rights to Purchase. When a right to purchase or receive Restricted Stock is granted under the Plan, the Company shall advise the recipient in writing of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid, if any (which shall be as determined by the Administrator, subject to Applicable Laws, including any applicable securities laws), and the time within which such person must accept such offer. The permissible consideration for Restricted Stock shall be determined by the Administrator and shall be the same as is set forth in Section 7(b)(ii) above with respect to exercise of Options. The offer to purchase Shares shall be accepted by execution of a Restricted Stock Purchase Agreement in the form determined by the Administrator.

(b) Repurchase Option.

(i) General. Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the Participant’s Continuous Service Status for any

-11-

reason (including death or Disability) at a purchase price for Shares equal to the original purchase price paid by the purchaser to the Company for such Shares and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine.

(ii) Leave of Absence. The Administrator shall have the discretion to determine whether and to what extent the lapsing of Company repurchase rights shall be tolled during any leave of absence; provided, however, that in the absence of such determination, such lapsing shall be tolled during any leave (unless otherwise required by Applicable Laws). Notwithstanding the foregoing, in the event of military leave, the lapsing of Company repurchase rights shall toll during any unpaid portion of such leave, provided that, upon a Participant’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to Shares purchased pursuant to the Restricted Stock Purchase Agreement to the same extent as would have applied had the Participant continued to provide services to the Company (or any Parent, Subsidiary or Affiliate, if applicable) throughout the leave on the same terms as he or she was providing services immediately prior to such leave.

(c) Other Provisions. The Restricted Stock Purchase Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. In addition, the provisions of Restricted Stock Purchase Agreements need not be the same with respect to each Participant.

(d) Rights as a Holder of Capital Stock. Once the Restricted Stock is purchased, the Participant shall have the rights equivalent to those of a holder of capital stock, and shall be a record holder when his or her purchase and the issuance of the Shares is entered upon the records of the duly authorized transfer agent of the Company. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Restricted Stock is purchased, except as provided in Section 11 below.

9. Taxes.

(a) As a condition of the grant, vesting and exercise of an Award, the Participant (or in the case of the Participant’s death or a permitted transferee, the person holding or exercising the Award) shall make such arrangements as the Administrator may require for the satisfaction of any applicable U.S. federal, state, local or foreign tax, withholding, and any other required deductions or payments that may arise in connection with such Award. The Company shall not be required to issue any Shares under the Plan until such obligations are satisfied.

(b) The Administrator may, to the extent permitted under Applicable Laws, permit a Participant (or in the case of the Participant’s death or a permitted transferee, the person holding or exercising the Award) to satisfy all or part of his or her tax, withholding, or any other required deductions or payments by Cashless Exercise or by surrendering Shares (either directly or by stock attestation) that he or she previously acquired; provided that, unless specifically permitted by the Company, any such Cashless Exercise must be an approved broker-assisted Cashless Exercise or the Shares withheld in the Cashless Exercise must be limited to avoid financial accounting

-12-

charges under applicable accounting guidance and any such surrendered Shares must have been previously held for any minimum duration required to avoid financial accounting charges under applicable accounting guidance. Any payment of taxes by surrendering Shares to the Company may be subject to restrictions, including, but not limited to, any restrictions required by rules of the Securities and Exchange Commission.

10. Non-Transferability of Awards.

(a) General. Except as set forth in this Section 10, Awards may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution. The designation of a beneficiary by a Participant will not constitute a transfer. An Option may be exercised, during the lifetime of the holder of the Option, only by such holder or a transferee permitted by this Section 10.

(b) Limited Transferability Rights. Notwithstanding anything else in this Section 10, the Administrator may in its sole discretion grant Nonstatutory Stock Options that may be transferred by instrument to an inter vivos or testamentary trust in which the Options are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift to Family Members. Further, beginning with (i) the period when the Company begins to rely on the exemption described in Rule 12h-1(f)(1) promulgated under the Exchange Act, as determined by the Board in its sole discretion, and (ii) ending on the earlier of (A) the date when the Company ceases to rely on such exemption, as determined by the Board in its sole discretion, or (B) the date when the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, an Option, or prior to exercise, the Shares subject to the Option, may not be pledged, hypothecated or otherwise transferred or disposed of, in any manner, including by entering into any short position, any “put equivalent position” or any “call equivalent position” (as defined in Rule 16a-1(h) and Rule 16a-1(b) of the Exchange Act, respectively), other than to (i) persons who are Family Members through gifts or domestic relations orders, or (ii) to an executor or guardian of the Participant upon the death or disability of the Participant. Notwithstanding the foregoing sentence, the Board, in its sole discretion, may permit transfers of Nonstatutory Stock Options to the Company or in connection with a Change of Control or other acquisition transactions involving the Company to the extent permitted by Rule 12h-1(f).

11. Adjustments Upon Changes in Capitalization, Merger or Certain Other Transactions.

(a) Changes in Capitalization. Subject to any action required under Applicable Laws by the holders of capital stock of the Company, (i) the numbers and class of Shares or other stock or securities: (x) available for future Awards under Section 3 above and (y) covered by each outstanding Award, (ii) the exercise price per Share of each such outstanding Option, and (iii) any repurchase price per Share applicable to Shares issued pursuant to any Award, shall be automatically proportionately adjusted in the event of a stock split, reverse stock split, stock dividend, combination, consolidation, reclassification of the Shares or subdivision of the Shares. In the event of any increase or decrease in the number of issued Shares effected without receipt of consideration by the Company, a declaration of an extraordinary dividend with respect to the Shares payable in a form other than Shares in an amount that has a material effect on the Fair Market Value, a

-13-

recapitalization (including a recapitalization through a large nonrecurring cash dividend), a rights offering, a reorganization, merger, a spin-off, split-up, change in corporate structure or a similar occurrence, the Administrator shall make appropriate adjustments, in its discretion, in one or more of (i) the numbers and class of Shares or other stock or securities: (x) available for future Awards under Section 3 above and (y) covered by each outstanding Award, (ii) the exercise price per Share of each outstanding Option and (iii) any repurchase price per Share applicable to Shares issued pursuant to any Award, and any such adjustment by the Administrator shall be made in the Administrator’s sole and absolute discretion and shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Award. If, by reason of a transaction described in this Section 11(a) or an adjustment pursuant to this Section 11(a), a Participant’s Award agreement or agreement related to any Optioned Stock or Restricted Stock covers additional or different shares of stock or securities, then such additional or different shares, and the Award agreement or agreement related to the Optioned Stock or Restricted Stock in respect thereof, shall be subject to all of the terms, conditions and restrictions which were applicable to the Award, Optioned Stock and Restricted Stock prior to such adjustment.

(b) Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company, each Award will terminate immediately prior to the consummation of such action, unless otherwise determined by the Administrator.

(c) Corporate Transactions. In the event of (i) a transfer of all or substantially all of the Company’s assets, (ii) a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, entity or person, or (iii) the consummation of a transaction, or series of related transactions, in which any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of more than 50% of the Company’s then outstanding capital stock (a “Corporate Transaction”), each outstanding Award (vested or unvested) will be treated as the Administrator determines (subject to the last sentence of this paragraph), which determination may be made without the consent of any Participant and need not treat all outstanding Awards (or portion thereof) in an identical manner. Such determination, without the consent of any Participant, may dispose of Awards that are not vested as of the effective date of such Corporate Transaction in any manner permitted by Applicable Laws, including (without limitation) the cancellation of such Awards without the payment of any consideration. Without limiting the foregoing, such determination, without the consent of any Participant, may provide for one or more of the following with respect to Awards that are vested and exercisable as of the effective date of such Corporate Transaction: (A) the continuation of such outstanding Awards by the Company (if the Company is the surviving corporation); (B) the assumption of such outstanding Awards by the surviving corporation or its parent; (C) the substitution by the surviving corporation or its parent of new options or equity awards for such Awards; (D) the cancellation of such Awards and a payment to the Participants equal to the excess of (1) the Fair Market Value of the Shares subject to such Awards as of the closing date of such Corporate Transaction over (2) the exercise price or purchase price for the Shares to be issued pursuant to the exercise of such Awards (such payment shall be made in the form of cash, cash equivalents and/or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount; if the exercise price

-14-

or purchase price per Share of the Shares to be issued pursuant to the exercise of such Awards exceeds the Fair Market Value per Share of such Shares, as of the closing date of the Corporate Transaction, then such Awards may be cancelled without making a payment to the Participants); or (E) the cancellation of such Awards for no consideration. Notwithstanding anything stated herein or in any other agreement to the contrary, whether such agreement was entered into before or after the date this Plan is effective, if any Award, or any agreement applicable to any Award, provides for accelerated vesting in connection with any termination of service that occurs on or after a Corporate Transaction, and the successor does not agree to assume the Award, or to substitute an equivalent award or right for the Award, then any acceleration of vesting that would otherwise occur upon such termination of service shall occur immediately prior to, and contingent upon, the consummation of such Corporate Transaction.

12. Time of Granting Awards. The date of grant of an Award shall, for all purposes, be the date on which the Administrator makes the determination granting such Award, or such other date as is determined by the Administrator.

13. Amendment and Termination of the Plan. The Board may at any time amend or terminate the Plan, but no amendment or termination shall be made that would materially and adversely affect the rights of any Participant under any outstanding Award, without his or her consent. In addition, to the extent necessary and desirable to comply with Applicable Laws, the Company shall obtain the approval of holders of capital stock with respect to any Plan amendment in such a manner and to such a degree as required.

14. Conditions Upon Issuance of Shares. Notwithstanding any other provision of the Plan or any agreement entered into by the Company pursuant to the Plan, the Company shall not be obligated, and shall have no liability for failure, to issue or deliver any Shares under the Plan unless such issuance or delivery would comply with Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel. As a condition to the exercise of any Option or purchase of any Restricted Stock, the Company may require the person exercising the Option or purchasing the Restricted Stock to represent and warrant at the time of any such exercise or purchase that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is advisable or required by Applicable Laws. Shares issued upon exercise of Options or purchase of Restricted Stock prior to the date, if ever, on which the Common Stock becomes a Listed Security shall be subject to a right of first refusal in favor of the Company pursuant to which the Participant will be required to offer Shares to the Company before selling or transferring them to any third party on such terms and subject to such conditions as is reflected in the applicable Option Agreement or Restricted Stock Purchase Agreement.

15. Beneficiaries. If permitted by the Company, a Participant may designate one or more beneficiaries with respect to an Award by timely filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Participant’s death. Except as otherwise provided in an Award Agreement, if no beneficiary was designated or if no designated beneficiary survives the Participant, then after a Participant’s death any vested Award(s) shall be transferred or distributed to the Participant’s estate or to any person who has the right to acquire the Award by bequest or inheritance.

-15-

16. Approval of Holders of Capital Stock. If required by Applicable Laws, continuance of the Plan shall be subject to approval by the holders of capital stock of the Company within 12 months before or after the date the Plan is adopted or, to the extent required by Applicable Laws, any date the Plan is amended. Such approval shall be obtained in the manner and to the degree required under Applicable Laws.

17. Addenda. The Administrator may approve such addenda to the Plan as it may consider necessary or appropriate for the purpose of granting Awards to Employees or Consultants, which Awards may contain such terms and conditions as the Administrator deems necessary or appropriate to accommodate differences in local law, tax policy or custom, which may deviate from the terms and conditions set forth in this Plan. The terms of any such addenda shall supersede the terms of the Plan to the extent necessary to accommodate such differences but shall not otherwise affect the terms of the Plan as in effect for any other purpose.

18. Information to Holders of Options. In the event the Company is relying on the exemption provided by Rule 12h-1(f) under the Exchange Act, the Company shall provide the information described in Rule 701(e)(3), (4) and (5) of the Securities Act of 1933, as amended, to all holders of Options in accordance with the requirements thereunder until such time as the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act. The Company may request that holders of Options agree to keep the information to be provided pursuant to this Section confidential. If the holder does not agree to keep the information to be provided pursuant to this Section confidential, then the Company will not be required to provide the information unless otherwise required pursuant to Rule 12h-1(f)(1) of the Exchange Act.

-16-

ADDENDUM A

2011 Equity Incentive Plan

(California Participants)

Prior to the date, if ever, on which the Common Stock becomes a Listed Security and/or the Company is subject to the reporting requirements of the Exchange Act, the terms set forth herein shall apply to Awards issued to California Participants. All capitalized terms used herein but not otherwise defined shall have the respective meanings set forth in the Plan.

1. The following rules shall apply to any Option in the event of termination of the Participant’s Continuous Service Status:

(a) If such termination was for reasons other than death, “Permanent Disability” (as defined below), or Cause, the Participant shall have at least 30 days after the date of such termination to exercise his or her Option to the extent the Participant is entitled to exercise on his or her termination date, provided that in no event shall the Option be exercisable after the expiration of the term as set forth in the Option Agreement.

(b) If such termination was due to death or Permanent Disability, the Participant shall have at least 6 months after the date of such termination to exercise his or her Option to the extent the Participant is entitled to exercise on his or her termination date, provided that in no event shall the Option be exercisable after the expiration of the term as set forth in the Option Agreement.

“Permanent Disability” for purposes of this Addendum shall mean the inability of the Participant, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of the Participant’s position with the Company or any Parent or Subsidiary because of the sickness or injury of the Participant.

2. Notwithstanding anything to the contrary in Section 11(a) of the Plan, the Administrator shall in any event make such adjustments as may be required by Section 25102(o) of the California Corporations Code.

3. Notwithstanding anything stated herein to the contrary, no Option shall be exercisable on or after the 10th anniversary of the date of grant and any Award agreement shall terminate on or before the 10th anniversary of the date of grant.

4. The Company shall furnish summary financial information (audited or unaudited) of the Company’s financial condition and results of operations, consistent with the requirements of Applicable Laws, at least annually to each California Participant during the period such Participant has one or more Awards outstanding, and in the case of an individual who acquired Shares pursuant to the Plan, during the period such Participant owns such Shares; provided, however, the Company shall not be required to provide such information if (i) the issuance is limited to key persons whose duties in connection with the Company assure their access to equivalent information or (ii) the Plan or any agreement complies with all conditions of Rule 701 of the Securities Act of 1933, as amended; provided that for purposes of determining such compliance, any registered domestic partner shall be considered a “family member” as that term is defined in Rule 701.

SIGNNOW, INC.

2011 EQUITY INCENTIVE PLAN

NOTICE OF STOCK OPTION GRANT

«Optionee»

(address)

You have been granted an option to purchase Common Stock of SignNow, Inc., a Delaware corporation (the “Company”), as follows:

Date of Grant:	«GrantDate»
Exercise Price Per Share:	$«ExercisePrice»
Total Number of Shares:	«NoofShares»
Total Exercise Price:	$«TotalExercisePrice»
Type of Option:	«ISO» Shares Incentive Stock Option «NSO» Shares Nonstatutory Stock Option
Expiration Date:	«ExpirDate»
Vesting Commencement Date:	«VestingCommencementDate»
Vesting/Exercise Schedule:	So long as your Continuous Service Status does not terminate, the Shares underlying this Option shall vest and become exercisable in accordance with the following schedule: «Vesting»

Termination Period:

You may exercise this Option for 3 months after termination of your Continuous Service Status except as set out in Section 5 of the Stock Option Agreement (but in no event later than the Expiration Date). You are responsible for keeping track of these exercise periods following the termination of your Continuous Service Status for any reason. The Company will not provide further notice of such periods.

Transferability:

You may not transfer this Option.

By your signature and the signature of the Company’s representative below, you and the Company agree that this Option is granted under and governed by the terms and conditions of this Notice and the SignNow, Inc. 2011 Equity Incentive Plan and Option Agreement, both of which are attached to and made a part of this Notice.

In addition, you agree and acknowledge that your rights to any Shares underlying this Option will be earned only as you provide services to the Company over time, that the grant of this Option is not as consideration for services you rendered to the Company prior to your date of hire, and that nothing in this Notice or the attached documents confers upon you any right to continue your employment or consulting relationship with the Company for any period of time, nor does it interfere in any way with your right or the Company’s right to terminate that relationship at any time, for any reason, with or without cause. Also, to the extent applicable, the Exercise Price Per Share has been set in good faith compliance with the applicable guidance issued by the IRS under Section 409A of the Code. However, there is no guarantee that the IRS will agree with the valuation, and by signing below, you agree and acknowledge that the Company, its Board, officers, employees and agents shall not be held liable for any applicable costs, taxes, or penalties associated with this Option if, in fact, the IRS or any other person (including, without limitation, a successor corporation or an acquirer in a Change of Control) were to determine that this Option constitutes deferred compensation under Section 409A of the Code. You should consult with your own tax advisor concerning the tax consequences of such a determination by the IRS. For purposes of this paragraph, the term “Company” will be interpreted to include any Parent, Subsidiary or Affiliate.

THE COMPANY:
SIGNNOW, INC.
By:
	(Signature)
Name:
Title:
OPTIONEE:
«OPTIONEE»
(Signature)
Address:

-2-

SIGNNOW, INC.

2011 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

1. Grant of Option. SignNow, Inc., a Delaware corporation (the “Company”), hereby grants to «Optionee» (“Optionee”), an option (the “Option”) to purchase the total number of shares of Common Stock (the “Shares”) set forth in the Notice of Stock Option Grant (the “Notice”), at the exercise price per Share set forth in the Notice (the “Exercise Price”) subject to the terms, definitions and provisions of the SignNow, Inc. 2011 Equity Incentive Plan (the “Plan”) adopted by the Company, which is incorporated in this Stock Option Agreement (this “Agreement”) by reference. Unless otherwise defined in this Agreement, the terms used in this Agreement or the Notice shall have the meanings defined in the Plan.

2. Designation of Option. This Option is intended to be an Incentive Stock Option as defined in Section 422 of the Code only to the extent so designated in the Notice, and to the extent it is not so designated or to the extent this Option does not qualify as an Incentive Stock Option, it is intended to be a Nonstatutory Stock Option.

Notwithstanding the above, if designated as an Incentive Stock Option, in the event that the Shares subject to this Option (and all other incentive stock options granted to Optionee by the Company or any Parent or Subsidiary, including under other plans) that first become exercisable in any calendar year have an aggregate fair market value (determined for each Share as of the date of grant of the option covering such Share) in excess of $100,000, the Shares in excess of $100,000 shall be treated as subject to a nonstatutory stock option, in accordance with Section 5(c) of the Plan.

3. Exercise of Option. This Option shall be exercisable during its term in accordance with the Vesting/Exercise Schedule set out in the Notice and with the provisions of Section 7(c) of the Plan as follows:

(a) Right to Exercise.

(i) This Option may not be exercised for a fraction of a share.

(ii) In the event of Optionee’s death, Disability or other termination of Continuous Service Status, the exercisability of this Option is governed by Section 5 below, subject to the limitations contained in this Section 3.

(iii) In no event may this Option be exercised after the Expiration Date set forth in the Notice.

(b) Method of Exercise.

(i) This Option shall be exercisable by execution and delivery of the Exercise Agreement attached hereto as Exhibit A or of any other form of written notice approved

for such purpose by the Company which shall state Optionee’s election to exercise this Option, the number of Shares in respect of which this Option is being exercised, and such other representations and agreements as to the holder’s investment intent with respect to such Shares as may be required by the Company pursuant to the provisions of the Plan. Such written notice shall be signed by Optionee and shall be delivered to the Company by such means as are determined by the Company in its discretion to constitute adequate delivery. The written notice shall be accompanied by payment of the aggregate Exercise Price for the purchased Shares.

(ii) As a condition to the exercise of this Option and as further set forth in Section 9 of the Plan, Optionee agrees to make adequate provision for federal, state or other applicable tax, withholding, required deductions or other payments, if any, which arise upon the grant, vesting or exercise of this Option, or disposition of Shares, whether by withholding, direct payment to the Company, or otherwise, as determined by the Company in its sole discretion.

(iii) The Company is not obligated, and will have no liability for failure, to issue or deliver any Shares upon exercise of this Option unless such issuance or delivery would comply with the Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel. This Option may not be exercised until such time as the Plan has been approved by the holders of capital stock of the Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such Shares would constitute a violation of any Applicable Laws, including any applicable U.S. federal or state securities laws or any other law or regulation, including any rule under Part 221 of Title 12 of the Code of Federal Regulations as promulgated by the Federal Reserve Board. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by the Applicable Laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to Optionee on the date on which this Option is exercised with respect to such Shares.

(iv) Subject to compliance with Applicable Laws, this Option shall be deemed to be exercised upon receipt by the Company of the appropriate written notice of exercise accompanied by the Exercise Price and the satisfaction of any applicable obligations described in Section 3(b)(ii) above.

4. Method of Payment. Payment of the Exercise Price shall be by cash or check or, following the initial public offering of the Company’s Common Stock, by Cashless Exercise pursuant to which the Optionee delivers an irrevocable direction to a securities broker (on a form prescribed by the Company and according to a procedure established by the Company).

5. Termination of Relationship. Following the date of termination of Optionee’s Continuous Service Status for any reason (the “Termination Date”), Optionee may exercise this Option only as set forth in the Notice and this Section 5. If Optionee does not exercise this Option within the Termination Period set forth in the Notice or the termination periods set forth below, this Option shall terminate in its entirety. In no event, may any Option be exercised after the Expiration Date of this Option as set forth in the Notice.

(a) General Termination. In the event of termination of Optionee’s Continuous Service Status other than as a result of Optionee’s Disability or death or Optionee’s

-2-

termination for Cause, Optionee may, to the extent Optionee is vested in the Optioned Stock at the date of such termination, exercise this Option during the Termination Period set forth in the Notice.

(b) Termination upon Disability of Optionee. In the event of termination of Optionee’s Continuous Service Status as a result of Optionee’s Disability, Optionee may, but only within 12 months following the Termination Date, exercise this Option to the extent Optionee is vested in the Optioned Stock.

(c) Death of Optionee. In the event of termination of Optionee’s Continuous Service Status as a result of Optionee’s death, or in the event of Optionee’s death within 3 months following Optionee’s Termination Date, this Option may be exercised at any time within 12 months following the Termination Date, or if later, 12 months following the date of death by any beneficiaries designated in accordance with Section 15 of the Plan or, if there are no such beneficiaries, by the Optionee’s estate, or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent Optionee is vested in this Option.

(d) Termination for Cause. In the event of termination of Optionee’s Continuous Service Status for Cause, this Option (including any vested portion thereof) shall immediately terminate in its entirety upon first notification to Optionee of such termination for Cause. If Optionee’s Continuous Service Status is suspended pending an investigation of whether Optionee’s Continuous Service Status will be terminated for Cause, all Optionee’s rights under this Option, including the right to exercise this Option, shall be suspended during the investigation period.

6. Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by him or her. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of Optionee. Further, beginning with (i) the period when the Company begins to rely on the exemption described in Rule 12h-1(f)(1) promulgated under the Exchange Act, as determined by the Board in its sole discretion, and (ii) ending on the earlier of (A) the date when the Company ceases to rely on such exemption, as determined by the Board in its sole discretion, or (B) the date when the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, an Option, or prior to exercise, the Shares subject to the Option, may not be pledged, hypothecated or otherwise transferred or disposed of, in any manner, including by entering into any short position, any “put equivalent position” or any “call equivalent position” (as defined in Rule 16a-1(h) and Rule 16a-1(b) of the Exchange Act, respectively), other than to (i) persons who are Family Members through gifts or domestic relations orders, or (ii) to an executor or guardian of Optionee upon the death or disability of Optionee. Notwithstanding the foregoing sentence, the Board, in its sole discretion, may permit transfers of Nonstatutory Stock Options to the Company or in connection with a Change of Control or other acquisition transactions involving the Company to the extent permitted by Rule 12h-1(f).

7. Lock-Up Agreement. In connection with the initial public offering of the Company’s securities and upon request of the Company or the underwriters managing such offering of the Company’s securities, Optionee hereby agrees not to sell, make any short sale of,

-3-

loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company however or whenever acquired (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed 180 days) from the effective date of such registration as may be requested by the Company or such managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the Company’s initial public offering. Notwithstanding the foregoing, the Company shall use its best efforts to cause any such agreement to contain a phased release from the lock-up period contained in the agreement based on the Company’s achievement of certain performance milestones. Any waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply to all securityholders subject to such agreements pro rata based on the number of shares subject to such agreements. In addition, upon request of the Company or the underwriters managing a public offering of the Company’s securities (other than the initial public offering), Optionee hereby agrees to be bound by similar restrictions, and to sign a similar agreement, in connection with no more than one additional registration statement filed within 12 months after the closing date of the initial public offering, provided that the duration of the lock-up period with respect to such additional registration shall not exceed 90 days from the effective date of such additional registration statement. Notwithstanding the foregoing, if during the last 17 days of the restricted period, the Company issues an earnings release or material news or a material event relating to the Company occurs, or prior to the expiration of the restricted period the Company announces that it will release earnings results during the 16-day period beginning on the last day of the restricted period, then, upon the request of the managing underwriter, to the extent required by any FINRA rules, the restrictions imposed by this subsection shall continue to apply until the end of the third trading day following the expiration of the 15-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. In no event will the restricted period extend beyond 216 days after the effective date of the registration statement.

8. Effect of Agreement. Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof (and has had an opportunity to consult counsel regarding the Option terms), and hereby accepts this Option and agrees to be bound by its contractual terms as set forth herein and in the Plan. Optionee hereby agrees to accept as binding, conclusive and final all decisions and interpretations of the Administrator regarding any questions relating to this Option. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of the Notice and this Agreement, the Plan terms and provisions shall prevail.

9. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Optionee’s participation in the Plan, on the Option and on any Award or Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with Applicable Laws or facilitate the administration of the Plan. Optionee agrees to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. Furthermore, Optionee acknowledges that the laws of the country in which Optionee is working at the time of grant, vesting and exercise of the Option or the sale of Shares received pursuant to this Agreement (including any rules or regulations governing securities, foreign exchange, tax, labor, or other matters) may subject Optionee to additional procedural or regulatory requirements that Optionee is and will be solely responsible for and must fulfill.

-4-

10. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to Optionee’s current or future participation in the Plan by electronic means or to request Optionee’s consent to participate in the Plan by electronic means. Optionee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

11. Miscellaneous.

(a) Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby submit and consent to the exclusive jurisdiction of the State of California and agree that any such litigation shall be conducted only in the courts of California or the federal courts of the United States located in California and no other courts.

(b) Entire Agreement; Enforcement of Rights. This Agreement, together with the Notice to which this Agreement is attached and the Plan, sets forth the entire agreement and understanding of the parties relating to the subject matter herein and therein and merges all prior or contemporaneous discussions between the parties. Except as contemplated under the Plan, no modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.

(c) Severability. If one or more provisions of this Agreement are held to be unenforceable under Applicable Laws, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of this Agreement shall be enforceable in accordance with its terms.

(d) Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient when delivered personally or by overnight courier or sent by email or fax (upon customary confirmation of receipt), or forty-eight (48) hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party’s address or fax number as set forth on the signature page, as subsequently modified by written notice, or if no address is specified on the signature page, at the most recent address set forth in the Company’s books and records.

(e) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

-5-

(f) Successors and Assigns. The rights and benefits of this Agreement shall inure to the benefit of, and be enforceable by the Company’s successors and assigns. The rights and obligations of Optionee under this Agreement may not be assigned without the prior written consent of the Company.

-6-

EXHIBIT A

SIGNNOW, INC.

2011 EQUITY INCENTIVE PLAN

EXERCISE AGREEMENT

This Exercise Agreement (this “Agreement”) is made as of                     , by and between SignNow, Inc., a Delaware corporation (the “Company”), and «Optionee» (“Purchaser”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Company’s 2011 Equity Incentive Plan (the “Plan”) and the Option Agreement (as defined below).

1. Exercise of Option. Subject to the terms and conditions hereof, Purchaser hereby elects to exercise his or her option to purchase              shares of the Common Stock (the “Shares”) of the Company under and pursuant to the Plan, the Notice of Stock Option Grant and the Stock Option Agreement granted              (the “Option Agreement”). The purchase price for the Shares shall be $             per Share for a total purchase price of $            . The term “Shares” refers to the purchased Shares and all securities received in connection with the Shares pursuant to stock dividends or splits, all securities received in replacement of the Shares in a recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities or other property to which Purchaser is entitled by reason of Purchaser’s ownership of the Shares.

2. Time and Place of Exercise. The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company simultaneously with the execution and delivery of this Agreement, the payment of the aggregate exercise price by any method listed in Section 4 of the Option Agreement, and the satisfaction of any applicable tax, withholding, required deductions or other payments, all in accordance with the provisions of Section 3(b) of the Option Agreement. The Company shall issue the Shares to Purchaser by entering such Shares in Purchaser’s name as of such date in the books and records of the Company or, if applicable, a duly authorized transfer agent of the Company, against payment of the exercise price therefor by Purchaser. If applicable, the Company will deliver to Purchaser a certificate representing the Shares as soon as practicable following such date.

3. Limitations on Transfer. In addition to any other limitation on transfer created by Applicable Laws, Purchaser shall not assign, encumber or dispose of any interest in the Shares except in compliance with the provisions below and Applicable Laws.

(a) Right of First Refusal. Before any Shares held by Purchaser or any transferee of Purchaser (either being sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section 3(a) (the “Right of First Refusal”).

(i) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating: (A) the Holder’s bona fide intention to sell or otherwise transfer such Shares; (B) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (C) the number of Shares to be transferred to each Proposed Transferee; and (D) the terms and conditions of each proposed sale or transfer, including (without limitation) the purchase price for such Shares (the “Purchase Price”). The Holder shall offer the Shares at the Purchase Price and upon the same terms (or terms as similar as reasonably possible) to the Company or its assignee(s).

(ii) Exercise of Right of First Refusal. At any time within 30 days after receipt of the Notice, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase any or all of the Shares proposed to be transferred to any one or more of the Proposed Transferees, at the Purchase Price. If the Purchase Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board in good faith.

(iii) Payment. Payment of the Purchase Price shall be made, at the election of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness, or by any combination thereof within 60 days after receipt of the Notice or in the manner and at the times set forth in the Notice.

(iv) Holder’s Right to Transfer. If any of the Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section 3(a), then the Holder may sell or otherwise transfer any unpurchased Shares to that Proposed Transferee at the Purchase Price or at a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice and provided further that any such sale or other transfer is effected in accordance with any Applicable Laws and the Proposed Transferee agrees in writing that the provisions of this Section 3 and the waiver of statutory information rights in Section 8 shall continue to apply to the Shares in the hands of such Proposed Transferee. The Company, in consultation with its legal counsel, may require the Holder to provide an opinion of counsel evidencing compliance with Applicable Laws. If the Shares described in the Notice are not transferred to the Proposed Transferee within such period, or if the Holder proposes to change the price or other terms to make them more favorable to the Proposed Transferee, a new Notice shall be given to the Company, and the Company and/or its assignees shall again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred.

(v) Exception for Certain Family Transfers. Anything to the contrary contained in this Section 3(a) notwithstanding, the transfer of any or all of the Shares during Holder’s lifetime or on Holder’s death by will or intestacy to Holder’s Immediate Family or a trust for the benefit of Holder’s Immediate Family shall be exempt from the provisions of this Section 3(a). “Immediate Family” as used herein shall mean lineal descendant or antecedent, spouse (or spouse’s antecedents), father, mother, brother or sister (or their descendants), stepchild (or their antecedents or descendants), aunt or uncle (or their antecedents or descendants), brother-in-law or sister-in-law (or their antecedents or descendants) and shall include adoptive relationships. In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of this Section 3, and there shall be no further transfer of such Shares except in accordance with the terms of this Section 3.

-2-

(b) Company’s Right to Purchase upon Involuntary Transfer. In the event of any transfer by operation of law or other involuntary transfer (including death or divorce, but excluding a transfer to Immediate Family as set forth in Section 3(a)(v) above) of all or a portion of the Shares by the record holder thereof, the Company shall have an option to purchase any or all of the Shares transferred at the greater of the purchase price paid by Purchaser pursuant to this Agreement or the Fair Market Value of the Shares on the date of transfer (as determined by the Company). Upon such a transfer, the Holder shall promptly notify the Secretary of the Company of such transfer. The right to purchase such Shares shall be provided to the Company for a period of 30 days following receipt by the Company of written notice from the Holder.

(c) Assignment. The right of the Company to purchase any part of the Shares may be assigned in whole or in part to any holder or holders of capital stock of the Company or other persons or organizations.

(d) Restrictions Binding on Transferees. All transferees of Shares or any interest therein will receive and hold such Shares or interest subject to the provisions of this Agreement and the terms of the Option Agreement, including, without limitation, Section 7 of the Option Agreement. Any sale or transfer of the Shares shall be void unless the provisions of this Agreement are satisfied.

(e) Termination of Rights. The Right of First Refusal granted the Company by Section 3(a) above and the option to repurchase the Shares in the event of an involuntary transfer granted the Company by Section 3(b) above shall terminate upon the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act. Upon termination of such transfer restrictions, the Company will remove any stop-transfer notices referred to in Section 5(b) below and related to the restrictions in this Section 3 and, if certificates are issued, a new certificate or certificates representing the Shares not repurchased shall be issued, on request, without the legend referred to in Section 5(a)(ii) below and delivered to Holder.

4. Investment and Taxation Representations. In connection with the purchase of the Shares, Purchaser represents to the Company the following:

(a) Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Shares. Purchaser is purchasing the Shares for investment for Purchaser’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act or under any applicable provision of state law. Purchaser does not have any present intention to transfer the Shares to any other person or entity.

-3-

(b) Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.

(c) Purchaser further acknowledges and understands that the securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to register the securities.

(d) Purchaser is familiar with the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer of the securities (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of certain conditions. Purchaser understands that the Company provides no assurances as to whether he or she will be able to resell any or all of the Shares pursuant to Rule 144, which rule requires, among other things, that the Company be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, that resales of securities take place only after the holder of the Shares has held the Shares for certain specified time periods, and under certain circumstances, that resales of securities be limited in volume and take place only pursuant to brokered transactions. Notwithstanding this Section 4(d), Purchaser acknowledges and agrees to the restrictions set forth in Section 4(e) below.

(e) Purchaser further understands that in the event all of the applicable requirements of Rule 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.

(f) Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and that Purchaser is not relying on the Company for any tax advice.

5. Restrictive Legends and Stop-Transfer Orders.

(a) Legends. Any certificate or certificates representing the Shares shall bear the following legends (as well as any legends required by the Company or applicable state and federal corporate and securities laws):

(i) “THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR

-4-

DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

(ii) “THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH AND MAY BE OBTAINED FROM THE SECRETARY OF THE COMPANY AT NO CHARGE.”

(b) Stop-Transfer Notices. Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

6. No Employment Rights. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a parent, subsidiary or affiliate of the Company, to terminate Purchaser’s employment or consulting relationship, for any reason, with or without cause.

7. Lock-Up Agreement. The lock-up provisions set forth in Section 7 of the Option Agreement shall apply to the Shares issued upon exercise of the Option hereunder and Purchaser reaffirms Purchaser’s obligations set forth therein.

8. Waiver of Statutory Information Rights. Purchaser acknowledges and understands that, but for the waiver made herein, Purchaser would be entitled, upon written demand under oath stating the purpose thereof, to inspect for any proper purpose, and to make copies and extracts from, the Company’s stock ledger, a list of its stockholders, and its other books and records, and the books and records of subsidiaries of the Company, if any, under the circumstances and in the manner provided in Section 220 of the General Corporation Law of Delaware (any and all such rights, and any and all such other rights of Purchaser as may be provided for in Section 220, the “Inspection Rights”). In light of the foregoing, until the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, Purchaser hereby unconditionally and irrevocably waives the Inspection Rights, whether such Inspection Rights would be exercised or pursued directly or indirectly pursuant to Section 220 or otherwise, and covenants and agrees never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to be

-5-

commenced any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights. The foregoing waiver applies to the Inspection Rights of Purchaser in Purchaser’s capacity as a stockholder and shall not affect any rights of a director, in his or her capacity as such, under Section 220. The foregoing waiver shall not apply to any contractual inspection rights of Purchaser under any written agreement with the Company.

9. Miscellaneous.

(a) Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby submit and consent to the exclusive jurisdiction of the State of California and agree that any such litigation shall be conducted only in the courts of California or the federal courts of the United States located in California and no other courts.

(b) Entire Agreement; Enforcement of Rights. This Agreement , together with the Option Agreement and the Plan, sets forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior or contemporaneous discussions between them. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.

(c) Severability. If one or more provisions of this Agreement are held to be unenforceable under Applicable Laws, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

(d) Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient when delivered personally or by overnight courier or sent by email or fax (upon customary confirmation of receipt), or forty-eight (48) hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party’s address or fax number as set forth on the signature page, as subsequently modified by written notice, or if no address is specified on the signature page, at the most recent address set forth in the Company’s books and records.

(e) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

(f) Successors and Assigns. The rights and benefits of this Agreement shall inure to the benefit of, and be enforceable by the Company’s successors and assigns. The rights and obligations of Purchaser under this Agreement may only be assigned with the prior written consent of the Company.

-6-

(g) California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

-7-

The parties have executed this Exercise Agreement as of the date first set forth above.

THE COMPANY:
SIGNNOW, INC.
By:
	(Signature)
Name:
Title:
Address:
United States
Fax:
PURCHASER:
«OPTIONEE»
(Signature)
Address:
Fax:
email:

-8-

I,                                         , spouse of «Optionee» (“Purchaser”), have read and hereby approve the foregoing Agreement. In consideration of the Company’s granting my spouse the right to purchase the Shares as set forth in the Agreement, I hereby agree to be bound irrevocably by the Agreement and further agree that any community property or other such interest that I may have in the Shares shall hereby be similarly bound by the Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise of any rights under the Agreement.

Spouse of Purchaser (if applicable)

-9-

EX-10.5

Exhibit 10.5

PUREWIRE, INC.

2008 STOCK INCENTIVE PLAN

1. Establishment, Purpose and Types of Awards

Purewire, Inc., a Delaware corporation (the “Company”), hereby establishes the Purewire, Inc. 2008 Stock Incentive Plan (the “Plan”). The purpose of the Plan is to promote the long-term growth and profitability of the Company by (i) providing key people with incentives to improve stockholder value and to contribute to the growth and financial success of the Company through their future services, and (ii) enabling the Company to attract, retain and reward the best-available persons.

The Plan permits the granting of stock options (including incentive stock options qualifying under Code section 422 and nonstatutory stock options), stock appreciation rights, or other stock-based awards, or any combination of the foregoing.

2. Definitions

Under this Plan, except where the context otherwise indicates, the following definitions apply:

(a) “Administrator” means the Board or the committee(s) or officer(s) appointed by the Board that have authority to administer the Plan as provided in Section 3 hereof.

(b) “Affiliate” means any entity, whether now or hereafter existing, which controls, is controlled by, or is under common control with, the Company (including, but not limited to, joint ventures, limited liability companies, and partnerships). For this purpose, “control” shall mean ownership of 50% or more of the total combined voting power or value of all classes of stock or interests of the entity.

(c) “Award” means any stock option, stock appreciation right, or other stock award.

(d) “Board” means the Board of Directors of the Company.

(e) “Change in Control” means: (i) the acquisition (other than from the Company) in one or more transactions by any Person, as defined in this Section 2(e), of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of 50% or more of (A) the then outstanding shares of the securities of the Company, or (B) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “Company Voting Stock”); (ii) the closing of a sale or other conveyance of all or substantially all of the assets of the Company; or (iii) the effective time of any merger, share exchange, consolidation, or other business combination involving the Company if immediately after such transaction persons who hold a majority of the

outstanding voting securities entitled to vote generally in the election of directors of the surviving entity (or the entity owning 100% of such surviving entity) are not persons who, immediately prior to such transaction, held the Company Voting Stock; provided, however, that a Change in Control shall not include any transaction primarily for equity financing purposes or a public offering of capital stock of the Company; and provided, further, that for purposes of any Award or subplan that constitutes a “nonqualified deferred compensation plan,” within the meaning of Code section 409A, the Administrator, in its discretion, may specify a different definition of Change in Control in order to comply with the provisions of Code section 409A. For purposes of this Section 2(e), a “Person” means any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended, other than: employee benefit plans sponsored or maintained by the Company and by entities controlled by the Company or an underwriter of the Common Stock in a registered public offering.

(f) “Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder.

(g) “Common Stock” means shares of the Common Stock of the Company, par value of $0.001 per share.

(h) “Fair Market Value” means, with respect to a share of the Company’s Common Stock for any purpose on a particular date, the value determined by the Administrator in good faith. However, if the Common Stock is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, and listed for trading on a national exchange or market, “Fair Market Value” means, as applicable, (i) the closing price quoted on the New York Stock Exchange, the American Stock Exchange, or the Nasdaq Global Market; (ii) the last sale price on the relevant date quoted on the Nasdaq Capital Market; (iii) the average of the high bid and low asked prices on the relevant date quoted on the Nasdaq OTC Bulletin Board Service or by the National Quotation Bureau, Inc. or a comparable service as determined in the Administrator’s discretion; or (iv) if the Common Stock is not quoted by any of the above, the average of the closing bid and asked prices on the relevant date furnished by a professional market maker for the Common Stock, or by such other source, selected by the Administrator. If no public trading of the Common Stock occurs on the relevant date but the shares are so listed, then Fair Market Value shall be determined as of the next preceding date on which trading of the Common Stock does occur. For all purposes under this Plan, the term “relevant date” as used in this Section 2(h) means either the date as of which Fair Market Value is to be determined or the next preceding date on which public trading of the Common Stock occurs, as determined in the Administrator’s discretion.

(i) “Grant Agreement” means a written document memorializing the terms and conditions of an Award granted pursuant to the Plan and which shall incorporate the terms of the Plan.

3. Administration

(a) Administration of the Plan. The Plan shall be administered by the Board or by such committee or committees as may be appointed by the Board from time to time. To the extent allowed by applicable state law, the Board by resolution may authorize an officer or officers to grant Awards (other than Stock Awards) to any person eligible to participate in the Plan, and, to the extent of such authorization, such officer or officers shall be the Administrator.

-2-

(b) Powers of the Administrator. The Administrator shall have all the powers vested in it by the terms of the Plan, such powers to include authority, in its sole and absolute discretion, to grant Awards under the Plan, prescribe Grant Agreements evidencing such Awards and establish programs for granting Awards.

The Administrator shall have full power and authority to take all other actions necessary to carry out the purpose and intent of the Plan, including, but not limited to, the authority to: (i) determine the eligible persons to whom, and the time or times at which Awards shall be granted; (ii) determine the types of Awards to be granted; (iii) determine the number of shares to be covered by or used for reference purposes for each Award; (iv) impose such terms, limitations, restrictions and conditions upon any such Award as the Administrator shall deem appropriate; (v) modify, amend, extend or renew outstanding Awards, or accept the surrender of outstanding Awards and substitute new Awards (provided however, that, except as provided in Section 6 or 7(d) of the Plan, any modification that would materially adversely affect any outstanding Award shall not be made without the consent of the holder); (vi) accelerate or otherwise change the time in which an Award may be exercised or becomes payable and to waive or accelerate the lapse, in whole or in part, of any restriction or condition with respect to such Award, including, but not limited to, any restriction or condition with respect to the vesting or exercisability of an Award following termination of any grantee’s employment or other relationship with the Company; (vii) establish objectives and conditions, if any, for earning Awards and determining whether Awards will be paid with respect to a performance period; and (viii) for any purpose, including but not limited to, qualifying for preferred tax treatment under foreign tax laws or otherwise complying with the regulatory requirements of local or foreign jurisdictions, to establish, amend, modify, administer or terminate sub-plans, and prescribe, amend and rescind rules and regulations relating to such sub-plans.

The Administrator shall have full power and authority, in its sole and absolute discretion, to administer, construe and interpret the Plan, Grant Agreements and all other documents relevant to the Plan and Awards issued thereunder, to establish, amend, rescind and interpret such rules, regulations, agreements, guidelines and instruments for the administration of the Plan and for the conduct of its business as the Administrator deems necessary or advisable, and to correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent the Administrator shall deem it desirable to carry it into effect.

(c) Non-Uniform Determinations. The Administrator’s determinations under the Plan (including without limitation, determinations of the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the Grant Agreements evidencing such Awards) need not be uniform and may be made by the Administrator selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated.

(d) Limited Liability. To the maximum extent permitted by law, no member of the Administrator shall be liable for any action taken or decision made in good faith relating to the Plan or any Award thereunder.

-3-

(e) Indemnification. To the maximum extent permitted by law and by the Company’s charter and by-laws, the members of the Administrator shall be indemnified by the Company in respect of all their activities under the Plan.

(f) Effect of Administrators Decision. All actions taken and decisions and determinations made by the Administrator on all matters relating to the Plan pursuant to the powers vested in it hereunder shall be in the Administrator’s sole and absolute discretion and shall be conclusive and binding on all parties concerned, including the Company, its stockholders, any participants in the Plan and any other employee, consultant, or director of the Company, and their respective successors in interest.

4. Shares Available for the Plan

Subject to adjustments as provided in Section 7(d) of the Plan, the shares of Common Stock that may be issued with respect to Awards granted under the Plan shall not exceed an aggregate of 8,000,000 shares of Common Stock. The Company shall reserve such number of shares for Awards under the Plan, subject to adjustments as provided in Section 7(d) of the Plan. If any Award, or portion of an Award, under the Plan expires or terminates unexercised, becomes unexercisable, is settled in cash without delivery of shares of Common Stock, or is forfeited or otherwise terminated, surrendered or canceled as to any shares, or if any shares of Common Stock are repurchased by or surrendered to the Company in connection with any Award (whether or not such surrendered shares were acquired pursuant to any Award), or if any shares are withheld by the Company, the shares subject to such Award and the repurchased, surrendered and withheld shares shall thereafter be available for further Awards under the Plan; provided, however, that any such shares that are surrendered to or repurchased or withheld by the Company in connection with any Award or that are otherwise forfeited after issuance shall not be available for purchase pursuant to incentive stock options intended to qualify under Code section 422.

5. Participation

Participation in the Plan shall be open to all employees, officers, and directors of, and other individuals (including consultants and advisors) providing bona fide services to or for, the Company, or to any Affiliate of the Company, as may be selected by the Administrator from time to time. The Administrator may also grant Awards to individuals in connection with hiring, retention or otherwise, prior to the date the individual first performs services for the Company or an Affiliate, provided that such Awards shall not become vested or exercisable, and no shares shall be issued to such individual, prior to the date the individual first commences performance of such services.

6. Awards

The Administrator, in its sole discretion, establishes the terms of all Awards granted under the Plan. Awards may be granted individually or in tandem with other types of Awards, concurrently with or with respect to outstanding Awards. All Awards are subject to the terms and conditions provided in the Grant Agreement. The Administrator may permit or require a recipient of an Award to defer such individual’s receipt of the payment of cash or the delivery of Common Stock that would otherwise be due to such individual by virtue of the issuance of, exercise of, payment of,

-4-

or lapse or waiver of restrictions respecting, any Award. If any such payment deferral is required or permitted, the Administrator shall, in its sole discretion, establish rules and procedures for such payment deferrals.

(a) Stock Options. The Administrator may from time to time grant to eligible participants Awards of incentive stock options as that term is defined in Code section 422 or nonstatutory stock options; provided, however, that Awards of incentive stock options shall be limited to employees of the Company or of any current or hereafter existing “parent corporation” or “subsidiary corporation,” as defined in Code sections 424(e) and (f), respectively, of the Company and any other individuals who are eligible to receive incentive stock options under the provisions of Code section 422. Options intended to qualify as incentive stock options under Code section 422 must have an exercise price at least equal to Fair Market Value as of the date of grant, but nonstatutory stock options may be granted with an exercise price less than Fair Market Value. The exercise price of all stock options granted under the Plan shall be set in good faith by the Administrator in compliance with Code section 409A. No stock option shall be an incentive stock option unless so designated by the Administrator at the time of grant or in the Grant Agreement evidencing such stock option.

(b) Stock Appreciation Rights. The Administrator may from time to time grant to eligible participants Awards of Stock Appreciation Rights (“SAR”). An SAR entitles the grantee to receive, subject to the provisions of the Plan and the Grant Agreement, a payment having an aggregate value equal to the product of (i) the excess of (A) the Fair Market Value on the exercise date of one share of Common Stock over (B) the base price per share specified in the Grant Agreement, times (ii) the number of shares specified by the SAR, or portion thereof, which is exercised. The base price per share specified in the Grant Agreement shall not be less than the lower of the Fair Market Value on the grant date or the exercise price of any tandem stock option Award to which the SAR is related. Payment by the Company of the amount receivable upon any exercise of an SAR may be made by the delivery of Common Stock or cash, or any combination of Common Stock and cash, as determined in the sole discretion of the Administrator. If upon settlement of the exercise of an SAR a grantee is to receive a portion of such payment in shares of Common Stock, the number of shares shall be determined by dividing such portion by the Fair Market Value of a share of Common Stock on the exercise date. No fractional shares shall be used for such payment and the Administrator shall determine whether cash shall be given in lieu of such fractional shares or whether such fractional shares shall be eliminated.

(c) Stock Awards. The Administrator may from time to time grant stock Awards to eligible participants in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by law, as it shall determine. A stock Award may be denominated in Common Stock or other securities, stock-equivalent units, securities or debentures convertible into Common Stock, or any combination of the foregoing and may be paid in Common Stock or other securities, in cash, or in a combination of Common Stock or other securities and cash, all as determined in the sole discretion of the Administrator.

-5-

7. Miscellaneous

(a) Withholding of Taxes. Grantees and holders of Awards shall pay to the Company or its Affiliate, or make provision satisfactory to the Administrator for payment of, any taxes required to be withheld in respect of Awards under the Plan no later than the date of the event creating the tax liability. The Company or its Affiliate may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the grantee or holder of an Award. In the event that payment to the Company or its Affiliate of such tax obligations is made in shares of Common Stock, such shares shall be valued at Fair Market Value on the applicable date for such purposes and shall not exceed in amount the minimum statutory tax withholding obligation.

(b) Loans. To the extent otherwise permitted by law, the Company or its Affiliate may make or guarantee loans to grantees to assist grantees in exercising Awards and satisfying any withholding tax obligations.

(c) Transferability. Except as otherwise determined by the Administrator, and in any event in the case of an incentive stock option or a stock appreciation right granted with respect to an incentive stock option, no Award granted under the Plan shall be transferable by a grantee otherwise than by will or the laws of descent and distribution. Unless otherwise determined by the Administrator in accord with the provisions of the immediately preceding sentence, an Award may be exercised during the lifetime of the grantee, only by the grantee or, during the period the grantee is under a legal disability, by the grantee’s guardian or legal representative.

(d) Adjustments for Corporate Transactions and Other Events.

(i) Stock Dividend, Stock Split and Reverse Stock Split. In the event of a stock dividend of, or stock split or reverse stock split affecting, the Common Stock, (A) the maximum number of shares of such Common Stock as to which Awards may be granted under this Plan, as provided in Section 4 of the Plan, and (B) the number of shares covered by and the exercise price and other terms of outstanding Awards, shall, without further action of the Board, be adjusted to reflect such event unless the Board determines, at the time it approves such stock dividend, stock split or reverse stock split, that no such adjustment shall be made. The Administrator may make adjustments, in its discretion, to address the treatment of fractional shares and fractional cents that arise with respect to outstanding Awards as a result of the stock dividend, stock split or reverse stock split.

(ii) Non-Change in Control Transactions. Except with respect to the transactions set forth in Section 7(d)(i), in the event of any change affecting the Common Stock, the Company or its capitalization, by reason of a spin-off, split-up, dividend, recapitalization, merger, consolidation or share exchange, other than any such change that is part of a transaction resulting in a Change in Control of the Company, the Administrator, in its discretion and without the consent of the holders of the Awards, may make (A) appropriate adjustments to the maximum number and kind of shares reserved for issuance or with respect to which Awards may be granted under the Plan, as provided in Section 4 of the Plan; and (B) any adjustments in outstanding Awards, including but not limited to modifying the number, kind and price of securities subject to Awards.

-6-

(iii) Change in Control Transactions. In the event of any transaction resulting in a Change in Control of the Company, outstanding stock options and other Awards that are payable in or convertible into Common Stock under this Plan will terminate upon the effective time of such Change in Control unless provision is made in connection with the transaction for the continuation or assumption of such Awards by, or for the substitution of the equivalent awards of, the surviving or successor entity or a parent thereof. In the event of such termination, the Administrator, in its sole discretion, may take any or all of the following actions to be effective as of the date of the Change in Control (or as of some other date prior to the Change in Control, but contingent upon the consummation of the Change in Control):

(A) accelerate (in part or in whole) the vesting and/or exercisability of such option or other Award;

(B) unilaterally cancel any such option which has not vested and/or which has not become exercisable as of the Effective Time;

(C) unilaterally cancel such option or other Award in exchange for: (1) whole and/or fractional shares of Common Stock (or for whole shares and cash in lieu of any fractional share) that, in the aggregate, are equal in value to the excess of the Fair Market Value of the shares of Common Stock that could be purchased subject to such option or other Award determined as of the Effective Time (taking into account vesting and/or exercisability) over the aggregate exercise price for such shares of Common Stock; or (2) cash or other property equal in value to the excess of the Fair Market Value of the shares of Common Stock that could be purchased subject to such option or other Award determined as of the Effective Time (taking into account vesting and/or exercisability) over the aggregate exercise price for such shares of Common Stock;

(D) unilaterally cancel such option or other Award after providing the holder of such option or other Award with (y) an opportunity to exercise such option or other Award to the extent vested and/or exercisable within a specified period prior to the Effective Time, and (z) notice of such opportunity to exercise prior to the commencement of such specified period; and/or

(E) unilaterally cancel such option or other Award and notify the holder of such option of such action, but only if the Fair Market Value of the shares of Common Stock that could be purchased subject to such option determined as of the Effective Time (taking into account vesting and/or exercisability) does not exceed the aggregate exercise price for such shares.

(iv) Unusual or Nonrecurring Events. The Administrator is authorized to make, in its discretion and without the consent of holders of Awards, adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events affecting the Company, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

-7-

(e) Substitution of Awards in Mergers and Acquisitions. Awards may be granted under the Plan from time to time in substitution for awards held by employees, officers, consultants or directors of entities who become or are about to become employees, officers, consultants or directors of the Company or an Affiliate as the result of a merger or consolidation of the employing entity with the Company or an Affiliate, or the acquisition by the Company or an Affiliate of the assets or stock of the employing entity. The terms and conditions of any substitute Awards so granted may vary from the terms and conditions set forth herein to the extent that the Administrator deems appropriate at the time of grant to conform the substitute Awards to the provisions of the awards for which they are substituted.

(f) Other Agreements. As a condition precedent to the grant of any Award under the Plan, the exercise pursuant to such an Award, or to the delivery of certificates for shares issued pursuant to any Award, the Administrator may require the grantee or the grantee’s successor or permitted transferee, as the case may be, to become a party to a stock restriction agreement, shareholders’ agreement, voting agreement, right of first refusal and co-sale agreement or other agreements regarding the Common Stock of the Company in such form(s) as the Administrator may determine from time to time.

(g) Termination, Amendment and Modification of the Plan. The Board may terminate, amend or modify the Plan or any portion thereof at any time. Except as otherwise determined by the Board, termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

(h) Non-Guarantee of Employment or Service. Nothing in the Plan or in any Grant Agreement thereunder shall confer any right on an individual to continue in the service of the Company or shall interfere in any way with the right of the Company to terminate such service at any time with or without cause or notice and whether or not such termination results in (i) the failure of any Award to vest; (ii) the forfeiture of any unvested or vested portion of any Award; and/or (iii) any other adverse effect on the individual’s interests under the Plan.

(i) Compliance with Securities Laws; Listing and Registration. If at any time the Administrator determines that the delivery of Common Stock under the Plan is or may be unlawful under the laws of any applicable jurisdiction, or Federal, state or foreign securities laws, the right to exercise an Award or receive shares of Common Stock pursuant to an Award shall be suspended until the Administrator determines that such delivery is lawful. The Company shall have no obligation to effect any registration or qualification of the Common Stock under Federal, state or foreign laws. The Company may require that a grantee, as a condition to exercise of an Award, and as a condition to the delivery of any share certificate, make such written representations (including representations to the effect that such person will not dispose of the Common Stock so acquired in violation of Federal, state or foreign securities laws) and furnish such information as may, in the opinion of counsel for the Company, be appropriate to permit the Company to issue the Common Stock in compliance with applicable Federal, state or foreign securities laws. The stock certificates for any shares of Common Stock issued pursuant to this Plan may bear a legend restricting transferability of the shares of Common Stock unless such shares are registered or an exemption from registration is available under the Securities Act of 1933, as amended, and applicable state or foreign securities laws.

-8-

(j) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a grantee or any other person. To the extent that any grantee or other person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company.

(k) Governing Law. The validity, construction and effect of the Plan, of Grant Agreements entered into pursuant to the Plan, and of any rules, regulations, determinations or decisions made by the Administrator relating to the Plan or such Grant Agreements, and the rights of any and all persons having or claiming to have any interest therein or thereunder, shall be determined exclusively in accordance with applicable federal laws and the laws of the State of Delaware, without regard to its conflict of laws principles.

(l) Prior Plans. This Plan is the only plan or agreement of the Company with respect to the subject matter hereof and supercedes and replaces all prior plans, agreements and undertakings, both written and oral, with respect to such subject matter.

(m) Effective Date; Termination Date. The Plan is effective as of the date on which the Plan is adopted by the Board, subject to approval of the stockholders within twelve months before or after such date. No Award shall be granted under the Plan after the close of business on the day immediately preceding the tenth anniversary of the effective date of the Plan, or if earlier, the tenth anniversary of the date this Plan is approved by the stockholders. Subject to other applicable provisions of the Plan, all Awards made under the Plan prior to such termination of the Plan shall remain in effect until such Awards have been satisfied or terminated in accordance with the Plan and the terms of such Awards.

-9-

PLAN APPROVAL

Date Approved by the Board: June     , 2008

Date Approved by the Stockholders: June     , 2008

-10-

RESTRICTED STOCK AGREEMENT

PUREWIRE, INC.

2008 STOCK INCENTIVE PLAN

GRANTEE:                     

NO. OF SHARES:                     

This Agreement (the “Agreement”) evidences the Company’s grant to you of              restricted shares (each, an “Award Share,” and collectively, the “Award Shares”) of the Common Stock of Purewire, Inc., a Delaware corporation (the “Company”) as of             , 2009 (the “Grant Date”) each currently valued at $0.10 per share, pursuant to the Purewire, Inc. 2008 Stock Incentive Plan (the “Plan”) and conditioned upon your agreement to the terms described below. All of the provisions of the Plan are expressly incorporated into this Agreement.

1. Terminology. Capitalized words used in this Agreement not defined above are defined in the Glossary at the end of the Agreement.

2. Vesting.

(a) As of             , 2009 (the “Vesting Measurement Date”), zero (0) Award Shares shall be vested and              Award Shares shall be unvested. So long as your Service with the Company is continuous from the Grant Date through the applicable date upon which forfeiture lapses with respect to such Award Shares, (i) 11.111% of the Award Shares will become vested on the date one month after the Vesting Measurement Date and on such date every month thereafter, through the date that is nine months following the Vesting Measurement Date; and (ii) 100% of the Award Shares will be vested on the date nine months after the Vesting Measurement Date.

(b) Notwithstanding anything herein to the contrary, any unvested portion of the Award Shares shall become vested upon the consummation of a Change in Control.

3. Termination of Employment or Service. If your Service with the Company ceases for any reason, all Award Shares that are not then vested will be immediately and automatically forfeited to the Company upon such cessation.

4. Restrictions on Transfer.

(a) Until an Award Share becomes vested, it may not be assigned, transferred, pledged, hypothecated or disposed of in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process.

(b) You hereby represent and warrant to the Company as follows:

(i) You will hold the Award Shares for your own account for investment only and not with a view to, or for resale in connection with, any “distribution” of the Award Shares within the meaning of the Securities Act.

(ii) You understand that the Award Shares have not been registered under the Securities Act by reason of a specific exemption and that the Award Shares must be held indefinitely, unless they are subsequently registered under the Securities Act or you obtain an opinion of counsel, in form and substance satisfactory to the Company and its counsel, that such registration is not required. You further acknowledge and understand that the Company is under no obligation to register the Award Shares. However, the Company acknowledges and agrees that for purposes of registration under the Securities Act, it will not treat the Award Shares granted hereunder differently (in an adverse manner to you) as any other shares of Common Stock granted under the Plan.

(iii) You understand that the Company may, in its discretion, impose restrictions on the sale, pledge or other transfer of the Award Shares (including the placement of appropriate legends on stock certificates) if, in the judgment of the Company, such restrictions are necessary or desirable to comply with the Securities Act, the securities laws of any State or any other law.

(iv) You are aware that your investment in the Company is a speculative investment that has limited liquidity and is subject to the risk of complete loss.

(c) The Company shall not be required to (i) transfer on its books any Award Shares that have been sold or transferred in contravention of this Agreement or (ii) treat as the owner of Award Shares, or otherwise accord voting, dividend or liquidation rights to, any transferee to whom Award Shares have been transferred in contravention of this Agreement.

(d) If you propose to Transfer any Award Shares, then you shall promptly give written notice (the “Notice”) to the Company at least thirty (30) days prior to the closing of such Transfer. The Notice shall describe in reasonable detail the proposed Transfer including the number of Award Shares to be transferred, the nature of such Transfer, the consideration to be paid, and the name and address of each prospective purchaser or transferee. For a period of twenty (20) days following receipt of any Notice, the Company shall have the right to purchase all or a portion of the Award Shares subject to such Notice on the same terms and conditions as set forth therein. The Company’s purchase right shall be exercised by written notice signed by an officer of the Company (the “Company Notice”) and delivered to you within such twenty (20) day period. The Company shall effect the purchase of the Award Shares, including payment of the purchase price, not more than five (5) business days after delivery of the Company’s Notice, and at such time you shall deliver to the Company the certificate(s) representing the Award Shares to be purchased by the Company, each certificate to be properly endorsed for transfer. The Company’s rights under this Section 4(d) shall expire upon the Company’s initial public offering.

-2-

(e) The limitations on transfer contained in this Section 4 are in addition to and shall not in any way limit any right of first refusal in favor of the Company pursuant to a shareholders’ agreement, right of first refusal agreement or otherwise; provided, that in the event of a conflict between such agreement and Section 4(d), such agreement shall control.

5. Stock Certificates. You will be reflected as the owner of record of the Award Shares as of the Grant Date on the Company’s books. The Company or its counsel will hold the share certificates for safekeeping, or otherwise retain the Award Shares in uncertificated book entry form, until the Award Shares become vested. Until the Award Shares become vested, any share certificates representing such shares will include a legend to the effect that you may not sell, assign, transfer, pledge, or hypothecate the Award Shares pursuant to this Agreement. All regular cash dividends on the Award Shares held by the Company will be paid directly to you. At the execution of this Agreement, you shall deliver to the Company a stock power, endorsed in blank, with respect to any Award Shares that have been forfeited pursuant to this Agreement.

6. Tax Election and Tax Withholding.

(a) You hereby agree to make adequate provision for foreign, federal, state and local taxes required by law to be withheld, if any, which arise in connection with the grant or vesting of the Award Shares. The Company shall have the right to deduct from any compensation or any other payment of any kind (including withholding the issuance of shares of Common Stock) due you the amount of any federal, state, local or foreign taxes required by law to be withheld as a result of the grant or vesting of the Award Shares in whole or in part; provided, however, that the value of the shares of Common Stock withheld may not exceed the statutory minimum withholding amount required by law. In lieu of such deduction, the Company may require you to make a cash payment to the Company equal to the amount required to be withheld. If you do not make such payment when requested, the Company may refuse to issue any Common Stock certificate under this Agreement until arrangements satisfactory to the Administrator for such payment have been made.

(b) You hereby acknowledge that you have been advised by the Company to seek independent tax advice from your own advisors regarding the availability and advisability of making an election under Section 83(b) of the Code, and that any such election, if made, must be made within 30 days of the Grant Date. You expressly acknowledge that you are solely responsible for filing any such Section 83(b) election with the appropriate governmental authorities, irrespective of the fact that such election is also delivered to the Company. You may not rely on the Company or any of its officers, directors or employees for tax or legal advice regarding this award.

7. Adjustments for Corporate Transactions and Other Events.

(a) Stock Dividend, Stock Split and Reverse Stock Split. Upon a stock dividend of, or stock split or reverse stock split affecting, the Common Stock, the number of Award Shares and the number of such Award Shares that are forfeitable shall, without further action of the Administrator, be adjusted to reflect such event. The Administrator may make adjustments, in its discretion, to address the treatment of fractional shares with respect to the Award Shares as a result of the stock dividend, stock split or reverse stock split. Adjustments under this Section 7 will be made by the Administrator, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive. No fractional Award Shares will result from any such adjustments.

-3-

(b) Binding Nature of Agreement. The terms and conditions of this Agreement shall apply with equal force to any additional and/or substitute securities received by you in exchange for, or by virtue of your ownership of, the Award Shares, whether as a result of any spin-off, stock split-up, stock dividend, stock distribution, other reclassification of the Common Stock of the Company, or similar event, except as otherwise determined by the Administrator. If the Award Shares are converted into or exchanged for, or stockholders of the Company receive by reason of any distribution in total or partial liquidation or pursuant to any merger of the Company or acquisition of its assets, securities of another entity, or other property (including cash), then the rights of the Company under this Agreement shall inure to the benefit of the Company’s successor, and this Agreement shall apply to the securities or other property received upon such conversion, exchange or distribution in the same manner and to the same extent as the Award Shares.

8. Non-Guarantee of Employment or Service Relationship. Nothing in the Plan or this Agreement shall alter your at-will or other employment status or other service relationship with the Company, nor be construed as a contract of employment or service relationship between the Company and you, or as a contractual right of you to continue in the employ of, or in a service relationship with, the Company for any period of time, or as a limitation of the right of the Company to discharge you at any time with or without cause or notice and whether or not such discharge results in the forfeiture of any Award Shares or any other adverse effect on your interests under the Plan.

9. Rights as Stockholder. Except as otherwise provided in this Agreement with respect to the forfeitable Award Shares, you are entitled to all rights of a stockholder of the Company, including the right to vote the Award Shares and receive dividends and/or other distributions declared on the Award Shares.

10. The Company’s Rights. The existence of the Award Shares shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or other stocks with preference ahead of or convertible into, or otherwise affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of the Company’s assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

11. Agreement to Execute Other Agreements. You agree to execute, upon the request of the Company at any time, any and all agreements as may be reasonably requested by the Administrator (including, without limitation, a shareholders’ agreement, voting agreement, right of first refusal and co-sale agreement, and any other agreements that may be in effect among and between the Company’s shareholders).

12. Notices. All notices and other communications made or given pursuant to this Agreement shall be in writing and shall be sufficiently made or given if hand delivered, mailed by

-4-

certified mail or transmitted by facsimile, addressed to you at the address contained in the records of the Company, or addressed to the Administrator, care of the Company for the attention of its Corporate Secretary at its principal executive office.

13. Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the Award Shares granted hereunder. Any oral or written agreements, representations, warranties, written inducements, or other communications made prior to the execution of this Agreement with respect to the Award Shares granted hereunder shall be void and ineffective for all purposes.

14. Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

15. Amendment. This Agreement may be amended from time to time by the Administrator in its discretion; provided, however, that this Agreement may not be modified in a manner that would have an adverse effect on the Award Shares as determined in the discretion of the Administrator, except as provided in the Plan or in a written document signed by each of the parties hereto.

16. Conformity with Plan. This Agreement is intended to conform in all respects with, and is subject to all applicable provisions of, the Plan. Inconsistencies between this Agreement and the Plan shall be resolved in accordance with the terms of this Agreement. A copy of the Plan has been provided to you.

17. Governing Law. The validity, construction and effect of this Agreement, and of any determinations or decisions made by the Administrator relating to this Agreement, and the rights of any and all persons having or claiming to have any interest under this Agreement, shall be determined exclusively in accordance with the laws of the State of Georgia, without regard to its provisions concerning the applicability of laws of other jurisdictions. Any suit with respect hereto will be brought in the federal or state courts in the districts which include Atlanta, Georgia, and you hereby agree and submit to the personal jurisdiction and venue thereof.

18. Attorneys’ Fees; Specific Performance. The nonprevailing party shall reimburse the prevailing party for all costs incurred by the prevailing party in enforcing the performance of, or protecting his, her or its rights under, any part of this Agreement, including reasonable costs of investigation and attorneys’ fees. It is the intention of the parties that upon forfeiture of any Award Shares hereunder, the Company, pursuant to the terms of this Agreement, shall be entitled to receive such Award Shares, in specie, in order to have such Common Stock available for future issuance without dilution of the holdings of other stockholders. Furthermore, it is expressly agreed between the parties that money damages are inadequate to compensate the Company for such forfeited Award Shares and that the Company shall be entitled to specific performance.

-5-

19. Headings. The headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

20. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

-6-

GLOSSARY

(a) “Administrator” has the meaning given to such term in the Plan.

(b) “Affiliate” has the meaning given to such term in the Plan.

(c) “Change in Control” has the meaning given to such term in the Plan.

(d) “Company” means Purewire, Inc. and its Affiliates, except where the context otherwise requires. For purposes of determining whether a Change in Control has occurred, Company shall mean only Purewire, Inc.

(e) “Securities Act” means the Securities Act of 1933, as amended.

(f) “Service” means your employment or other service relationship with the Company and its Affiliates. Your Service will be considered to have ceased with the Company and its Affiliates if, immediately after a sale, merger or other corporate transaction, the trade, business or entity with which you are employed or otherwise have a service relationship is not the Company or an Affiliate of the Company.

(g) “Transfer” shall include any sale, assignment, encumbrance, hypothecation, pledge, conveyance in trust, gift, transfer by request, devise or descent, or other transfer or disposition of any kind, including transfers to receivers, levying creditors, trustees or receivers in bankruptcy proceedings or general assignees for the benefit of creditors, whether voluntary or by operation of law, directly or indirectly, of any of the Award Shares.

(h) “You”; “Your”. You means the recipient of the Award Shares as reflected in the first paragraph of this Agreement. Whenever the word “you” or “your” is used in any provision of this Agreement under circumstances where the provision should logically be construed, as determined by the Administrator, to apply to the estate, personal representative, or beneficiary to whom the Award Shares may be transferred by will or by the laws of descent and distribution, the words “you” and “your” shall be deemed to include such person.

-7-

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer.

PUREWIRE, INC.
By:
	Name:
	Title:

Date:

The undersigned hereby acknowledges that he/she has carefully read this Agreement and agrees to be bound by all of the provisions set forth herein.

GRANTEE

Name:

Date:

Address:

Facsimile:

Enclosure: Purewire, Inc. 2008 Stock Incentive Plan

-8-

{This Stock Power should be signed in blank and deposited with the Company if share certificates are issued and/or delivered to the Grantee for Award Shares that are forfeitable.}

STOCK POWER

FOR VALUE RECEIVED, the undersigned,                     , hereby sells, assigns and transfers unto Purewire, Inc., a Delaware corporation (the “Company”), or its successor,              shares of restricted common stock, par value $0.001 per share, of the Company standing in my name on the books of the Company, represented by Certificate No.     , which is attached hereto, and hereby irrevocably constitutes and appoints                                                           as my attorney-in-fact to transfer the said stock on the books of the Company with full power of substitution in the premises.

This Stock Power may only be used in connection with the forfeiture of Award Shares pursuant to that certain Restricted Stock Agreement between                      and the Company, dated                     .

Name:

Dated:

-9-

PUREWIRE, INC.

INCENTIVE STOCK OPTION NOTICE

This notice evidences the award of stock options (each, an “Option” and collectively, the “Options”) that have been granted to you, <<GRANTEE>>, subject to and conditioned upon your agreement to the terms of the attached Incentive Stock Option Agreement (the “Agreement”). The Options entitle you to purchase shares of Common Stock, par value $0.001 per share (“Common Stock”), of Purewire, Inc., a Delaware corporation (the “Company”), under the Purewire, Inc. 2008 Stock Incentive Plan (the “Plan”). The number of shares you may purchase and the exercise price at which you may purchase them are specified below. This Notice constitutes part of and is subject to the terms and provision of the Agreement and the Plan, which are incorporated by reference herein.

Grant Date:
Vesting Measurement Date:
Number of Shares:
Exercise Price:
Expiration Date:	The Options expire at 5:00 p.m. Eastern Time on the last business day coincident with or prior to the 10th anniversary of the Grant Date (the “Expiration Date”), unless fully exercised or terminated earlier.
Exercisability Schedule:	Subject to the terms and conditions described in the Agreement, the Options become exercisable in accordance with the schedule below:

(a) 25% of the Options become exercisable on the first anniversary of the Vesting Measurement Date (the “Initial Vesting Date”), and

(b) 2.083% of the Options become exercisable on the date one month after the Initial Vesting Date and on such date every month thereafter, through the fourth anniversary of the Vesting Measurement Date.

The extent to which the Options are exercisable as of a particular date is rounded down to the nearest whole share. However, exercisability is rounded up to 100% on the fourth anniversary of the Vesting Measurement Date.

PUREWIRE, INC.

By:

Date:

I acknowledge and I have carefully read the attached Agreement and the Plan and agree to be bound by all of the provisions set forth in these documents.

OPTIONEE

Date:

Enclosures:	Incentive Stock Option Agreement
	Purewire, Inc. 2008 Stock Incentive Plan
	Exercise Form

-2-

INCENTIVE STOCK OPTION AGREEMENT

UNDER THE

PUREWIRE, INC. 2008 STOCK INCENTIVE PLAN

1. Terminology. Capitalized terms used in this Agreement are defined in the correlating Stock Option Notice and/or the Glossary at the end of the Agreement. Capitalized terms used in this Agreement and not otherwise defined shall have the definitions attributed to them in the Plan.

2. Exercise of Options.

(a) Exercisability. The Options will become exercisable in accordance with the Exercisability Schedule set forth in the Stock Option Notice, so long as you are in the Service of the Company from the Grant Date through the applicable exercisability dates. None of the Options will become exercisable after your Service with the Company ceases, unless the Stock Option Notice provides otherwise with respect to exercisability that arises as a result of your cessation of Service.

(b) Right to Exercise. You may exercise the Options, to the extent exercisable, at any time on or before 5:00 p.m. Eastern Time on the Expiration Date or the earlier termination of the Options, unless otherwise provided under applicable law. Section 3 below describes certain limitations on exercise of the Options that apply in the event of your death, Total and Permanent Disability, or termination of Service. The Options may be exercised only in multiples of whole Shares. No fractional Shares will be issued under the Options.

(c) Exercise Procedure. In order to exercise the Options, you must provide the following items to the Secretary of the Company or his or her delegate before the expiration or termination of the Options:

(i) notice, in such manner and form as the Administrator may require from time to time, specifying the number of Shares to be purchased under the Options; and

(ii) full payment of the Exercise Price for the Shares or properly executed, irrevocable instructions, in such manner and form as the Administrator may require from time to time, to effectuate a broker-assisted cashless exercise, each in accordance with Section 2(d) of this Agreement; and

(iii) an executed copy of any other agreements requested by the Administrator pursuant to Section 2(e) of this Agreement.

(iv) An exercise will not be effective until the Secretary of the Company or his or her delegate receives all of the foregoing items, and such exercise otherwise is permitted under and complies with all applicable federal, state and foreign securities laws.

(d) Method of Payment. You may pay the Exercise Price by:

(i) delivery of cash, certified or cashier’s check, money order or other cash equivalent acceptable to the Administrator in its discretion;

(ii) a broker-assisted cashless exercise in accordance with Regulation T of the Board of Governors of the Federal Reserve System through a brokerage firm approved by the Administrator;

(iii) subject to such limits as the Administrator may impose from time to time, tender (via actual delivery or attestation) to the Company of other shares of Common Stock of the Company which have a Fair Market Value on the date of tender equal to the Exercise Price, provided that tender of such shares will not result in the Company having to record a charge to earnings under United States generally accepted accounting principles then applicable to the Company;

(iv) any other method approved by the Administrator; or

(v) any combination of the foregoing.

(e) Agreement to Execute Other Agreements. You agree to execute, as a condition precedent to the exercise of the Options, and at any time thereafter, any and all agreements as may be requested by the Administrator, including, without limitation, a stock restriction agreement, shareholders’ agreement, voting agreement, and right of first refusal and co-sale agreement.

(f) Issuance of Shares upon Exercise. As soon as practicable after exercise of the Options, the Company will deliver a share certificate to you, or deliver Shares electronically or in certificate form to your designated broker on your behalf, for the Shares issued upon exercise. Any share certificates delivered will, unless the Shares are registered or an exemption from registration is available under applicable federal and state law, bear a legend restricting transferability of such Shares and referencing any applicable agreement described in Section 2(e).

3. Termination of Service.

(a) Termination of Unexercisable Options. If your Service with the Company ceases for any reason, the Options that are then unexercisable, after giving effect to the exercise acceleration provisions set forth on the Stock Option Notice, if any, will terminate immediately upon such cessation.

-2-

(b) Exercise Period Following Termination of Service. If your Service with the Company ceases for any reason other than discharge for Cause, the Options that are then exercisable, after giving effect to the exercise acceleration provisions set forth on the Stock Option Notice, if any, will terminate upon the earliest of:

(i) the expiration of 90 days following such cessation, if your Service ceases on account of (1) your termination by the Company other than a discharge for Cause, or (2) your voluntary termination other than for Total and Permanent Disability or death;

(ii) the expiration of 12 months following such cessation, if your Service ceases on account of your Total and Permanent Disability or death;

(iii) the expiration of 12 months following your death, if your death occurs during the periods described in clauses (i) or (ii) of this Section 3(b), as applicable; or

(iv) the Expiration Date.

In the event of your death, the exercisable Options may be exercised by your executor, personal representative, or the person(s) to whom the Options are transferred by will or the laws of descent and distribution.

(c) Misconduct. The Options will terminate in their entirety, regardless of whether the Options are then exercisable, immediately upon your discharge from Service for Cause, or upon your commission of any of the following acts during the exercise period following your termination of Service: (i) fraud on or misappropriation of any funds or property of the Company, or (ii) your breach of any provision of any employment, non-disclosure, non-competition, non-solicitation, assignment of inventions, or other similar agreement executed by you for the benefit of the Company, as determined by the Administrator, which determination will be conclusive.

(d) Changes in Status. If you cease to be a “common law employee” of the Company but you continue to provide bona fide services to the Company following such cessation in a different capacity, including without limitation as a director, consultant or independent contractor, then a termination of Service shall not be deemed to have occurred for purposes of this Section 3 upon such change in capacity. Notwithstanding the foregoing, the Options shall not be treated as incentive stock options within the meaning of Code section 422 with respect to any exercise that occurs more than three months after such cessation of the common law employee relationship (except as otherwise permitted under Code section 421 or 422). In the event that your Service is with a business, trade or entity that, after the Grant Date, ceases for any reason to be part or an Affiliate of the Company, your Service will be deemed to have terminated for purposes of this Section 3 upon such cessation if your Service does not continue uninterrupted immediately thereafter with the Company or an Affiliate of the Company.

4. Market Stand-Off Agreement. You agree that following the effective date of a registration statement of the Company filed under the Securities Act of 1933, you, for the duration specified by and to the extent requested by the Company and an underwriter of Common Stock or other securities of the Company, shall not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of such securities, whether any such aforementioned transaction is to be settled by delivery of such securities or other securities, in cash or otherwise, or

-3-

publicly disclose the intention to make any such offer, sale, pledge or disposition, or to enter into any such transaction, swap, hedge or other arrangement, in each case during the seven days prior to and the 180 days after the effectiveness of any underwritten offering of the Company’s equity securities (or such longer or shorter period as may be requested in writing by the managing underwriter and agreed to in writing by the Company) (the “Market Stand-Off Period”), except as part of such underwritten registration if otherwise permitted. In addition, you agree to execute any further letters, agreements and/or other documents requested by the Company or its underwriters that are consistent with the terms of this Section 4. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Stand-Off Period.

5. Nontransferability of Options. These Options are nontransferable otherwise than by will or the laws of descent and distribution and during your lifetime, the Options may be exercised only by you or, during the period you are under a legal disability, by your guardian or legal representative. Except as provided above, the Options may not be assigned, transferred, pledged, hypothecated or disposed of in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process.

6. Qualified Nature of the Options.

(a) General Status. The Options are intended to qualify as incentive stock option within the meaning of Code section 422 (“Incentive Stock Option”), to the fullest extent permitted by Code section 422, and this Agreement shall be so construed. The Company, however, does not warrant any particular tax consequences of the Options. Code section 422 provides limitations, not set forth in this Agreement, respecting the treatment of the Options as Incentive Stock Options. You should consult with your personal tax advisors in this regard.

(b) Code Section 422(d) Limitation. Pursuant to Code section 422(d), the aggregate fair market value (determined as of the Grant Date) of shares of Common Stock with respect to which all Incentive Stock Options first become exercisable by you in any calendar year under the Plan or any other plan of the Company (and its parent and subsidiary corporations, within the meaning of Code section 424(e) and (f), as may exist from time to time) may not exceed $100,000 or such other amount as may be permitted from time to time under Code section 422. To the extent that such aggregate fair market value exceeds $100,000 or other applicable amount in any calendar year, such stock options will be treated as nonstatutory stock options with respect to the amount of aggregate fair market value thereof that exceeds the Code section 422(d) limit. For this purpose, the Incentive Stock Options will be taken into account in the order in which they were granted. In such case, the Company may designate the shares of Common Stock that are to be treated as stock acquired pursuant to the exercise of Incentive Stock Options and the shares of Common Stock that are to be treated as stock acquired pursuant to nonstatutory stock options by issuing separate certificates for such shares and identifying the certificates as such in the stock transfer records of the Company.

(c) Significant Stockholders. Notwithstanding anything in this Agreement or the Stock Option Notice to the contrary, if you own, directly or indirectly through attribution, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any of its subsidiaries (within the meaning of Code section 424(f)) on the Grant Date, then the

-4-

Exercise Price is the greater of (a) the Exercise Price stated on the Stock Option Notice or (b) 110% of the Fair Market Value of the Common Stock on the Grant Date, and the Expiration Date is the last business day prior to the fifth anniversary of the Grant Date.

7. Withholding of Taxes. At the time the Options are exercised, in whole or in part, or at any time thereafter as requested by the Company, you hereby authorize withholding from payroll or any other payment of any kind due to you and otherwise agree to make adequate provision for foreign, federal, state and local taxes required by law to be withheld, if any, which arise in connection with the Options (including upon a disqualifying disposition within the meaning of Code section 421(b)). The Company may require you to make a cash payment to cover any withholding tax obligation as a condition of exercise of the Options or issuance of share certificates representing Shares.

The Administrator may, in its sole discretion, permit you to satisfy, in whole or in part, any withholding tax obligation which may arise in connection with the Options either by electing to have the Company withhold from the Shares to be issued upon exercise that number of Shares, or by electing to deliver to the Company already-owned shares, in either case having a Fair Market Value equal to the amount necessary to satisfy the statutory minimum withholding amount due.

8. Adjustments. The Administrator may make various adjustments to your Options, including adjustments to the number and type of securities subject to the Options and the Exercise Price, in accordance with the terms of the Plan. In the event of any transaction resulting in a Change in Control of the Company, the outstanding Options will terminate upon the effective-time of such Change in Control unless provision is made in connection with the transaction for the continuation or assumption of such Options by, or for the substitution of the equivalent awards of, the surviving or successor entity or a parent thereof. In the event of such termination, you will be permitted, immediately before the Change in Control, to exercise or convert all portions of such Options that are then exercisable or which become exercisable upon or prior to the effective time of the Change in Control or you will receive Fair Market Value for any such Options as provided in the Plan.

9. Non-Guarantee of Employment or Service Relationship. Nothing in the Plan or this Agreement will alter your at-will or other employment status or other service relationship with the Company, nor be construed as a contract of employment or service relationship between you and the Company, or as a contractual right for you to continue in the employ of, or in a service relationship with, the Company for any period of time, or as a limitation of the right of the Company to discharge you at any time with or without Cause or notice and whether or not such discharge results in the failure of any of the Options to become exercisable or any other adverse effect on your interests under the Plan.

10. No Rights as a Stockholder. You shall not have any of the rights of a stockholder with respect to the Shares until such Shares have been issued to you upon the due exercise of the Options. No adjustment will be made for dividends or distributions or other rights for which the record date is prior to the date such Shares are issued.

11. The Company’s Rights. The existence of the Options shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments,

-5-

recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or other stocks with preference ahead of or convertible into, or otherwise affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of the Company’s assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

12. Right of First Refusal. If you propose to Transfer any Shares, then you shall promptly give written notice (the “Notice”) to the Company at least thirty (30) days prior to the closing of such Transfer. The Notice shall describe in reasonable detail the proposed Transfer including the number of Shares to be transferred, the nature of such Transfer, the consideration to be paid, and the name and address of each prospective purchaser or transferee. For a period of twenty (20) days following receipt of any Notice, the Company shall have the right to purchase all or a portion of the Shares subject to such Notice on the same terms and conditions as set forth therein. The Company’s purchase right shall be exercised by written notice signed by an officer of the Company (the “Company Notice”) and delivered to you within such twenty (20) day period. The Company shall effect the purchase of the Shares, including payment of the purchase price, not more than five (5) business days after delivery of the Company’s Notice, and at such time you shall deliver to the Company the certificate(s) representing the Shares to be purchased by the Company, each certificate to be properly endorsed for transfer. The Company’s rights under this Section 12 shall expire upon the Company’s initial public offering.

13. Entire Agreement. This Agreement, together with the correlating Stock Option Notice and the Plan, contain the entire agreement between you and the Company with respect to the Option. Any oral or written agreements, representations, warranties, written inducements, or other communications made prior to the execution of this Agreement with respect to the Options shall be void and ineffective for all purposes.

14. Amendment. This Agreement may be amended from time to time by the Administrator in its discretion; provided, however, that this Agreement may not be modified in a manner that would have a materially adverse effect on the Options or Shares as determined in the discretion of the Administrator, except as provided in the Plan or in a written document signed by you and the Company.

15. Conformity with Plan. This Agreement is intended to conform in all respects with, and is subject to all applicable provisions of, the Plan. Any conflict between the terms of this Agreement and the Plan shall be resolved in accordance with the terms of the Plan. In the event of any ambiguity in this Agreement or any matters as to which this Agreement is silent, the Plan shall govern. A copy of the Plan is provided to you with this Agreement.

-6-

GLOSSARY

(a) “Affiliate” means any entity, whether now or hereafter existing, which controls, is controlled by, or is under common control with, Purewire, Inc. For this purpose, “control” means ownership of 50% or more of the total combined voting power or value of all classes of stock or interests of the entity.

(b) “Cause” has the meaning ascribed to such term or words of similar import in your written employment or service contract with the Company as in effect at the time at issue and, in the absence of such agreement or definition, means your (i) conviction of, or plea of nolo contendere to, a felony or crime involving moral turpitude; (ii) fraud on or misappropriation of any funds or property of the Company, any affiliate, customer or vendor; (iii) personal dishonesty, incompetence, willful misconduct, willful violation of any law, rule or regulation (other than minor traffic violations or similar offenses) or breach of fiduciary duty which involves personal profit; (iv) willful misconduct in connection with your duties or willful failure to perform your responsibilities in the best interests of the Company; (v) illegal use or distribution of drugs; (vi) violation of any Company rule, regulation, procedure or policy; or (vii) breach of any provision of any employment, non-disclosure, non-competition, non-solicitation or other similar agreement executed by you for the benefit of the Company, all as determined by the Administrator, which determination will be conclusive.

(c) “Company” means Purewire, Inc. and its Affiliates, except where the context otherwise requires. For purposes of determining whether a Change in Control has occurred, Company shall mean only Purewire, Inc.

(d) “Service” means your employment or other service relationship with the Company.

(e) “Shares” mean the shares of Common Stock underlying the Options.

(f) “Stock Option Notice” means the written notice evidencing the award of the Options that correlates with and makes up a part of this Agreement

(g) “Total and Permanent Disability” means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months. The Administrator may require such proof of Total and Permanent Disability as the Administrator in its sole discretion deems appropriate and the Administrators good faith determination as to whether you are totally and permanently disabled will be final and binding on all parties concerned.

(h) “Transfer”, shall include any sale, assignment, encumbrance, hypothecation, pledge, conveyance in trust, gift, transfer by request, devise or descent, or other transfer or disposition of any kind, including transfers to receivers, levying creditors, trustees or receivers in bankruptcy proceedings or general assignees for the benefit of creditors, whether voluntary or by operation of law, directly or indirectly, of any of the Shares.

(i) “You”; “Your” means the recipient of the award of Options as reflected on the Stock Option Notice. Whenever the Agreement refers to “you” under circumstances where the provision should logically be construed, as determined by the Administrator, to apply to your estate, personal representative, or beneficiary to whom the Options may be transferred by will or by the laws of descent and distribution, the word “you” shall be deemed to include such person.

-2-

EX-10.12

Exhibit 10.12

PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS

THIS PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS (“Agreement”) is made as of July 31, 2011 (“Agreement Date”), by and between BRYAN FAMILY PARTNERSHIP II, LTD., a California limited partnership (“Seller”), and BARRACUDA NETWORKS, INC., a Delaware corporation, or assignee (“Buyer”), collectively referred to herein as the “Parties,” with reference to the following:

RECITALS

A. Seller is the owner of the Real Property (hereinafter defined) consisting of approximately 3.33 acres, including improvements thereon consisting of and including, among many things, an approximately sixty-one thousand four hundred and twenty-four (61,424) square foot building (the “Building”) and parking spaces located at 3165 and 3175 Winchester Boulevard, City of Campbell, County of Santa Clara, State of California, which is commonly identified by APNs 406-21-016, 406-21-017 and 406-21¬019 and more particularly described in Exhibit A to this Agreement and hereby incorporated by this reference.

B. Seller and Buyer previously entered into an agreement to lease the Building on January 19, 2007 (the “Lease Agreement”). The Patios modified the Lease Agreement by entering into a first amendment to the Lease Agreement on October 4, 2010.

C. Seller entered into a Real Estate Note with Symetra Life Insurance Company, a Washington corporation (“Symetra”), on June 20, 2007, Loan No. 1673, for the original principal sum of Six Million Seven Hundred Fifty Thousand and no/100 Dollars ($6,750,000.00) and a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (the “Existing Debt Obligation”). The Real Estate Note and the Deed of Trust, Assignment of Rents, Security Agreement and Fixture are attached as Exhibit B and Exhibit C to this Agreement respectively.

D. Buyer desires to purchase and Seller desires to sell the Property (hereinafter defined) only upon the following terms and conditions, which includes the assumption of the Existing Debt Obligation.

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements hereinafter contained and for other good and valuable consideration, the Parties hereto agree as follows:

Seller’s Initial: /s/ RB, JF & DZ            

Buyer’s Initials: /s/ DD            

ARTICLE 1

DEFINITIONS AND EXHIBITS

1.1 Definitions. In addition to the terms defined above and throughout this Agreement, for purposes of this Agreement, each of the following terms, when used, herein with an initial capital letter, shall have the meaning ascribed to it as follows:

(A) “Closing Date” shall be the date upon which the Deed (hereinafter defined) is, recorded in the Official Records of Santa Clara County where the Property is located, which shall occur on the date selected by Buyer that is no later than five (5) days after delivery of the Approval Notice (hereinafter defined) or Buyer notifies Seller in writing that all of the conditions described in Article 4 have been satisfied or waived, whichever is later, but in any event no later than October 31, 2011, the outside closing date.

(B) “Escrow Agent” and “Title Company” refer to First American Insurance Company, 1737 North First Street, Suite 500, San Jose, CA 95112, attention Linda Tugade, Escrow Agent, Phone 408-579-8340.

(C) “Property” includes all of the following items, in addition to the items described above in Paragraph A:

(1) Real Property. All that certain real property located at 3165 and 3175 Winchester Boulevard, City of Campbell, County of Santa Clara, State of California, as more particularly shown in Exhibit A attached hereto (the “Real Property”);

(2) Appurtenances. All rights, privileges and easements appurtenant to the Real Property, including, without limitation, (a) all minerals, oil, gas and other hydrocarbon substances on and under the Real Property, (b) all development rights, air rights, water, water rights and water stock relating to the Real Property, (c) all other easements, rights-of-ways or appurtenances used in connection with the beneficial use and enjoyment of the Real Property, (d) all right, title and interest of Seller in. and to any streets, alley, passages, or other appurtenances included in, adjacent to or used in connection with the Real Property, before or after the vacation thereof (all of which are collectively referred to as the “Appurtenances”);

(3) Personal Property. All personal property and personal property rights, if any, of Seller used in the ownership, use and operation of the Real Property, including furniture, fixtures and equipment as well as the generator and other like items (the “Personal Property”); and

(4) Intangible Property. All of the interest of Seller in any intangible personal property now or hereafter owned by Seller and used in the ownership, use and operation of the Real Property and Personal Property, including, without limitation, (a) all entitlements and approvals, building permits, zoning approvals, conditional use permits and any and all documents and work products relating thereto in which Seller has an interest, and (b) all warranties or guaranties (all of which are collectively referred to as the “Intangible Property”).

(D) “Purchase Price” is Eleven Million Eight Hundred Fifty Thousand and no/100 Dollars ($11,850,000.00), which includes the outstanding principal balance on the Existing Debt Obligation of Six Million Two Hundred Fifty Thousand and no/100 Dollars ($6,250,000.00) and the balance of Five Million Six Hundred Thousand and no/100 Dollars (5,600,000.00) (“Balance of the Purchase Price”) payable, all cash, at Close of Escrow, which is defined below.

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-2-

1.2 Exhibits: Attached hereto and forming an integral part of this Agreement are the following exhibits, all of which are incorporated into this Agreement as though fully set forth:

Exhibit A         Legal Description of Real Property

Exhibit B         Real Estate Note

Exhibit C         Deed of Trust, Assignment of Rents, Security Agreement and Fixture

ARTICLE 2

PURCHASE AND SALE

2.1 Purchase and Sale. Seller agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property from Seller, upon all of the terms, covenants and conditions herein set forth.

2.2 Purchase Price and Method of Payment(s). Buyer shall pay Seller the Purchase Price for the Property. The Purchase Price shall be subject to the prorations and adjustments required below, and shall be payable as follows:

(A) Deposit and Release of Deposit:

(1) Deposit. Upon Buyer’s execution of the Agreement, Buyer shall place Six Hundred Thousand One Hundred and no/100 Dollars ($600,100.00) as a deposit (“Deposit”) with the Title Company to be held in trust pursuant to the terms of this Agreement: Title Company shall place the Deposit in an interest-bearing account. Any interest earned on the Deposit shall be part of the Deposit. If the Approval Notice (defined below) is not provided, the Deposit and interest shall be refunded to Buyer during the period commencing on the Agreement Date and ending at 5:00 p.m. (local time) on the date that is forty-five (45) days after the Agreement Date (“Feasibility Period”). The last day of the Feasibility Period is referred to as the “Approval Date”. If Buyer decides to proceed with the transaction contemplated herein, Buyer shall deliver written notice thereof to Seller prior to the expiration of the Feasibility Period (the “Approval Notice”). If Buyer fails to timely deliver the Approval Notice, this Agreement shall be deemed automatically terminated and of no further force or effect (except for the Parties’ Surviving Obligations [defined below]), and Escrow Agent shall retain the Deposit, less reasonable and customary escrow termination fees charged by Escrow Agent, if any (the “Escrow Fees”), to Buyer without further instruction or written approval from Seller. The Deposit includes the amount of One Hundred Dollars ($100.00) (the “Independent Consideration”) as independent consideration for Seller’s performance under this Agreement and shall be retained by Seller in all instances. The Independent Consideration shall be non-refundable to Buyer as independent consideration for rights and options extended to Buyer under this Agreement, including, without limitation the right and option to terminate the Agreement as provided therein. The Independent Consideration shall be released to Seller immediately following Buyer’s deposit of such funds with the Title Company. In all instances

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-3-

under this Agreement in which Buyer elects to terminate or is deemed to have terminated the Agreement and the Deposit is returned to Buyer, Seller shall retain the Independent Consideration. The Independent Consideration shall not be applicable towards the Purchase Price or treated as consideration given by Buyer for any purpose other than stated in this Section 2.2(A)(1). Buyer and Seller expressly acknowledge and agree that (i) the Independent Consideration, plus Buyer’s agreement to pay the costs provided in this Agreement has been bargained for as consideration for Seller’s execution and delivery of this Agreement and for Buyer’s review, inspection and termination rights during the Feasibility Period, and (ii) such consideration is adequate for all purposes under any applicable law or judicial decision.

(2) Release of Deposit. Following Buyer’s delivery of the Approval Notice and written confirmation that all of the conditions described in Article 4 have been satisfied or waived, the balance of the Deposit shall be released to Seller. Upon release and subject to the terms of this Agreement, the Deposit shall be non-refundable but applicable toward the Purchase Price.

(B) Payment of Purchase Price. At least one (1) business day prior to the Close of Escrow, Buyer shall deposit or cause to be deposited with Escrow Agent, in cash, by certified or bank cashier’s check made payable to Escrow Agent, or by confirmed Federal Reserve wire transfer of funds (“Immediately Available Funds”), the Balance of the Purchase Price plus Escrow Agent’s estimate of Buyer’s share of closing costs, prorations and charges payable pursuant to this Agreement.

2.3 Closing and Escrow. The Close of Escrow shall occur on the Closing Date and shall take place at the offices of Escrow Agent or such other location mutually agreeable to the parties (the “Closing”).

(A) Escrow. Upon the complete execution and delivery of this Agreement by Buyer and Seller, Buyer shall deliver a fully executed copy of this Agreement to Escrow Agent. This Agreement shall constitute the joint escrow instructions of Buyer and Seller to Escrow Agent. Escrow Agent is authorized to act in accordance with the terms of this Agreement. Upon Escrow Agent’s request, the Parties shall execute such additional and supplementary escrow instructions as may be appropriate or required by Escrow Agent to enable the Escrow Agent to comply with the terms of Agreement; provided, however, that if there is any conflict or inconsistency between such additional and supplementary escrow instructions and this Agreement, this Agreement shall control.

(B) Seller Deliveries in Escrow. Prior to the Closing, Seller shall deliver to Escrow Agent for delivery to Buyer the following:

(1) Grant Deed. The Grant Deed in the form customarily used by the Title Company (the “Deed”), duly executed and acknowledged, including a statement of transfer taxes.

(2) FIRPTA Certificate. A certificate from Seller, in form, scope and substance reasonably satisfactory to Buyer and Escrow Agent, reaffirming Seller’s representation and warranty that it is not a “foreign person” under section 1445(f)(3) of the Internal Revenue Code.

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-4-

(3) State Withholding Certificate. The California Form 597W, duly executed by Seller, certifying that no withholding of proceeds of the Purchase Price is required under California law. in connection with the sale of real estate and any personal property in connection therewith.

(4) Owner’s Affidavit. Such affidavits, other evidence of title, tenancy-in-common or entity documents and the like from Seller and/or other third parties as may be required by the Title Company, on or in forms required by the Title Company in Order to issue the Title Policy (hereinafter defined) as specified in this Agreement.

(5) Assumption of Existing Debt Obligation. Documents from Seller and/or other third parties as may be required by Symetra or other third parties evidencing Buyer’s assumption of the Existing Debt Obligation.

(C) Buyer Deliveries in Escrow. At or prior to the Closing, Buyer shall deliver to Escrow Agent for delivery to Seller the following:

(1) Funds. The Immediately Available Funds required of Buyer under the terms of this Agreement.

(2) Assumption of Existing Debt Obligation. Documents from Buyer and/or other third parties as may be required by Symetra or other third parties evidencing Buyer’s assumption of the Existing Debt Obligation AS SUCH EXISTING DEBT OBLIGATION IS TO BE MODIFIED AS SET FORTH BELOW IN ARTICLE 4.

(D) Other Documents. Seller and Buyer shall, prior to the Closing Date, execute any and all documents and perform any and all acts reasonably necessary or appropriate to consummate the purchase and sale pursuant to the terms of the transaction set forth in this Agreement, including, without limitation, a closing statement reflecting all prorations, adjustments and closing costs, and escrow instructions for Closing, and such other documentation as the Title Company may reasonably require for the issuance of the Title Policy, including any quitclaim and spousal consent for any individual. Buyer and Seller shall execute all documents reasonably required by Symetra to effect the assumption by Buyer of the Existing Debt Obligation.

2.4 Title and Survey.

(A) Title Commitment. Within two (2) days after the Agreement Date, Seller shall arrange for delivery to Buyer, for its review and approval in its discretion, a commitment for a American Land Title Association (“ALTA”) owner’s policy of title insurance covering the Property, issued by the Title Company, together with legible copies of all exceptions and matters referred to therein (said commitment, together with the copies of the materials referred to above shall be referred to as the “Title Commitment”). The Title Commitment shall show that Seller has marketable and insurable fee simple title to the Property.

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-5-

(B) Survey. Seller shall provide Buyer with any existing survey of the Property it possesses. At its own expense, Buyer may have obtained a survey of the Property, prepared by a surveyor or civil engineer licensed in the State where the Property is located (“Survey”).

(C) Title and Survey Review. Buyer shall have fourteen (14) days from receipt of the Title Commitment to review and approve the Title Commitment or to notify Seller in writing of any exceptions, qualifications, conditions, or matters shown in the Survey, disclosed in the Title Commitment or discovered by the inspection of the Property that are not acceptable to Buyer in its discretion (all such items and all monetary liens, deeds of trust or encumbrances shall be referred to as “Title Objections”). Buyer waives any claims resulting from or based on title issues that could have been discovered by Buyer’s review of the Title Commitment, a Survey or inspection of the Property and become a Title Objection, including but not limited to easements or encumbrances.

(D) Seller’s Right to Cure. Seller shall have the right, upon written notice to Buyer• within five (5) days after receipt of Buyer’s notice of Title Objections, to (1) elect by written notice to Buyer and Escrow Agent to cause the Title Objections to be removed of record or otherwise cured to the satisfaction of Buyer in its discretion by the Closing Date (“Approved Title Objections”), or (2) elect not to cure. Seller must remove all exceptions relating to tax liens (other than non-delinquent real estate taxes and assessments), judgment liens and mechanics’ and materialman’s liens, other than any mechanics’ or materialman’s liens resulting from Buyer’s due diligence investigations of or on. the Property (“Monetary Liens”). If Seller elects not to cure such Title Objections as provided in clause (2) above, Buyer shall have the right, upon written notice to Seller, to acquire the Property subject to such Title Objections without any abatement in the Purchase Price. If Seller elects to cure and does not remove all Approved Title Objections or Monetary Liens by the Closing Date, Seller shall be in default under this Agreement, in which case, Buyer, in addition to all other rights and remedies available under this Agreement, at law or in equity, shall have the right, but not obligation, upon written notice to Seller, to cancel this Agreement and receive a refund of any funds deposited in escrow, together with all interest thereon, except the Independent Consideration.

(E) Permitted Exceptions. The exceptions and Survey matters Buyer has agreed to in writing to accept shall be referred to herein as the “Permitted Exceptions.”

(F) Owner’s Policy. As a condition to Closing, the Title Company shall issue to Buyer an ALTA Owner’s Policy of Title Insurance in the amount of the Purchase Price, insuring fee simple title to the Real Property, and the Appurtenances in Buyer, subject only to the Permitted Exceptions (“Title Policy”).

2.5 Closing Costs. All closing costs or expenses of escrow shall be paid as follows:

(A) Title Insurance. Buyer and Seller shall pay the premium for the policy of title insurance, in accordance with custom in Santa Clara County, in the amount of the Purchase Price for the Property. If the premium for the ALTA Owner’s Policy of Title Insurance is greater than the premium for a CLTA Owner’s Policy of Title Insurance, Buyer shall pay the difference in the premium amounts.

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-6-

(B) Recording Fees. The cost of recording the Deed and any other documents shall be paid by the Parties as is customary in Santa Clara County.

(C) Transfer Taxes. All county transfer taxes and any applicable city transfer taxes shall be paid by the Parties as is customary in Santa Clara County.

(D) Other. The Parties shall, pay for the escrow fees charged by the Escrow Agent as is customary in Santa Clara County. Each party shall be responsible for their own attorneys’ fees. If this Agreement is terminated, the Parties shall pay equally for any title and escrow cancellation fees of Escrow Agent, unless such termination is due to a default by either party, in which case the defaulting party shall pay such escrow cancellation fees.

2.6 Prorations. All prorations and adjustments for the Property shall be made as of midnight of the day preceding the Closing Date, unless otherwise mutually agreed in writing by the Parties (the “Adjustment Date”). If the prorations and adjustments are found to be incorrect within six (6) months after the Closing Date, Seller and Buyer agree to re-prorate or readjust the same accordingly. All prorations and adjustments shall be in cash, as a cash credit or debit as follows:

(A) Taxes. General real estate taxes and assessments for all fiscal years prior to the Closing Date shall be paid by Seller, including, without limitation, all supplemental taxes levied as a result of any changes in ownership or improvements to the Property occurring prior to the Closing Date. General real estate taxes and assessments payable for the current year shall be prorated between Seller and Buyer as of the Adjustment Date.

(B) Other Items. Seller will be responsible for payment of all other expenses affecting the Property that are incurred, or relate to services provided, prior to the Closing Date.

(C) Post-Closing Reconciliation. If any of the aforesaid prorations cannot be calculated accurately on the Closing Date, then they shall be calculated as soon after the Closing Date as feasible, but in any event within six (6) months after the Closing Date.

2.7 Brokerage Commission. Seller shall pay a brokerage commission to Jay Phillips at Cornish & Carey Commercial Newmark Knight Frank (“Seller’s Broker”) pursuant to a separate written agreement between Seller and Seller’s Broker. The Parties represent and warrant to each other that Seller’s Broker is the only real estate brokers that represented the Parties in connection with the sale of the Property. With the exception of the commission described above, Seller and Buyer each represent and warrant that no other broker’s commission or finder’s fee is payable with respect to this transaction. Buyer and Seller each agree to indemnify, defend, and hold the other party harmless from and against any and all claims to a commission or finder’s fee resulting from the erroneous representation of the indemnifying party in this Section 2.7.

2.8 Assumption of Existing Debt Obligation. Subject to Buyer’s acceptance of any conditions to assumption imposed by Symetra and the receipt of those certain conditions precedent specified in Article 4, Buyer shall assume and agrees to perform each and every obligation for the Existing Debt Obligation on the Property. The Existing Debt Obligation currently includes: (a) the

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-7-

outstanding principal balance of approximately Six Million Two Hundred Fifty Thousand and no/100 Dollars ($6,250,000.00); (b) an interest rate of 6.23%; (c) the monthly payment of approximately Forty Four Thousand Four Hundred Forty Five and no/100 Dollars ($44,445.00); (d) due date of July 1, 2017; and (e) a balance due at expiration of approximately Five Million One Hundred Ninety Thousand and no/100 Dollars ($5,190,000.00), in addition to the additional terms and conditions contained in the Real Estate Loan and Deed of Trust described in paragraph C of the Recitals above. Seller shall be relieved of personal liability for acts or occurrences arising out of matters relating to the Existing Debt Obligation occurring after the Closing. Seller shall pay the assumption fee equal to one percent (1%) of the unpaid principal balance of the Real Estate Note that exists at the time of Closing. Seller shall pay all of Seller’s and Lender’s cost related to Buyer assuming the Existing Debt Obligation. Buyer shall pay all of Buyer’s costs related to Buyer assuming the Existing Debt Obligation. Buyer’s assumption of the Existing Debt Obligation is conditioned upon Buyer receiving, among other things, a one-time only right to convey the Property to an un-affiliated transferee as set forth in Exhibit B.

ARTICLE 3

COVENANTS OF SELLER

3.1 Operation of Property. Prior to the Closing Date, Seller and Buyer will operate the Property subject to the following provisions and limitations:

(A) Requirements. Seller and Buyer shall continue to operate the Property consistent with the terms of the lease agreement between Seller and Buyer, Seller, at its expense and prior to the Closing Date, shall terminate all service, maintenance and similar agreements affecting the Property, if required.

(B) Compliance with Law. Seller shall comply with all governmental laws, ordinances and regulations pertaining to the Property or any portion thereof; provided, however, that Seller shall not be required to make any capital improvements to the Property unless Seller is expressly directed by governmental authority to do so.

(C) Notices. Seller shall give immediate notice to Buyer if Seller receives notice or obtains actual knowledge of (1) the violation of any law, ordinance or regulation relating to the Property, (2) any casualty relating to the Property, or (3) the filing or threat to file an action, claim or proceeding in any court or administrative agency against Seller which may affect the Property.

(D) Cooperation with Processing. Seller hereby grants Buyer permission and authority to prepare and submit applications, plans and drawings, and to obtain the approvals of the City and other governmental agencies reasonably necessary for any new tenant improvements or other developments for the Property. Seller agrees to cooperate fully with Buyer’s development of the Property at no cost to Seller by executing upon Buyer’s reasonable demand all necessary and reasonable documents confirming Buyer’s authority to submit applications for development, but not any agreements or documents that would create a dedication or recorded title encumbrance with respect to the Property. Such development may include, but is not limited to conditional use applications, rezoning, construction permits or any other document reasonably necessary to complete the development process.

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-8-

3.2 Access. Seller will permit Buyer and its agents and consultants the following access and provide Buyer the following information:

(A) Access to Information and Property. Seller shall allow Buyer and its agents and consultants, from and after the Agreement Date, continuing access to the Property. However, Buyer and its agents and consultants shall only have forty-five (45) days from and after the Agreement Date for the right to inspect the Property, and the right to drill test wells and take soil borings, and geological, seismic, environmental tests and other invasive tests. Soil and ground water environmental tests shall be subject to the reasonable approval of Seller as to the scope and methods for such testing. Seller shall provide its written notice to Buyer of approval, or the grounds for disapproval of such tests within three (3) business days after receipt of notice from Buyer describing the type and scope of the soil and ground water environmental tests that Buyer want to perform at the Property. The failure of Seller to provide its written notice of approval or disapproval within said three (3) business day period shall be deemed a disapproval. Seller may have a representative present during such tests. Such access shall be exercised by Buyer at such times as deemed reasonably necessary to Buyer. Buyer will conduct its activities on the Property in a reasonable manner that causes the least practicable interference with Seller’s ownership of the Property. Buyer shall restore the Property to its condition prior to Buyer’s entry on the Property for the testing. Buyer shall provide Seller with copies any third party test results and/or reports obtained by Buyer as a result of Buyer’s investigations. Buyer agrees to indemnify, defend and hold Seller harmless from any damage, claim, liability, including attorney’s fees and costs, or injury to persons or property caused by Buyer or its authorized representatives during their entry and investigations prior to Closing. This indemnity shall survive the termination of this Agreement or the Closing Date for four years. Buyer acknowledges that it has been afforded the required access to the Property.

(B) Due Diligence Materials. Upon execution of the Agreement, Seller shall deliver or make available to Buyer true and correct copies of the documents in Seller’s possession related to the physical structure of the Building and the condition of the Property (collectively, “Due Diligence Materials”).

3.3 Title Covenants. To the best of Seller’s knowledge and ability, Seller shall maintain the legal title to the Property free from (1) any and all defects, and (2) any and all liens, encumbrances, and other recorded exceptions, other than the utility and access easements and the Agreed to Exceptions of record as of the end of the title review period defined above.

ARTICLE 4

BUYER’S CONDITIONS PRECEDENT

Anything in this Agreement to the contrary notwithstanding, Buyer’s obligation to acquire the Property and to perform other covenants and obligations prior to Closing shall be subject to and contingent upon the satisfaction of the following conditions precedent:

4.1 Approval of Documents. Review and approval by Buyer of the Due Diligence Materials and such other documents Buyer may have reasonably requested in writing from Seller.

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-9-

4.2 Condition of the Property. Review and approval by Buyer of the condition of the Property, including soils, topography, geology, utilities, environmental, hazardous materials that shall be completed during the Feasibility Period. If Buyer disapproves of any of the physical aspects of the Property as a result of any reports or inspections made or received by Buyer, Buyer shall notify Seller immediately of the items disapproved before the expiration of the Feasibility Period. Seller shall then either inform Buyer that Seller will repair and correct such disapproved items prior to the Close of Escrow or will not address the items. At that time, Buyer may either terminate the Agreement, and receive a refund of all monies deposited, or proceed with the purchase of the Property.

4.3 Title Policy. Review and approval by Buyer of title as described above in Section 2.4 and the Title Company must unconditionally commit to issue a Title Policy as described herein.

4.4 Lender’s Approval of Buyer’s Assumption of Existing Debt Obligation. Symetra shall have approved in writing, upon terms acceptable to Buyer and accepted by Buyer in writing, Buyer’s assumption of the Existing Debt Obligation.

4.5 Amendment of Transfer and Assumption Rights. Buyer’s obligations hereunder are expressly conditioned upon an agreement in writing from Symetra (i) evidencing Buyer’s right to transfer the Property to any related or unrelated third party subject to the Existing Debt Obligation at least one-time following Buyer’s acquisition of the Property from Seller without allowing Symetra or any other holder of the Existing Debt Obligation to accelerate the maturity of the Existing Debt Obligation and without requiring the payment of any pre-payment fees or other penalties thereunder, except for customary and commercially reasonable fees or expenses charged for approval of the transfer and (ii) evidencing Buyer’s right to transfer the Property to any related party(ies) an unlimited number of times following Buyer’s acquisition of the Property from Seller subject to the Existing Debt Obligation without allowing Symetra or any other holder of the Existing Debt Obligation to accelerate the maturity of the Existing Debt Obligation and without requiring the payment of any pre-payment fees or other penalties thereunder except for customary and commercially reasonable fees or expenses charged for approval of the transfer.

4.6 Assignment. Buyer’s obligations hereunder are expressly conditioned upon a reasonably acceptable document in writing from Symetra or other holders of the Existing Debt Obligation evidencing Buyer’s right to assign this Agreement, without restriction, to any party related to Buyer (including, but not limited to, a buying group comprising individual employees of Buyer).

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-10-

ARTICLE 5

REPRESENTATIONS & WARRANTIES

5.1 Seller Warranties. Seller hereby represents and warrants to Buyer as follows:

(A) Entity. With respect to Seller and its business:

(1) Organization. Seller is a duly formed and validly existing limited partnership and is qualified to do business in the State of California.

(2) Approvals. Seller is duly authorized to execute and deliver and perform this Agreement and all documents and instruments and the transaction contemplated hereby or incidental hereto without any other approval or consent from any other party or governing body; and this Agreement and the other documents required of Seller hereunder shall be binding on and enforceable against Seller.

(3) FIRPTA. Seller is not a foreign person or entity under section 1445 of the Internal Revenue Code, nor is any withholding required under California law in connection with the sale of the Property.

(B) Title. Seller is the owner of fee simple title to the Property. There are no options to purchase or rights of first offer or first refusal or similar agreements with any other party to acquire the Property or any interest therein. Seller makes no other representations or warranties as to title, other than those set forth herein.

(C) Occupancy Agreements. There is no lease, license, concession or other occupancy or use agreement or arrangement that affects any portion of the Property which cannot be cancelled or terminated by Seller prior to the Closing Date, other than the Lease Agreement.

(D) Service Contracts. There are no service, supply, maintenance, security, cable, management or other agreements affecting the Property, or the operation of any part thereof, which cannot be cancelled by Seller prior to the Closing Date.

(E) Due Diligence Materials. Copies of the Due Diligence Materials, which shall be delivered to Buyer by Seller as provided in this Agreement, are to the best of Seller’s actual knowledge, true, accurate and complete copies of all documents comprising the Due Diligence Materials; and there are no modifications or other agreements, written or oral, affecting the Due Diligence Materials other than as expressly set forth in the copies thereof so delivered to Buyer. To the best of Seller’s knowledge, no other documents exist that should be a part of the Due Diligence Materials.

(F) Litigation. There is no litigation, claim, audit, action, or proceeding pending or to the best of Seller’s actual knowledge, threatened before or by any court, public board or body or governmental or administrative agency or instrumentality affecting Seller or in any manner affecting title or the Property.

(G) Condemnation. There is no pending, or to the best of, Seller’s actual knowledge, threatened, condemnation, environmental, zoning or other land-use regulation proceeding against the Property or any portion thereof, nor does Seller or its agents have any actual knowledge or written notice of any public request, plans or proposals for changes in road grade,

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-11-

access or other municipal improvements that may affect the Property or result in a tax, levy or assessment against the Property or otherwise detrimentally affect the use, operation or value of the Property.

(H) Environmental. With respect to environmental matters affecting the Property;

(1) To the best of Seller’s actual knowledge, the Property is not in violation of any of the Environmental Laws (hereinafter defined). Neither Seller nor to the best of Seller’s actual knowledge any third party, including, without limitation, any occupant at the Property, has engaged in any operations or activities upon, or any use or occupancy of the Property, or any portion thereof, for the purpose of or in any way involving the handling, manufacture, treatment, storage, use, generation, release, discharge, refining, dumping or disposal of any Hazardous Materials (whether legal or illegal, accidental or intentional) on, under or in the Property, or transported any Hazardous Materials to, from or across the Property, nor has Seller provided written notice to any tenant regarding any such activity.

(2) Seller has not received written notice nor does Seller have actual knowledge that any Hazardous Materials have migrated from other properties upon or beneath the Property to be acquired by the Buyer under this Agreement;

(3) The term “Environmental Laws” shall mean any federal, state, local or administrative agency ordinance, law, rule, regulation, order or requirement relating to environmental conditions or Hazardous Materials. The term “Hazardous Materials” shall mean any substance, chemical, waste or other material which is listed, defined or otherwise identified as “hazardous” or “toxic” under any of the Environmental Laws, including, without limitation, formaldehyde, urea, polychlorinated biphenyls, petroleum, petroleum product or by-product, crude oil, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel or mixture thereof, radon, mold, asbestos and any by-product of same.

As used herein, the phrase “to the best of Seller’s knowledge” or “to the best of Seller’s actual knowledge” means the actual (not constructive or imputed) personal knowledge of Dan Amend, Seller’s property management agent.

5.2 Buyer Warranties. Buyer hereby represents and warrants to Seller as follows:

(A) Organization. Buyer is a duly formed and validly existing Delaware corporation and is qualified to do business in the State of California.

(B) Approvals. Buyer is duly authorized to execute and deliver and perform this Agreement and all documents and instruments and the transaction contemplated hereby or incidental hereto without any other approval or consent from any other party.

(C) Satisfied Buyer. Buyer has satisfied itself in its investigation as to all aspects of the Property, including but not limited to title issues and the AS IS, WHERE IS and WITH ALL FAULTS, LIABILITIES, AND DEFECTS, LATENT OR OTHERWISE, KNOWN OR UNKNOWN condition of the Property, and Buyer is only relying on Seller’s warranties stated herein.

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-12-

5.3 Warranties Applicable at Close of Escrow. The Parties hereby represent and warrant that their warranties stated herein shall be true and correct as of the Close of Escrow and Seller shall assign to Buyer all transferable warranties.

ARTICLE 6

“AS IS” CONDITION

6.1 “AS IS WITH ALL FAULTS” Condition. Buyer represents and warrants that Buyer has satisfied itself during the Feasibility Period, or prior to the Closing Date will satisfy itself, as to the physical, environmental, legal and economic condition of the Property and its suitability for the purposes intended by Buyer. Buyer acknowledges and agrees that Buyer is acquiring the Property on an “AS IS, WHERE IS” and “WITH ALL FAULTS, LIABILITIES, AND DEFECTS, LATENT OR OTHERWISE, KNOWN OR UNKNOWN” basis subject to all existing laws, ordinances, rules and regulations, and that neither Seller nor any of Seller’s officers, directors, employees, agents, representatives or attorneys have made any warranties, representations or statements regarding the availability of any approvals, or the laws, ordinances, rules or regulations of any governmental or quasi-governmental body, entity, district or agency having authority with respect to the ownership, possession, development, occupancy, condition and/or use of the Property. Except for those representations and warranties expressly set forth in this Agreement, Seller disclaims the making of any representations or warranties, express or implied, regarding the Property, the condition of the Property or matters-affecting the Property, including, without limitation, the physical condition of the Property, title to or boundaries of the Property, soil condition, the presence of hazardous waste, hazardous materials, toxic waste or other environmental matters, compliance with building, health, safety, land use or zoning laws, regulations and orders, structural or other engineering characteristics, traffic patterns and all other information pertaining to the Property. Buyer further acknowledges and agrees that no patent or latent physical condition, including, without limitation, any condition or contamination related to hazardous materials or waste materials, of the Property, whether known or unknown or discovered at a later date, shall affect the Purchase Price to be paid for the Property, be it through a right of set-off or reduction in the Purchase Price, and Buyer shall be obligated to close Escrow notwithstanding the condition of the Property after the Feasibility Period. Buyer moreover acknowledges that (a) Buyer has entered into this Agreement with the intention of making and relying upon its own or its expert’s investigation of the physical, environmental, economic and legal condition of the Property, including, without limitation, the compliance of the Property with laws and governmental regulations and the operation of the Property, and (b) that, except for those representations and warranties expressly set forth in this Agreement, Buyer is not relying on any representations or warranties made by Seller or anyone acting or claiming to act on Seller’s behalf. Buyer shall purchase the Property in its “AS IS, WHERE IS” and “WITH ALL FAULTS, LIABILITIES, AND DEFECTS, LATENT OR OTHERWISE, KNOWN OR UNKNOWN” condition on the Closing Date and assumes the risk that adverse physical, environmental, economic or legal conditions may not have been revealed by

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-13-

its investigations. Seller shall have no liability for any subsequently discovered defects, whether latent or patent, except if such defect is caused by Seller or any of its employees or agents, or if such defect or discovery thereof is the subject of any breach of a representation or warranty made by Seller under section 5.1 of this Agreement. Except as otherwise set forth in this Agreement, Buyer hereby waives, releases, acquits and forever discharges Seller, Seller’s officers, directors, employees, agents, partners, and any other person acting on or in behalf of Seller, and the heirs, successors and assigns of each of the foregoing, of and from any and all claims, liabilities, obligations, demands actions, causes of action, rights, damages, costs, expenses or compensation whatsoever (collectively “Claims”), direct or indirect, known or unknown, foreseen or unforeseen, that Buyer now has, or which may arise in the future, on account of or in any way growing out of or connected with the conditions of the Property. Notwithstanding anything in this section or in this Agreement to the contrary, nothing herein shall relieve Seller of any fraud.

6.2 Survival. Buyer represents and warrants that the provisions of this Section 6 shall survive the Close of Escrow,

ARTICLE 7

RELEASE OR RETURN OF DEPOSIT AND DEFAULT

7.1 Release or Return of Deposit. If Buyer gives the Approval Notice and notifies Seller in writing that all of the conditions described in Article 4 have been satisfied or waived, the Deposit and the interest accrued thereon shall be nonrefundable and be immediately released to Seller by Escrow Agent on the day after Buyer gives the Approval Notice or the day after Buyer gives Seller the second notice described previously in this sentence, whichever occurs later, and without the requirement of any further instruction from the parties; provided, however, the amounts of the Deposit, except for the Independent Consideration, and the interest accrued thereon shall be applicable to the Purchase Price. If, on or before the expiration of the Feasibility Period, Buyer gives notice of its election not to proceed with purchasing the Property, the Deposit, except for the Independent Consideration, and the interest accrued thereon as of such date shall be immediately released to Buyer by Escrow Agent without the requirement of any further instruction from the Parties, whereupon this Agreement shall terminate. The Deposit shall be non-refundable unless the Closing does not occur due to a third-party’s inability to satisfy the Condition Precedents listed in Article 4 or perform as required by this Agreement, at which point the Deposit shall be returned to Buyer whether or not the Approval Notice or any other notice may have been given.

7.2 Seller’s Default. If the sale of the Property is not consummated because of a default under this Agreement on the part of Seller, Buyer shall have all remedies afforded by law and in equity, including the right of specific performance, and recovery of the Deposit, if previously released to Seller, all additional costs and expenses including, without limitation, reasonable attorneys’ fees incurred in connection therewith and in the delay in acquiring title to the Property as a result.

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-14-

ARTICLE 8

GENERAL PROVISIONS

8.1 Notice. Any and all notices, elections, or demands permitted or required to be made under this Agreement shall be in writing and shall be sent by overnight courier service by a company regularly engaged in the business of delivering business packages or sent by registered or certified mail or by facsimile transmission (so long as confirmed by the appropriate automatic confirmation page), by electronic mail (so long as receipt is acknowledged or otherwise confirmed) or by courier to the other party at the address set forth below, or at such other address as may be supplied hi writing from time to time by either party to the other. The date of delivery or refusal thereof as evidenced by the courier’s or carrier’s receipt, shall be the effective date of such notice, election, or demand.

To Seller:

Bryan Family Partnership II, Ltd.

C/O Toeniskoetter Development

1960 The Alameda, Suite 20

San Jose, California 95126

Attention: Dan Amend

Telephone: 408-246-7500

Facsimile: 408-241-9983

E-mail: Dan@Toeniskoetter.com

With a Copy to:

Hoge, Fenton, Jones & Appel

60 S. Market St., Suite 1400

San Jose, CA 95113-2396

Attention: Sean A. Cottle

Telephone: 408-947-2404

Facsimile: 408-287-2583

E-mail: sac@hogefenton.com

To Buyer:

Barracuda Networks, Inc.

3175 Winchester Boulevard

Campbell, CA 95008

Attention: David Faugno

Telephone: 408-342-5357

Facsimile:                                 

E-mail: dfaugno@baifacuda.com

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-15-

Notice of change of address shall be given by written notice in the manner detailed in this Section 8.1. Rejection or other refusal to accept shall be deemed to constitute receipt of the notice, demand, request or communication sent.

8.2 Headings. The titles and headings of the various Articles and sections hereof are intended solely for means of reference and are not intended for any purpose whatsoever to modify, explain or place any construction on any of the provisions of this Agreement.

8.3 Severability. If any of the provisions of the Agreement or the application thereof to any persons or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Agreement by the application of such provision or provisions to persons or circumstances other than those as to whom or which it is held invalid or unenforceable shall not be affected thereby, and every remaining provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

8.4 Attorneys’ Fees. If either party hereto fails to perform any of their obligations under this Agreement or if a dispute arises between the Parties concerning the meaning or interpretation of any provision of this Agreement, the defaulting party or the party not prevailing in such dispute shall pay reasonable costs and expenses incurred by the other party on account of such default and/or in enforcing or establishing the rights hereunder, including, without limitation, ADR costs and reasonable attorneys’ fees and disbursements. Any such attorneys’ fees and other expenses incurred by either party in enforcing a judgment in their favor under this Agreement shall be recoverable separately from and in addition to any other amount included in such judgment, and such obligation is intended to be severable from the other provision of this Agreement and to survive and not be merged into any such judgment.

8.5 Integration. This Agreement constitutes the entire agreement between the Parties hereto with respect to the subject matter hereof and may not be modified, amended or otherwise changed in any manner except by a writing executed by the party against whom enforcement is sought. All exhibits attached hereto are incorporated herein by reference. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

8.6 Successors and Assigns. This Agreement and all covenants, terms and provisions contained herein shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and assignees.

8.7 Tax Deferred Exchange. Buyer and Seller each agree to cooperate with the other and any escrow agent or exchange facilitator selected by the other in facilitating an exchange under Section 1031 of the Internal Revenue Code of 1986, as most recently amended, undertaken by the other with respect to the Property, provided that: (A) consummation or accomplishment of such an exchange shall not be a condition precedent or a condition subsequent to either party’s obligations under this Agreement and shall not delay the Closing Date; (B) the party undertaking the exchange shall effect the exchange through an assignment of this Agreement, or their rights under this Agreement, to a qualified intermediary without release of the assigning party from any liability hereunder; (C) the party undertaking the exchange shall pay any additional out-of-pocket costs that

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-16-

would not otherwise have been incurred by such party or the cooperating party had such party not undertaken such exchange; and (D) the cooperating party shall not be required to take an assignment of the purchase agreement for any exchange property or be required to acquire or hold title to any real property for purposes of consummating the exchange. Neither party by this Agreement or acquiescence to an exchange shall their rights under this Agreement affected or diminished in any manner or be responsible for compliance with or be deemed to have warranted to the other party that the exchange in fact complies with Section 1031 of the Internal Revenue Code, Exchanging party shall indemnify and hold the cooperating party harmless from any claims, costs or liabilities against the cooperating party, including attorney’s fees, arising out of or in connection with the exchange transaction.

8.8 Time of the Essence. Time is of the essence of every provision herein contained.

8.9 Construction. The Parties acknowledge that with respect to the transactions contemplated herein (A) each party and their counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or exhibits thereto; (B) neither party has received from the other any accounting, tax, legal or other advice, and (C) each party has relied solely upon the advise of their own accounting, tax, legal and other advisor.

8.10 Survival. All representations and warranties by the respective parties contained herein or made in writing pursuant to this Agreement are intended to and shall remain true and correct as of the time of Closing, shall be deemed to be material, and shall survive the Closing Date for period of one year from the Closing Date.

8.11 Counterparts. This Agreement may be executed in two or more counterparts, including any facsimile of same, each of which is deemed an original, but all of which when taken together shall constitute one agreement. Any facsimile signature shall constitute a valid and binding method for executing this document.

8.12 Day. The reference to “day” shall mean a calendar day, unless modified to be a business day. If the day upon which a certain event or time period (such as the Closing Date, or time to respond) falls or expires is a weekend or holiday, then the time period shall be automatically extended to the next business day. A holiday shall be deemed a day which is a legal holiday for national banks in Santa Clara County or a day when the recorder’s office in Santa Clara County is closed,

8.13 Assignment. Buyer may not assign its rights, obligations and interest in this Agreement to any other person or entity (“Assignee”) without first obtaining Seller’s prior written consent, which consent may be given or withheld in Seller’s sole discretion; provided, however, that such consent shall not be unreasonably withheld ‘so long as Symetra has approved the assumption of the Existing Debt Obligation by Assignee. Buyer may assign its interest in this Agreement so long as (i) Assignee is an affiliated entity of Buyer, (ii) Assignee assumes all of Buyer’s obligations under this Agreement and agrees to timely perform same pursuant to an assignment agreement in form

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-17-

reasonably acceptable to Seller, (iii) Buyer delivers to Seller at least seven (7) business days prior to Closing (a) written notice of said proposed assignment and (b) a copy of the draft assignment agreement for Seller’s reasonable approval, and (iv) Assignee unconditionally ratifies and remakes all applicable covenants, indemnities, representations and warranties of Buyer made in or in connection with this Agreement, all of the foregoing for the express benefit and reliance of Seller. No assignment shall relieve Buyer from any liability or its obligations under this Agreement. Any attempted assignment not in compliance with the provisions of this Section shall be null and void. This Agreement shall inure to the benefit of and be binding upon the Parties to this Agreement and their respective successors and permitted assigns.

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-18-

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the date first above written.

SELLER:

BRYAN FAMILY PARTNERSHIP II, LTD.

a California limited partnership

By:	BFZ, LLC, a California limited liability Company, General Partner
	By:	/s/ Ross E. Bryan
		Ross E. Bryan, Managing Manager
	By:	/s/ John D. Frazer
		John D. Frazer, Jr., Manager
	By:	/s/ Diana B. Zinser
		Diana B. Zinser, Manager

BUYER:

BARRACUDA NETWORKS, INC.

a Delaware corporation

/s/ Dean Drako
By:	Dean Drako
Its:	CEO

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

-19-

EXHIBIT A

LEGAL DESCRIPTION OF THE REAL PROPERTY

Land and improvements situated in the City of Campbell, County of Santa Clara, State or California, described as follows:

PARCEL ONE, AS SHOWN ON THAT CERTAIN PARCEL MAP FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA ON OCTOBER 11, 1984 IN BOOK 535 OF MAPS, PAGES 24 AND 25.

EXCEPTING THEREFROM THAT THE INTEREST THEREOF AS CONVEYED TO THE CITY OF CAMPBELL, FOR STREET PURPOSES BY DEED RECORDED DECEMBER 10, 1984 IN BOOK J101, PAGE 321, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

BEGINNING AT THE MOST EASTERLY CORNER OF PARCEL ONE AS SAID PARCEL IS SHOWN ON THAT CERTAIN PARCEL MAP FILED IN BOOK 535 OF MAPS AT PAGES 24 AND 25 IN THE OFFICE OF THE COUNTY RECORDER, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA. THENCE SOUTHWESTERLY FROM SAID CORNER SOUTH 31° 31’ 00” WEST 490.81 FEET ALONG THE SOUTHEASTERLY LINE OF SAID “PARCEL ONE” TO ITS MOST SOUTHERLY CORNER. THENCE NORTHWESTERLY FROM LAST SAID CORNER 67° 52’ 58” WEST 4.05 FEET ALONG THE SOUTHWESTERLY LINE OF SAID “PARCEL ONE” TO A POINT LYING DISTANT 4.00 FEET NORTHWESTERLY BY PERPENDICULAR. MEASUREMENT FROM SOUTHEASTERLY LINE OF SAID “PARCEL ONE.” THENCE NORTHEASTERLY FROM LAST SAID POINT AND ALONG LAST SAID PARALLEL LINE NORTH 31° 31’ 00” EAST 491.47 FEET TO A POINT LYING ON THE NORTHEASTERLY LINE OF SAID “PARCEL ONE.” THENCE SOUTHEASTERLY FROM LAST SAID POINT AND ALONG LAST SAID LINE SOUTH 58° 29’ 00” EAST 4.00 FEET RETURNING TO THE POINT OF BEGINNING.

APN: 406-21-019 and 406-21-016 and 406-21-017

Seller’s Initial: /s/ RB, JF & DZ        

Buyer’s Initials: /s/ DD        

EXHIBIT B

REAL ESTATE NOTE

(To be attached)

SYMETRA

Financial

Loan No. 1673

REAL ESTATE NOTE

$6,750,000.00 June 20, 2007

FOR VALUE RECEIVED, the undersigned (hereinafter called “Maker”) promises to pay to the order of Symetra Life Insurance Company, a Washington corporation, its successors and assigns, (hereinafter called “Holder”) at Mortgage Loan Dept., PO Box 84066, Seattle, WA 98124-8466, or at such other place as Holder may designate in writing, the principal sum of SIX MILLION SEVEN HUNDRED FIFTY THOUSAND AND NO/100 U.S. DOLLARS ($6,750,000.00), or so much thereof as may be advanced, together with interest on the unpaid principal balance from the date funds are first disbursed by Holder at the rate of 6.23% per annum. Principal and Interest shall be due and payable in one hundred nineteen (119) consecutive monthly payments of $44,445.00 each, commencing on the 1st day of August, 2007 and continuing on the same day of each month thereafter; plus a final payment in the amount of all unpaid principal and interest which shall be due and payable in full on July 1, 2017. Interest accrued from the date of first disbursement until July 1, 2007 shall be due at closing. All payments made on this Note shall be paid by a pre-authorized debit from Maker’s account using electronic funds transfer through the Automated Clearing House (“ACH”). The interest rate specified above assumes that monthly payments will be paid by Maker to Holder through ACH until this Note has been fully paid. If Maker at any time for any reason discontinues making payments through ACH, the interest rate specified above will be increased automatically by 1/16^th of one percent (.0625%) for the remainder of the term to offset any additional expense to Holder. All payments made on this Note shall be applied at the option of Holder to any prepayment premium or late charges due hereunder, then no Interest, and then to the reduction of unpaid principal.

If any payment provided for herein is not paid on its due date or within five (5) days thereafter, Maker hereby agrees to pay to Holder a late charge equal to ten percent (10%) of the payment to defray the expenses incident to handling such delinquent payment. Payment of a late charge shall not relieve Maker of its obligation to pay all sums promptly when due, or cure any default, or in any way affect the exercise of Holder’s remedies.

This Note may be prepaid in full (and not in part) on any scheduled payment date, upon giving Holder ninety (90) days prior written notice, by paying, in addition to the outstanding-principal balance at the date of prepayment (plus all accrued interest and other sums due under the terms of the Security Documents, us defined herein), a “Prepayment Fee.” The Prepayment Fee is equal to the greater of:

(i) 1% of the principal prepaid (principal outstanding after application of payment due on date of prepayment) at the date of prepayment, or

(ii) the present value computed on a monthly basis as of the date of prepayment of all future principal and interest payments due under this Note (starting with the first monthly payment due after the prepayment date and including any balloon payments) using the Discount Rate (as defined below) less the principal prepaid. The Discount Rate (“DR”) is the rate which when compounded monthly, is equivalent to the Reinvestment Rate (as defined below) when compounded semi-annually. The DR shall be rounded to the nearest one hundredth of one percent. The Reinvestment Rate (“RR”) is the yield in percent per annum of the Treasury Constant Maturity (“TCM”) that equals the remaining Weighted Average Life (as defined below) of the Note as published 5 business days prior to the date of prepayment in the Federal Reserve Statistical Release H.15 Selected Interest Rates. The Weighted Average Life (“WAL”) of the Note is the average number of years that each dollar of unpaid principal due on the Note remains outstanding. WAL is computed as the weighted-averaged time to the receipt of all future cash flows, using as the weights the dollar amounts of the principal pay downs. The WAL shall be rounded to the second decimal place. If the remaining WAL of this Note does not equal any of the published TCM’s then the RR will be determined by interpolating linearly between two TCM’s, one having a maturity as close as possible to, but greater than the remaining WAL of this Note and one having a maturity as close as possible to, but less than the remaining WAL of this Note. The RR shall be rounded to the nearest one hundredth of one percent. If the Federal Reserve Statistical Release H.15 Selected Interest Rates is discontinued or no longer published, the Holder shall, in its sole discretion, designate some other daily financial or governmental publication national circulation to determine the RR which most nearly corresponds to the yield of the TCM Holder shall notify Maker of the amount and the basis of determination of the Prepayment Fee, which absent manifest error, shall be conclusive and binding upon Holder and Maker. No Prepayment Fee, shall be due if this Note is prepaid (a) during the 90 days prior to the maturity-date or (b) solely in connection with the application of Insurance proceeds or any condemnation award Maker waives any right of prepayment except as expressly provided herein.

This Note is secured by a Deed of Trust and an Assignment of Leases and Rents, each of even date herewith, encumbering certain real property located in the County of Santa Clara, State of California, (the “Premises”) and by any other Instruments, now or hereafter executed by Maker in favor of Holder, which in any manner constitute additional security for this Note (all of which are hereinafter called the “Security Documents”).

Time is of the essence in the performance by Maker of all obligations of this Note and the Security Documents. If Maker fails to make any payment within ten days of its due date, or defaults in the performance or observance of any of the terms, agreements, covenants or conditions contained in the Security Documents and fails to cure such default within the applicable cure period, if any, specified in the Security Documents, then, or at any time thereafter, the entire principal balance of this Note, irrespective of the maturity date specified herein, together with accrued interest thereon, and any applicable prepayment premium, shall, at the election of the Holder, without notice, become immediately due and payable. The principal balance of this Note shall thereafter bear interest at a default rate equal to six percent (6%) per annum above the interest rate then applicable hereunder until all defaults are cured.

Maker waives diligence, demand, presentment, protest and notice of dishonor. All endorsers and guarantors consent to any renewals, extensions or modifications of this Note, including the terms or times for payment; and further agree that any such renewal, extension or modification of this Note or the Security Documents or the release or substitution of any security for this Note or any other indulgences may be made without notice to any of said parties and shall not otherwise affect the liability of any party.

Holder has examined and relied upon the creditworthiness, financial strength, reputation, experience and managerial ability of Maker (and its owners and managers) with respect to owning, leasing and operating properties such as the Premises in agreeing to make the Loan to Maker, and will continue to rely on Maker as a means of preserving the value of the Premises as security. Except as provided below, if (i) the Premises or any pert thereof or interest therein he sold, transferred, leased (other than space lease without option to purchase), conveyed, traded, assigned, or otherwise alienated, or n contract of sale of other conveyance is entered into with respect thereto (each a “Conveyance”), or (ii) there is a change in the form of organization of, or transfer of a controlling interest in, Maker (each a “Change of Control”) without the prior written consent of Holder, then, upon the occurrence of any one or more of the foregoing events, and regardless of whether or not an event of default shall have occurred and be continuing under this Note or any Security Document, Holder may, at its option, declare the then outstanding principal balance evidenced by the Note plus accrued interest thereon, and any applicable delinquency charge. or prepayment premium, immediately due and payable or, at its sole option, it may consent to the Conveyance or Change of Control in writing and may increase the interest rate on the Note to the interest rate on which Holder would then commit to make a first mortgage loan with like terms and security, as determined by Holder in its sole discretion, and impose whatever other terms and conditions it may deem necessary to compensate it for the increased risk resulting from the Conveyance or Change of Control. Any increase in interest rate shall entitle Holder to increase monthly payments under this Note so that the increased monthly payments will fully amortize the unpaid principal balance of this Note over the unexpired amortization term of this Note. Any joint venture agreement, partnership agreement, declaration or revocation of trust, option agreement or other agreement whereby any other person or entity may become entitled, directly or indirectly, to the possession or enjoyment of the Premises (other than a space lease with no option to purchase), or the income or other benefits of the Premises, shall, in each case, be deemed to be a Conveyance or Change of Control for the purposes of this paragraph, and shall require prior written consent from the Holder. Any transfer of a partnership interest or interests in Maker which in tine aggregate over the term of this Note comprise less than 50% of the total partnership interests in Maker will not constitute a Conveyance or Change of Control, so long as no default has occurred and is continuing under this Note or the Security Documents, and the controlling interest in Maker does not change. Such transfers of partnership interests in Maker will not require approval of Holder but will acquire prior written notice to Holder.

Notwithstanding the foregoing, and provided Maker is not then in default under this Note, or any of the Security Documents, Maker shall have a one-time only right upon prior written notice to Holder, and payment of all expenses of Holder plus an assumption fee equal to one percent (1%) of the unpaid principal balance of the Note to convey the Premises to a transferee whose creditworthiness, financial strength, reputation, experience and property management ability with respect to the ownership, operation and leasing of properties similar to tine Premises are equal to or greater than Maker in the Judgment of Holder, which approval shall not be unreasonably withheld or delayed. If Holder withholds its approval because of the proposed transferee’s lack of creditworthiness, reputation, experience, property management ability or financial strength or other reasonable basis which Leads Holder to reasonably believe the Loan or the security would be impaired, Holder shall not be deemed to have unreasonably withheld its approval. As a condition of any consent by Holder, the transferee must fully assume in writing Maker’s obligations under this

Note and the Security Documents and Maker and any guarantors of the Indebtedness, except as set forth below, must agree in writing to remain fully bound. Any consent given by Holder shall not constitute consent to any other such transaction. If title to the Premises or any part thereof or interest therein becomes vested in a person or an entity other then Maker, whether or not Holder has given written consent, Holder may deal with such-successor or successors in interest with reference to the Note and Security Documents in the same manner as dealing with Maker, without in any way diminishing or discharging Maker’s obligations. Upon satisfaction of the other terms and conditions of this paragraph, Holder will release Maker and each guarantor of Maker’s obligations of personal liability under the Note and Security Documents upon a conveyance of the Premises to a transferee approved by Holder, as set forth herein, provided the loan-to-value ratio with respect to the Premises at such time is less than 50%. Calculation of the loan-to-value ratio shall be based on Holder’s reasonable business judgment. The transferee and its principals shall be liable for standard industry “carve-outs” with respect to the obligations of the Note and Security Documents and each must execute appropriate written Instruments incorporating those terms

In no event whatsoever shall the amount of interest received, charged or contracted for by Holder for the use, forbearance or detention of money exceed the highest lawful rate permissible under applicable law, it being the intent of Holder and Maker in the execution of this Note to contract in strict accordance with applicable usury laws. If Holder or any other holder of this Note shall ever receive as interest on the Indebtedness an amount which exceeds the maximum amount of interest permitted by applicable law, such excess amount shall be applied to reduction of the principal amount owing on the indebtedness so as to fully comply with such law. Without limiting the foregoing, all calculations of Interest shall be made, to the extent permitted by law, by prorating, allocating and spreading all Interest in equal parts over the full stated term of the Note. Any provision of this Note, or of any other agreement between Holder and Maker, that operates to bind, obligate, or compel the Maker to pay interest in excess of such maximum rate shall be construed to require the payment of the maximum rate only. The provisions of this paragraph shall be given precedence over any contrary provision contained herein or in any other agreement between Holder and Maker.

No exercise by Holder, or delay or omission in the exercise by Holder, of any right or remedy hereunder or under the Security Documents, or otherwise afforded by applicable law, shall preclude, waive or limit the exercise of any right or remedy. Neither the acceptance by Holder of any partial payment, nor acceptance of a payment after the due date of such payment, shall be a waiver of Holder’s right to require prompt payment in full when due of all other sums payable hereunder or declare a default for failure to make prompt payment in full.

This Note shall be governed by the laws of the State of California and shall be the joint and several obligation of all markets, endorsers and guarantors binding upon them and their successors and assigns.

If an attorney is retained for collection or enforcement of this Note or the Security Documents, or defense of Holder’s interest in the Premises or Rents, Maker agrees to pay, in addition to the sums stated herein, all costs of collection and of suit and foreclosure, including reasonable attorney’s fees incurred by Holder in instituting, prosecuting or defending any such notion (including attorneys’ fees for (i) any appeal, (ii) relief from stay motions, cash collateral disputes, assumption/rejection motions and disputes regarding proposed disclosure statements and plans in any bankruptcy proceeding and (iii) any other judicial or nonjudicial proceeding or arbitration).

MAKER ACKNOWLEDGES RECEIPT Or A COPY OF THIS REAL ESTATE NOTE.

MAKER:

BRYAN FAMILY PARTNERSHIP II, LTD, a California limited partnership

By:	BFZ, LLC, a Californialimited liability company, its General Partner
	By:	/s/ Robert A. Frazer
		Robert A. Frazer, Manager
	By:	/s/ John D. Frazer Jr.
		John D. Frazer, Jr., Manager

MAILING ADDRESS:

BRYAN FAMILY PARTNERSHIP II, LTD

c/o Toeniskoetter & Breeding, Inc. – Attn: Dan Amend

1960 The Alameda

San Jose, CA 95126

EXHIBIT C

DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND

FIXTURE

(To be attached)

Seller’s Initial: /s/ RB, JF & DZ

Buyer’s Initials: /s/ DD

First American Title Company
Escrow No. NCS-296567-SC	FIRST AMERICAN TITLE COMPANY
Recorded at the Request of	HEREBY CERTIFIES THAT THIS IS A
And After Recording Return To:	TRUE AND CORRECT COPY OF THE ORIGINAL DOCUMENT
Symetra Life Insurance Company
Mortgage Loan Department
PO Box 84066	BY:
Seattle, WA 98124-8466	RECORDED:
Loan No.1673	SERIES NO:

APN: 406-21-019, 406-21-016 & 406-21-017

DEED OF TRUST, ASSIGNMENT OF RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEIVIENT AND FIXTURE FILING, (“Deed of Trust”) is made as of June 20, 2007, by BRYAN FAMILY PARTNERSHIP II, LTD., a California limited partnership, (“Trustor”), whose address is c/o Toeniskoetter & Breeding, Inc., 1960 The Alameda, San Jose, CA 95126, Attn: Dan Amend, to FIRST AMERICAN TITLE INSURANCE COMPANY, a corporation, (“Trustee”), whose address is 1737 North First Street, Suite 500, San Jose, CA 95112, for the benefit of Symetra Life insurance Company, a Washington corporation, (“Beneficiary”), whose mailing address is Mortgage Loan Department, PO Box 84066, Seattle, WA 98124-8466.

WITNESSETH: Trustor irrevocably grants, bargains, sells, warrants and transfers to Trustee in trust in fee simple, WITH POWER OF SALE, all right, title and interest of Trustor in, to, under and derived from the following described real property and rights, including any after acquired interest therein, situated in Santa Clara County, State of California:

SEE ATTACHED EXHIBIT “A” WHICH IS INCORPORATED HEREIN BY THIS REFERENCE FOR A FULL LEGAL DESCRIPTION OF THE PROPERTY (the “Premises”).

together with all buildings, structures, fixtures and improvements now or hereafter erected or placed thereon, and all water rights, rights of way, casements, rents, issues, profits, income, tenements, hereditaments, privileges, and appurtenances thereunto belonging now or hereafter used or enjoyed with said Premises, or any part thereof, and the reversion and reversions, remainder and remainders thereof, and all other estate, property and rights hereinafter described, including without limitation, (a) all land lying in streets, ways, alleys, water courses and roads adjoining the Premises, and all access rights and easements pertaining to the Premises; (b) all the lands, privileges, reversions, remainders, and water rights and stock, oil and gas rights, royalties, minerals and mineral rights belonging or in any way pertaining to the Premises; (c) all fixtures, materials, machinery, fittings and other property now or hereafter attached to or used in the operation of the Premises which shall be

-1-

deemed part of the Premises and not severable wholly or in part without material injury to the property (including, but not limited to, heating and incinerating apparatus and equipment, boilers, generating equipment, piping and plumbing fixtures, cooling, ventilating, sprinkling and vacuum cleaning systems, fire extinguishing apparatus, carpeting, elevators, escalators, partitions, window shades, blinds, screens, furnishings or public spaces, halls and lobbies, and shrubbery and plants); (d) all existing and future leases of the Premises (including extensions, renewals and subleases), all agreements for use and occupancy of the Premises (all such leases and agreements whether written or oral, are hereafter referred to as the “Leases”); (e) all rents, issues, revenues and profits of the Premises, and all proceeds payable as a result of a tenant’s exercise of an option to purchase the property, all proceeds derived from the sale, conveyance or transfer of the Premises or any part thereof, all proceeds derived from the termination or rejection of any Lease in a bankruptcy or other insolvency proceeding, and all proceeds from any rights and claims of any kind which Trustor may have against any tenant under the Leases or any occupants of the property (all of the above are hereafter collectively referred to as the “Rents”); (f) all compensation, awards, damages, causes of action and proceeds (including insurance proceeds) arising out of or relating to a taking or damaging of the Premises by reason of any public. or private improvement, condemnation proceeding, fire, earthquake or other casualty, injury or decrease in the value of the Premises, and any claims, causes of action and rights arising from damage to the Property, including without limitation, claims for construction defects; and (g) all contracts and agreements pertaining to or affecting the Premises including management and operating agreements; and all additions, accessions, replacements, substitutions, and proceeds of any of the foregoing (all of the foregoing interests and rights together with the Premises are hereinafter collectively referred to as the “Property”).

For the Purpose of Securing:

(a) the payment of the indebtedness evidenced by a Real Estate Note of even date hereof in the principal amount of $6,750,000.00 made by Trustor (the “Note”), payable to the order of Beneficiary at the times, in the manner and with interest as therein set forth, and any extensions, renewals, modifications or substitutions of the Note; (b) the performance of each agreement of Trustor herein or in the Loan Documents contained; (c) the payment of such additional loans or advances as hereafter may be made to Trustor, or its successors or assigns, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust; and (d) the payment of all sums expended or advanced by Beneficiary under or pursuant to the terms hereof, together with interest as herein provided.

As used in this Deed of Trust, the “Loan Documents” shall mean the Note, this Deed of Trust, the Assignment of Leases and Rents (the “Assignment of Leases and Rents”), and the other documents and instruments executed and delivered in connection therewith. The principal amount of the Note, interest thereon, and all other sums advanced or clue hereunder and thereunder are collectively referred to herein as the “Loan”.

-2-

TO MAINTAIN AND PROTECT THE SECURITY OF THIS DEED OF TRUST, TO SECURE THE FULL AND TIMELY PERFORMANCE BY TRUSTOR OF ALL OBLIGATIONS, COVENANTS AND AGREEMENTS OE THIS DEED OF TRUST AND THE OTHER LOAN DOCUMENTS, TRUSTOR REPRESENTS, WARRANTS AND COVENANTS AS FOLLOWS:

1. Personal Property Security. Trustor hereby grants to Beneficiary a security interest in that portion of the Property not deemed to be real property for the purpose of seeming performance of all of Trustor’s obligations under the Loan Documents.

2. Security Agreement. This Deed of Trust shall also constitute a Security Agreement as that term is used in the California Commercial Code (“UCC”) or other law applicable to the creation of’ liens or security interests in personal property with respect to any Property not deemed to be real property which is described herein, or in any way connected with the use and enjoyment of the Property, and the remedies for any violation of the covenants, terms and conditions of’ the agreements herein contained shall be as specified in the UCC or at law. Trustor authorizes Beneficiary to file one or more financing statements under the UCC with Trustor as Debtor and Beneficiary as Secured Party to perfect or give public notice of the security interest granted herein. Trustor and Beneficiary agree that the filing of a financing statement in the records normally having to do with personal property shall not be construed as in anywise derogating from or impairing the lien of this Deed of Trust.

3. Performance of Obligations. Trustor agrees to timely pay all sums when due pursuant to the Note and the Loan Documents without deduction or credit for taxes, insurance and other charges paid by Trustor, and strictly comply with all the terms and conditions of the Loan Documents.

4. Warranty of Title. Trustor warrants to Beneficiary that Trustor has good and marketable title to an indefeasible fee simple estate in the Premises, subject to no liens, encumbrances, easements, assessments, security interests, claims or defects of any kind except easements of record, recorded declarations, restrictions, reservations and covenants, if any, approved by Beneficiary in writing as specific exceptions in Beneficiary’s title insurance policy, and real estate taxes for the current year, a lien not yet payable (the “Permitted Exceptions”). Neither the real estate taxes nor any Permitted Exceptions are delinquent or in default. Trustor has the right to convey the Premises to Trustee for the benefit of Beneficiary, and the right to grant a security interest in the personal property security. Trustor will warrant and defend title to the Property and will defend the validity and priority of the lien of this Deed of Trust and the security interest granted herein against any claims or demands.

5. Prohibited Liens. Trustor shall not permit any governmental or statutory liens (including tax and mechanic’s and materialmen’s liens) to be filed against the Property except for real estate taxes and assessments not yet due and liens permitted by the Loan Documents or approved by Beneficiary in writing.

6. Payment of Fees and Taxes and Other Liens and Assessments; Contest. Trustor shall pay all filing, registration and recording fees, stamp and documentation taxes, and other fees, taxes, duties, imposts, and other charges incident to, arising from, or in connection with the preparation, execution, delivery or recording of any Loan Document. Trustor shall pay the real estate taxes and any assessments with respect to the Property at least ten (10) days prior to delinquency unless otherwise agreed to in writing by Beneficiary. After timely notice to Beneficiary, Trustor shall have the right to contest any real property tax or special assessment on the Property by appropriate proceedings so long as (a) no default has occurred and is continuing under the Note, this Deed or any

-3-

of the other Loan Documents; (b) Trustor makes any payment or deposit or posts any bond as and when required as a condition of pursuing such contest; (c) Trustor commences such contest prior to such tax or assessment becoming delinquent, and continuously pursues same in good faith with due diligence; (d) such contest or any bond furnished by Trustor stays the foreclosure and enforcement of any lien securing the payment of any such tax or assessment; and (e) Trustor pays any tax or assessment within ten (10) days following the resolution of such contest. All other encumbrance charges, fees, and liens affecting the Property, including mortgages and deeds of trust, whether prior to or subordinate to the lien of this Deed of Trust, shall be paid when due and shall not be in default. On request Trustor shall furnish receipts or other evidence of payment of these items.

7. Maintenance; No Waste. Trustor shall protect and preserve the Property and maintain it in good condition and repair. Trustor shall do all acts and take all precautions which, from the character and use of the Property, are reasonable, proper or necessary to preserve and maintain the Property in the state in which it exists on the date hereof, reasonable wear and tear from ordinary use alone excepted. Trustor shall not commit or permit any waste of the Property, or suffer or permit any condition to exist which will (i) increase the risk of fire or other hazard to the Property, or (ii) invalidate or allow cancellation of any insurance policy covering the Property.

8. Alterations, Removal and Demolition. Trustor shall not, nor permit others to, structurally alter, remove or demolish any building or improvement on the Property without Beneficiary’s prior written consent. Trustor shall not remove any fixture or other item or property which is part of the Property without Beneficiary’s prior written consent unless the fixture or item of property is immediately replaced by an article of equal value and utility owned by Trustor free and clear of any lien or security interest.

9. Completion, Repair and Restoration. Trustor shall promptly complete or repair and restore in good workmanlike manner any building or improvement on the Property which may be constructed or damaged or destroyed and shall pay all costs incurred therefor.

10. Compliance with Laws. The Premises are zoned for its existing or contemplated use, and are in present compliance with all zoning and subdivision laws, regulations, and ordinances applicable thereto. Trustor shall comply with all laws, ordinances, regulations, covenants, conditions, declarations, and restrictions affecting the Premises and shall not commit or permit any act upon or concerning the Premises in violation of any such laws, ordinances, regulations, covenants, declarations, and restrictions. Without limiting the foregoing, Trustor represents and covenants that the Property is in present compliance with, and in the future shall fully comply with, as applicable, the Americans With Disabilities Act of 1990 (42 USC 12101, et seq.), as amended from time to time, and the rules and regulations adopted pursuant thereto.

11. Impairment of Property. Trustor shall not, without Beneficiary’s prior written consent, change the general nature of the use of the Property, initiate, acquire or permit any change in any public or private restrictions (including a zoning reclassification) limiting the uses which may be made of the Property, or take or permit any notion which would impair the value of the Property or Beneficiary’s lien or security interest in the Property.

-4-

12. Inspection of Property. Beneficiary or its authorized representative may inspect the Property at reasonable times after reasonable notice.

13. Trustor’s Defense of Property. Trustor shall appear in and defend any action or proceeding which may affect the Property or the rights or powers of Beneficiary or Trustee.

14. Beneficiary’s Right to Protect Property. Beneficiary may commence, appear in, and defend any action or proceeding which may affect the Property or the rights or powers of Beneficiary or Trustee if Trustor fails to undertake such actions after reasonable notice from Beneficiary. Beneficiary may pay, purchase, contest or compromise any encumbrance, charge or lien which in its judgment appears to be prior or superior to the lien of this Deed of Trust and Trustor shall promptly reimburse Beneficiary therefor. If Trustor fails to make any payment or do any act required under the Loan Documents, including without limitation, payment of taxes and assessments and maintenance of insurance on the Property, Beneficiary, without any obligation to do so, but without releasing Trustor from any obligations under the Loan Documents, may make the payment or cause the act to be performed in such manner and to such extent as Beneficiary may deem necessary to protect Beneficiary’s interest in the Property. Beneficiary is authorized to enter upon the Property for such purposes. In exercising any of these powers Beneficiary may incur such expenses, in its absolute discretion, it deems necessary.

15. Repayment of Beneficiary’s Expenditures. Trustor shall pay within 10 days after written notice from Beneficiary all sums expended by and all costs and expenses incurred by Beneficiary in taking any actions or exercising any remedies pursuant to the Loan Documents including attorneys’ fees, appraisal and inspection fees, and the costs for title reports. Expenditures by Beneficiary shall bear interest from the date of such advance or expenditure at the default rate specified in the Note, shall constitute advances made under this Deed of Trust and shall be secured by and have the same priority as the lien of this Deed of Trust. If Trustor falls to pay any such expenditures, costs and expenses and interest thereon, Beneficiary may, at its option, without foreclosing the lien of this Deed of Trust, commence an independent action against Trustor for the recovery of the expenditures and advance any undisbursed loan proceeds to pay the expenditures.

16. Due On Sale or Transfer Change of Control. Beneficiary has examined and relied upon the creditworthiness, financial strength, reputation, experience and managerial ability of Trustor (and its owners and managers) with respect to owning, leasing and operating properties such as the Property in agreeing to make the Loan to Trustor, and will continue to rely on Trustor as a means of preserving the value of the Property as security. If (i) the Property or any part thereof or interest therein is sold, transferred, leased (other than space lease without option to purchase), conveyed, traded, assigned, or otherwise alienated whether voluntarily or involuntarily, or a contract of sale or other conveyance is entered into with respect thereto (each a “Conveyance”), or (ii) there is a change in the form of organization of, or transfer of a controlling interest in, Trustor (each a “Change of Control”), without the prior written consent of Beneficiary, then, upon the occurrence of any one or more of the foregoing events, and regardless of whether or not an event of default shall have occurred and be continuing under the Note or this Deed of Trust or any other Loan Document, Beneficiary may, at its option, declare the then outstanding principal balance evidenced by the Note plus accrued interest thereon, and any applicable delinquency charge or prepayment premium, immediately due and payable or at its sole option, it may consent to the Conveyance or Change of

-5-

Control in writing and may increase the interest rate on the Note to the interest rate on which Beneficiary would then commit to make a first mortgage loan of similar character with like terms and security, as determined by Beneficiary in its sole discretion, and impose whatever other terms and conditions it may deem necessary to compensate or protect it for the increased risk resulting from the Conveyance or Change of Control. Such increase in interest rate shall entitle Beneficiary to increase monthly payments under the Note so that the increased monthly payments will fully amortize the unpaid principal balance of the Note over the unexpired amortization term. Any joint venture agreement, partnership agreement, declaration or revocation of trust, option agreement or other agreement whereby any other person or entity may become entitled, directly or indirectly, to the possession or enjoyment of the Property (other than a space lease without option to purchase), or the income or other benefits of the Property, shall, in each case, be deemed to be a Conveyance for the purposes of this paragraph, and shall require prior written consent from the Beneficiary. Any transfer of a partnership interest or interests in Trustor which in the aggregate over the term of the Note comprise less than 50% of the total partnership interests in Trustor will not constitute a Conveyance or Change of Control, so long as no default under this Note or the other Loan Documents has occurred and is controlling, and the controlling interest in Trustor does not change. Such transfers of partnership interests will not require approval of Beneficiary but will require prior written notice to Beneficiary. Notwithstanding the foregoing, and provided Trustor is not then in default under the Note, this Deed of Trust or any of the other Loan Documents, Trustor shall have a one-time only right upon prior written notice to Beneficiary and payment of all expenses of Beneficiary plus an assumption fee equal to one percent (1%) of the unpaid principal balance of the Note to convey the Premises to a transferee whose creditworthiness, financial strength, reputation, experience and property management ability with respect to the ownership, operation and leasing of properties similar to the Property are equal to or greater than Trustor in the judgment of Beneficiary, which approval shall not be unreasonably withheld or delayed. If Beneficiary withholds its approval because of the proposed transferee’s lack of creditworthiness, reputation, experience, property management ability or financial strength or other reasonable basis which leads Beneficiary to reasonably believe the Loan or the security would be impaired, Beneficiary shall not be deemed to have unreasonably withheld its acceptance. Any transferee must fully assume in writing Trustor’s obligations under the Note and the Loan Documents in a form satisfactory to Beneficiary and Trustor and any guarantors must agree in writing to remain fully bound. Any approval given by Beneficiary shall not constitute an approval of any future such transaction. If ownership of the Property or any part thereof or interest therein becomes vested in a person or an entity other than Trustor, whether or not Beneficiary has given written consent, Beneficiary may deal with such successor or successors in interest with reference to this Deed of Trust and the Loan, in the same manner as with Trustor, without in any way diminishing or discharging Trustor’s obligations. Upon satisfaction of the other terms and conditions of this Section 16, Beneficiary will release Trustor and each guarantor of Trustor’s obligations of personal liability under the Loan Documents upon a sale of the Property to an assuming buyer approved by Beneficiary, provided that the loan-to-value ratio with respect to the Property at such time is less than 50%. Calculation of the loan-to-value ratio shall be based on Beneficiary’s reasonable business judgment. The assuming buyer and its principals shall be liable for standard industry “carve-outs” with respect to the Loan and each must execute appropriate written instruments incorporating those terms.

-6-

17. No Other Encumbrances; Due On Encumbrance. At no time while the Loan remains unpaid, shall Trustor create, assume, or suffer to exist on the Property, or any part thereof, any mortgage, trust deed or other security instrument (other than this Deed of Trust) without first obtaining the prior written consent of Beneficiary. Trustor agrees that should the Property or any part thereof at any time be or become subject to the lien of any other mortgage or deed of trust or subject to any other encumbrance, pledge, or security interest (except with the prior written consent of Beneficiary), the whole of the principal and interest secured hereby and any applicable delinquency charge or prepayment premium shall, at the option of the Beneficiary, become immediately due and payable. Whether or not the consent of Beneficiary has been obtained, Trustor, for itself and for all future owners of the Property, agrees that this Deed of Trust may be modified, varied, extended, renewed, or reinstated at any time by agreement between the holder of this Deed of Trust and Trustor, or the then owner of the Property, without notice to, or the consent of, any subordinate mortgagee, beneficiary or lienor, and any such modification, variance, extension, renewal, or reinstatement shall be binding upon such subordinate mortgagee, beneficiary or lienor with the same force and effect as if such subordinate mortgagee, beneficiary or lienor had consented thereto

18. Insurance. Without limiting the generality of any other provision contained in this Deed of Trust, Trustor shall procure and continuously maintain “All Risk” property insurance on the Property with premiums prepaid providing 100% replacement cost coverage and insuring against loss by fire, smoke, explosion, riot, lightning, hail, windstorm, vandalism and other risks covered by the broadest form of extended coverage available from time to time, loss of rents/income or business interruption (if owner occupied) coverage for a minimum of one year, and earthquake coverage to the extent required by Beneficiary in the exercise of its business judgment in light of commercial real estate practices by institutional lenders existing in the general vicinity where the Property is located at the time the insurance is issued, and coverage for such other perils and risks as may be reasonably required by Beneficiary from time to time. If the Property is over designated as having special flood hazards or any other designation which would make the Property subject to the National Flood Insurance Act of 1968 or the Federal flood Disaster Protection Act of 1973, as amended, modified, supplemented, or replaced from time to time, or any similar law, Trustor agrees to do everything reasonably necessary to comply with the requirements of said law and related regulations in order that flood insurance will be available to Trustor, and to obtain and maintain for the benefit of Beneficiary such an insurance policy in form, amount and content satisfactory to Beneficiary. Trustor shall also procure and maintain occurrence form commercial general liability insurance against bodily injury or death or property damage occurring in, upon or about, or resulting from, the Property with limits in such amounts as are acceptable to Beneficiary, but in no event less than $2,000,000 combined single limit per occurrence and $2,000,000 general aggregate, naming Beneficiary as an additional insured on a non-contributory basis. All insurance shall be with companies licensed to do business in California satisfactory to Beneficiary having an A.M. Best rating of B+VI or better and in such amounts and with deductibles acceptable to Beneficiary with lender’s loss payable clauses (438 BFU or equivalent) in favor of and in form satisfactory to Beneficiary. Each policy must provide no less than thirty (30) days prior written notice to Beneficiary of any cancellation, non-renewal or material change. No approval by Beneficiary of the amount, type or form of any insurance may be construed to be a representation or warranty by Beneficiary of its sufficiency. At least 30 days prior to the expiration of the term of any insurance policy, Trustor shall furnish Beneficiary with written evidence of renewal or issuance of a

-7-

satisfactory replacement policy. If requested, Trustor shall deliver copies of all policies to Beneficiary. In the event of foreclosure of this Deed of Trust all interest of Trustor in any insurance policies pertaining to the Property and in any claims against the policies and in any proceeds due under the policies shall pass to Beneficiary.

19. Condemnation and Insurance Proceeds. All insurance proceeds and condemnation awards with respect to the Property are assigned to Beneficiary as additional security. Trustor shall give immediate notice to Beneficiary of any condemnation proceeding, or material loss or damage to the Property in excess of $50,000 (“Material Loss”). Trustor shall have the right to settle and receive the proceeds payable with respect to a condemnation, loss or damage except for a Material Loss. With respect to a Material Loss, all proceeds payable as a result of a condemnation, or material loss or damage shall be paid to Beneficiary and applied to repair or restore the Property, provided no event of default has occurred and is continuing under this Deed of Trust, and such repair or restoration is economically feasible and the security of this Deed of Trust is not impaired. Upon a Material Loss to such an extent as would make repair uneconomical, or if a default under this Deed of Trust shall have occurred and be continuing at the time of such condemnation or loss, or if less than two years remains on the unexpired term of the Note, Beneficiary shall, at its option, after deducting its expenses including attorney’s fees, (a) apply all or part of the proceeds against the sums owed under the Loan Documents including the Note whether or not (i) the sums are actually due or (ii) the security is impaired, and without affecting the due dates or amount of payments thereafter due under the Note, or (b) release all or any part of the proceeds to Trustor, or (c) permit all or any part of the proceeds to be used for repair and restoration of the Property on such conditions as Beneficiary may impose including evidence of sufficient funds to complete the work, approval of the plans and specifications and periodic disbursement of the proceeds during the course of repair and restoration.

20. Leases. The terms of all now Leases of the Property must be acceptable to Beneficiary. Trustor shall fully comply with all of the terms, conditions and provision of the Leases so that no breach shall occur and do all that is necessary to preserve all the Leases in force. With respect to any Lease involving an initial term of three years or more, Trustor shall not without the prior written consent of Beneficiary, modify or amend the Lease for a lesser rental or term, accelerate the payment of rent, change the terms of any renewal option, or accept surrender of the Lease or terminate the Lease except in accordance with the terms of the lease providing for termination in the event of default. Any proceeds or damages resulting from a tenant’s default under any such Lease, at Beneficiary’s option, shall be paid to Beneficiary and applied against sums owed under the Loan Documents even though such sums may not be due and payable. Except for the lien of real estate taxes and assessments, Trustor shall not permit any lien to be created against the Property which may be or may become prior to any Lease. If the Property is partially condemned or suffers a casualty, Trustor shall promptly repair and restore the Property in order to comply with the Leases.

21. Assignment of Leases and Rents; Trustor’s Right to Collect. Trustor hereby absolutely and irrevocably assigns to Beneficiary all Trustor’s interest in the Rents and Leases. This assignment shall be subject to the terms and conditions of any separate Assignment of Leases and Rents, whenever executed, in favor of Beneficiary and covering the Premises. Unless otherwise provided in any separate Assignment of Leases and Rents, and so long as Trustor is not in default

-8-

under the Loan Documents, Trustor may collect the Rents as they become due. Trustor shall use the Rents to pay normal operating expenses for the Property and sums due and payments required under the Loan Documents. No Rents shall be collected more than two months in advance of the due date. Trustor warrants that it has made no prior assignment of the Rents or Leases and will make no subsequent assignment without the prior written consent of Beneficiary. Trustor’s right to collect the Rents shall not constitute Beneficiary’s consent to the use of cash collateral in any bankruptcy proceeding.

22. Beneficiary’s Right to Collect Rents. If a default has occurred under the Loan Documents and has not been cured after any applicable notice and cure period specified in the Loan Documents, Beneficiary shall have all the rights set forth in California Civil Code Section 2938, and Beneficiary or its agents, or a court appointed receiver, may collect the Rents without further notice to Trustor. In doing so, Beneficiary may (a) evict tenants for nonpayment of rent, (b) terminate in any lawful manner any tenancy or occupancy, (c) lease the Premises in the name of the then owner on such terms as it may deem best and (d) institute proceedings against any tenant for past due rent. The Rents received shall be applied to payment of the costs and expenses of collecting the Rents, including a reasonable fee to Beneficiary, a receiver or an agent, operating expenses for the Property and any sums due or payments required under the Loan Documents, in such amounts as Beneficiary may determine. Any excess shall be paid to Trustor, however, Beneficiary may withhold from any excess a reasonable amount to pay sums anticipated to become due which exceed the anticipated future Rents. Beneficiary’s failure to collect or discontinuing collection at any time shall not in any manner affect the subsequent enforcement by Beneficiary of its rights to collect the Rents. The collection or application of the Rents shall not cure or waive any default under the Loan Documents. Beneficiary or a receiver shall have no obligation in perform any of Trustor’s obligations under the Leases. In exercising its rights under this section Beneficiary shall be liable only for the proper application of and accounting for the Rents collected by Beneficiary or its agents. Any Rents paid to Beneficiary or a receiver shall be credited against the amount due from the tenant under the Lease. In the event any tenant under the Lease becomes the subject of any proceeding under the Bankruptcy Code or any other federal, state or local statute which provides for the possible termination or rejection of the leases assigned hereby, Trustor covenants and agrees that in the event any of the Leases are so rejected, no damages settlement shall be made without the prior written consent of Beneficiary; any check in payment of damages for rejection or termination of any such Lease will be made payable to both the Trustor and Beneficiary; and Trustor hereby assigns any such payment to Beneficiary and further covenants and agrees that upon request of Beneficiary, it will duly endorse to the order of Beneficiary any such check, the proceeds of which will be applied to the Loan in such manner as Beneficiary may elect.

23. Fixture Filling. This Deed of Trust shall also serve as a financing statement filed for record in the real estate records as a fixture filing pursuant to the UCC with Trustor being named as the Debtor and the Beneficiary being named as the Secured Party and the Property being the collateral.

24. Late Charge. In the event that any payment or portion thereof is not paid within five (5) days commencing with the date it is due, Beneficiary may collect, and Trustor agrees to pay a “late charge” of 10% of the delinquent payment, but not to exceed the highest such charge permitted by applicable law. This late charge shall apply individually to each payment past due. Payment of a

-9-

late charge shall not relieve the Trustor of the obligation to make payments on or before the date on which they are due, or cure any default, or in any way affect Beneficiary’s remedies pursuant to the terms of the Note secured hereby or this Deed of Trust.

25. Default; Remedies. TIME IS OF THE ESSENCE HEREOF. If Trustor fails to pay any installment of principal or interest on the Note within ten (10) days of the date the same is due and payable, or fails to pay when due any taxes, assessments or insurance premiums or any lien or charge upon the Property, or if Trustor fails to perform or observe any other, covenant or agreement of Trustor contained in this Deed of Trust or in the Loan Documents for more than thirty (30) days after receipt of written notice specifying such default, or if any representation or warranty made by Trustor or any guarantor of the Note was materially false or misleading at the time it was made, or if Trustor or any guarantor fails to disclose any material fact, or if Trustor falls to provide or maintain the insurance required by this Deed of Trust, or fails to perform or observe any other obligation of Trustor to Beneficiary when due, or makes an assignment for the benefit of creditors, or if a petition in bankruptcy is filed by or against Trustor and is not dismissed within sixty (60) days, or if Trustor is dissolved, changes its form of legal entity or ceases doing business as a going concern, or if any guarantor of the Loan revokes, or attempts to revoke, its guaranty, or is the subject of a petition in bankruptcy or other insolvency proceeding, or if a Conveyance has occurred without the prior written consent of Beneficiary, or a Change of Control has occurred with respect to Trustor or any guarantor without the prior written consent of Beneficiary, then and in any such event (each of such events being a default by Trustor under this Deed of Trust for all purposes of this Deed of Trust, including the acceleration previsions contained in the Note), the entire unpaid principal balance of the Loan with interest thereon, at the option of the Beneficiary or the holder of the Note, shall become immediately due and payable and Beneficiary may exercise its rights and remedies under the Loan Documents and applicable law. Without limiting the foregoing, Beneficiary may enter upon the Property, exclude Trustor and its employees therefrom, and having and holding same, may use, operate, manage and control the Property and conduct the business thereof. Upon entry, Beneficiary may maintain and restore the Property, and make repairs and improvements as Beneficiary may deem necessary. Beneficiary may cause Trustee to execute a written notice of default and of election to cause the Property to be sold to satisfy the indebtedness and obligations hereof, and Trustee shall file such notice of record in each county wherein the Property or some part or parcel thereof is situated. Beneficiary shall deposit with Trustee the Note and all other documents evidencing expenditures secured hereby. After lapse of such time as may then be required by law following the recordation of said notice of default, and notice of default and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell the Property on the date and at the time and place designated in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine (but subject to any statutory right of Trustor to direct the order in which the Property, if consisting of several lots or parcels, shall be sold), at public auction to the highest bidder, the purchase price payable in lawful money of the United States at the time of sale. The person conducting the sale may, for any cause he deems expedient, postpone the sale from time to time until it shall be completed, and in every such case, notice of postponement shall be given by public declaration thereof by such person at the time and place last appointed for the sale; provided, if the sale is postponed for longer than seventy-two (72) hours beyond the day designated in the notice of sale, notice thereof shall be given in the same manner as the original notice of sale. Trustee shall execute and deliver to the purchaser its deed conveying the Property so sold, but without any

-10-

covenant or warranty, expressed or implied. The recitals in this deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Beneficiary, may bid at the sale. Trustee shall apply the proceeds of the sale to the payment of (1) the costs and expenses of retaking the Property and exercising the power of sale, and of the sale, including the payment of the Trustee’s and attorneys fees; (2) cost of any evidence of title procured in connection with such sale; (3) all sums expended under the terms hereof, not then repaid, with accrued interest thereon at 10% per annum from the date of the expenditure; (4) all sums then secured hereby; and (5) the remainder, if any, to the person or persons legally entitled thereto, or to the Trustee, in its discretion, may deposit the balance of such proceeds with the County Clerk of the county in which the sale took place. Trustor agrees to surrender possession of the Property to the purchaser at the aforesaid sale, immediately after such sale, in the event such possession has not previously been surrendered by Trustor. Alternatively, Beneficiary shall have the option to declare all sums secured hereby immediately due and payable and foreclose this Deed of Trust in the manner provided by law for the foreclosure of mortgages on real property and Beneficiary shall be entitled to recover in such proceedings all costs and expenses incident thereto, including a reasonable attorneys fee in such amount as may be fixed by the court. Beneficiary may bid for and acquire the Property or any part thereof and in lieu of paying cash therefor may make settlement for the purchase price by crediting upon the Loan the net sales price after deducting therefrom the expenses of the sale and the cost of the action and any other sums which Beneficiary is authorized to deduct under this Deed of Trust. Beneficiary’s exercise of any of its rights and remedies shall not constitute a waiver or cure of a default. Beneficiary’s failure to enforce any default shall not constitute a waiver of the default or any subsequent default. In the event the Loan Documents are referred to an attorney for enforcement or defense of Beneficiary’s rights or remedies, whether or not suit is filed or any proceedings are commenced, Trustor shall pay all Beneficiary’s costs and expenses including Trustee’s and reasonable attorneys’ fees (including attorneys’ fees for (i) any appeal, (ii) relief from stay motions, cash collateral disputes, assumption/rejection motions and disputes regarding proposed disclosure statements and plans in any bankruptcy proceeding or (iii) for any other judicial or nonjudicial proceeding or arbitration), appraisal and inspection fees and cost of a title report.) To the extent permitted by applicable law, Trustor waives the benefit of any statute regulating the entry of a deficiency judgment or requiring that the value of the Property be set off against any part of the indebtedness secured hereby. If Beneficiary has initiated any action or proceeding to enforce any right or remedy under this Deed of Trust by foreclosure, entry or otherwise, and such action or proceedings has been discontinued or abandoned for any reason, or has been determined adversely to Beneficiary, then, Trustor and Beneficiary shall be restored to their former positions and rights hereunder, and all rights, powers and remedies of Beneficiary shall continue in full force and effect as if no such action or proceeding had been undertaken.

26. Cumulative Remedies. All Beneficiary’s and Trustee’s rights and remedies specified in the Loan Documents are cumulative, not mutually exclusive and not in substitution for any rights or remedies available in law or equity. In order to obtain performance of Trustor’s obligations under the Loan Documents, without waiving its rights in the Property, Beneficiary may proceed against Trustor or may proceed against any other security or guaranty for the Note, in such order and manner as Beneficiary may elect. The commencement of proceedings to enforce a particular remedy shall not preclude the discontinuance of the proceedings and the commencement of proceedings to enforce a different remedy.

-11-

27. Sale of Property After Default. The Property may be sold separately or as a whole, at the option of Beneficiary. In the event of a Trustee’s sale of all the Property, Beneficiary hereby assigns its security interest in any personal property to the Trustee. Beneficiary may also realize on the personal property security in accordance with the remedies available under the UCC at law. In the event of a foreclosure sale, Trustor and the holders of any subordinate liens or security interest waive any equitable, statutory or other right they may have to require marshaling of assets or foreclosure in the inverse order of alienation.

28. Appointment of Receiver. In the event of a default and the expiration of any applicable notice and cure period specified in the Loan Documents, Beneficiary shall be entitled, without notice, without bond, and without regard to the adequacy of the security, to the appointment of a receiver for the Premises to take possession of and operate the Property and collect the rents, profits, issues and revenues thereof. The receiver shall have, in addition to all the rights and powers customarily given to and exercised by a receiver, all the rights and powers granted to Beneficiary by the Loan Documents.

29. Foreclosure of Tenant’s Rights; Subordination. Beneficiary shall have the right, at its option, to foreclose this Deed of Trust subject to the rights of any tenants on the Property. Beneficiary’s failure to foreclose against any tenant shall not be asserted as a claim against Beneficiary or as a defense against any claim by Beneficiary in any action or proceeding. Beneficiary at any time may subordinate this Deed of Trust to any or all of the Leases except that Beneficiary shall retain its priority claim to any condemnation or insurance proceeds.

30. Reconveyance After Payment. Upon written request of Beneficiary stating that all obligations secured by this Deed of Trust have been paid, Trustee shall reconvey, without warranty, the Property then subject to the lien of this Deed of Trust. The recitals in any reconveyance of any matters of fact shall be conclusive proof of the truthfulness thereof. The grantee in the reconveyance may be described as “the person or person legally entitled thereto” Trustor shall pay any Trustee’s fees or recording fees.

31. Release of Parties or Poverty. Without affecting the obligations of any party under the Loan Documents (including any guarantor, surety or endorser of Trustor’s obligations) or any subsequent purchaser of the Property, and without affecting the lien of this Deed of Trust and Beneficiary’s security interest in the Property, Beneficiary may, without notice (a) release Trustor and any other party now or hereafter liable for the payment or performance of any obligations under the Loan Documents, including guarantors of the Loan, (b) release all or any part of the Property, (c) subordinate the lien of this Deed of Trust or Beneficiary’s security interest in the Property, (d) take or release any other security or guaranty, (e) grant an extension of time or accelerate the time for performance of the obligations owed under the Loan Documents, (f) modify, waive, forbear, delay or fail to enforce any obligations owed under the Loan Documents, (g) sell or otherwise realize on any other security or guaranty prior to, contemporaneously with or subsequent to a sale of all or any part of the Property, (h) make advances pursuant to the Loan Documents including advances in excess of the Note amount, (i) consent to the making of any map or plot of the Property, and (j) join in the grant of any easement on the Property. Any subordinate lienholder shall be subject to all such releases, extensions or modifications without notice to or consent from the subordinate lienholder. Trustor shall pay any Trustee’s or attorneys fees, title insurance premiums or recording fees in connection with any of the foregoing.

-12-

32. Nonwaiver of Terms and Conditions. Time is of the essence with respect to performance of the obligations due under the Loan Documents. Beneficiary’s failure to require prompt enforcement of any required obligations shall not constitute a waiver of the obligations due or any subsequent required performance of the obligation. No term or condition of the Loan Documents may be waived, modified or amended except by a written agreement signed by Trustor and Beneficiary. Any waiver of any term or condition of the Loan Documents shall apply only to the time and occasion specified in the waiver and shall not constitute a waiver of the term or condition at any subsequent time or occasion.

33. Business Use. The Property shall be used for business or commercial purposes and does not include agricultural or residential use property.

34. Joint and Several Liability. If there is more than one Trustor of this Deed of Trust, their obligations shall be joint and several.

35. Operating and Financial Statements. Trustor will deliver to Beneficiary upon Beneficiary’s request, operating statements and occupancy reports (including a rent roll) for the Property in a form and for periods satisfactory to Beneficiary certified as correct by Trustor. Trustor shall permit Beneficiary to examine all books and records of Trustor pertaining to the Property and deliver to Beneficiary upon request all financial statements, credit reports and other documents in the possession of Trustor relating to the financial condition of Trustor, any tenant of the Property and any guarantor of the Loan, including rental, income and expense statements pertaining to the Property and tax returns and audits.

36. Maximum Interest Rate. No person shall be obligated to pay the amount of any interest to the extent it is in excess of the maximum amount of interest permitted by applicable law. The Loan Documents are expressly limited so that in no contingency or event whatsoever shall the amount paid, or agreed to be paid, to Beneficiary for the use, forbearance or detention of the money loaned under the Note or otherwise, or for the performance or payment of any indebtedness, exceed the maximum amount permitted under applicable law. Trustor and Beneficiary intend to comply strictly with the applicable usury laws of the State of California. If Beneficiary or any other holder of this Deed of Trust shall over receive as interest on the Loan an amount which exceeds the maximum amount of interest permitted by applicable law, such excess amount shall be applied to reduction of the principal amount owing on the loan so as to fully and strictly comply with such law. Without limiting the foregoing, all calculations of interest shall be made, to the extent permitted by law, by amortizing, prorating, allocating and spreading all interest in equal parts over the full stated term of the Note.

37. Evasion of the Prepayment Penalty. 1f Trustor is in default under the Loan Documents, any tender of payment sufficient to satisfy all sums due under the Loan Documents made at any time prior to foreclosure sale shall constitute an evasion of the prepayment terms contained in the Note, if any, and shall be deemed a voluntary prepayment and subject to payment of any applicable prepayment premium.

-13-

38. Payment of New Taxes. If any federal, state or local law is passed subsequent to the date of this Deed of Trust which requires Beneficiary to pay any tax because of this Deed of Trust or the sums due under the Loan Documents, then Trustor shall pay to Beneficiary on demand any such taxes if it is lawful for Trustor to pay them. If it is not lawful for Trustor to pay such taxes, then at its option Beneficiary may declare the entire unpaid balance of the indebtedness to be immediately due and payable under the Loan Documents and exercise any remedies permitted under this Deed of Trust.

39. Acceptance By Trustee. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of any pending sale under any other deed of trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party, unless brought by the Trustee.

40. Substitution of Trustee. Beneficiary may at any time discharge the Trustee and appoint a successor Trustee who shall have all of the powers, duties, authority and title of the original Trustee. Appointment of a successor Trustee shall become effective upon filing for record in the office of the County Recorder of each county in which said Premises is situated a Substitution of Trustee. Each such substitution shall be executed and acknowledged, and notice thereof shall be given and proof thereof made, in the manner provided by law.

41. Reserves. Upon (i) occurrence of an Event of Default, and (ii) written notice to Trustor from Beneficiary, Trustor shall thereafter pay to Beneficiary, together with and in addition to the monthly payments of principal and interest payable on the Note, on the date set forth in the Note for the making of monthly payments, until the Note is fully paid, a sum, as estimated by Beneficiary, equal to the taxes and special assessments next due on the Premises, plus the premiums that will next become due and payable on insurance policies required by this Deed of Trust, divided by the number of months to elapse before the premiums, taxes and special assessments are due, such sums to be held by Beneficiary to pay said premiums, taxes and special assessments. Such payments (“Reserves”) are to be held without allowance of interest to Trustor (except as required by applicable law) and need not be kept separate and apart from other funds of Beneficiary. Such Reserves shall be applied by Beneficiary to real estate taxes, special assessments and insurance premiums on the Premises as the same become due and payable. Collection of the reserves are solely for the added protection of Beneficiary and entails no responsibility on the part of Beneficiary beyond allowance of due credit for sums actually received by Beneficiary and the payment by Beneficiary of such taxes, special assessments and insurance premiums to the extent of the Reserves when statements therefor are actually presented to Beneficiary by Trustor. If the total of the Reserves shall exceed the amount of payments actually applied by Beneficiary, such excess may be credited by Beneficiary on subsequent payments to be made by Trustor, or at the option of Beneficiary, refunded to Trustors.

42. Property Management. Trustor agrees that Beneficiary shall have, and reserves the right to install, professional management of the Premises at any time following the occurrence of default under this Deed of Trust, if such default remains uncured following the expiration of any applicable cure period. Such professional management shall be at the sole discretion of Beneficiary and nothing herein shall obligate Beneficiary to exercise its right to install professional management. The cost of such management shall be borne by Trustor, shall be secured by this Deed of Trust and shall be treated as an additional advance under the Loan Documents.

-14-

43. Environmental Compliance and Indemnification. Trustor represents and warrants to Beneficiary that to the best of Trustees knowledge after due and diligent inquiry, neither the Property nor any improvements thereon presently contain asbestos, or signs of water damage or mold in any form, and except as disclosed by the Environmental Site Assessment provided by Trustor to Beneficiary in writing prior to closing the Loan, no hazardous or toxic waste or substances are being stored on (or located in the soil, groundwater, surface water or waterways) at or under the Property or any adjacent properly in quantities or concentrations sufficient to require investigation, removal or remediation under the Environmental Laws (as hereinafter defined) nor have any such quantities or concentrations of waste or substances been stored or used on the Property or any adjacent property prior to Trustees ownership, possession or control of the Property, nor are any underground storage tanks (whether or not in use located in, on or under any part of the Property. Trustor agrees to provide written notice to Beneficiary immediately upon Trustor becoming aware of any underground storage tanks on the Property, or that the Property or any adjacent property is being or has been contaminated with hazardous or toxic waste or substances. Trustor will not cause nor permit any activities on the Property which directly or indirectly could result in the Property or any adjoining property becoming contaminated with hazardous or toxic waste or substances. For purposes of this Deed of Trust, the term “hazardous or toxic waste or substances” means asbestos, urea formaldehyde foam insulation, flammable explosives, radioactive materials, hazardous materials and petroleum and its refined products, and any substance or material defined, regulated, controlled, limited, prohibited or classified as hazardous or toxic wastes, hazardous or toxic material, a hazardous, toxic or radioactive substance, or other similar term in the Comprehensive Environmental Response Compensation Act of 1980 (“CIRCLA”), as amended (42 USC 9601, et seq.), the Hazardous Materials Transportation Act, as amended, (49 USC 1801, at seq.), the Resource Conservation and Recovery Act (“RCRA”), as amended, (42 USC 6901, et seq.) the Clean Water Act, as amended, (33 USC 1251, et seq.), the Clean Air Act, as amended, (42 USC 7401, at seq.), the Toxic Substances Control Act, as amended, (15 USC 2601, et seq.) or in any other applicable federal, state or local environmental statute, regulation or ordinance now or hereafter in effect governing the Property, its businesses, products or assets, with respect to discharges into the ground and surface water, emissions into ambient air and generation, control, accumulation, storage, treatment, transportation, removal, labeling, or disposal of waste materials or process by-products, the existence, cleanup, and/or remedy of contamination on property, the protection of the environment from soil; air or water pollution, or from spilled, deposited or otherwise emplaced contamination (the “Environmental Laws”) Trustor shall promptly comply with all statutes, regulations and ordinances which apply to Trustor or the Property and with all orders, decrees or judgments of governmental authorities or courts having jurisdiction or by which Trustor is bound, relating to the use, collection, storage, treatment, control, removal or cleanup of hazardous or toxic substances in, on or under the Property or in, on or under any adjacent property that becomes contaminated with hazardous or toxic substances as a result of construction, operations or other activities on, or the contamination of, the Property, at Trustor’s expense. Beneficiary may, but is not obligated to, enter upon the Property and take such actions and incur such costs and expenses to effect such compliance as it deems advisable to protect its interest as Beneficiary; and whether or not Trustor has actual knowledge of the existence of hazardous or toxic substances in, on or under the Property or any adjacent property as of the date of this instrument, Trustor shall reimburse Beneficiary on demand for the full amount of all costs and expenses incurred by Beneficiary in connection with such compliance activities. Trustor agrees to indemnify and hold harmless Beneficiary, its officers, agents and employees from and

-15-

against any and all loss, damage, expense (including without limitation reasonable attorneys’ fees and the cost of environmental consultants), liability, claims, suits, judgments, fines and penalties or liability associated with or related to the presence, use, manufacture, storage, dumping, disposal, discharge, cleanup or removal of hazardous materials or toxic waste affecting the Property, except for any of the foregoing caused by the willful misconduct or gross negligence of Beneficiary, or its employees, agents and representatives while in possession of the Property. These covenants and agreements shall survive any foreclosure, release, discharge or satisfaction of this Deed of Trust or the indebtedness secured thereby.

44. Trustor Not a Foreign Person. Trustor is not a “foreign person” as that term is defined by Section 1445(f)(3) of the U.S. Internal Revenue Code.

45. Representations of Trustor. Trustor represents and warrants to Beneficiary that Trustor (a) is (1) an individual of legal age and capacity, or (2) a corporation, general partnership, limited partnership, limited liability company, trust or other legal entity, duly organized, validly existing and in good standing under the laws of its creation, and is authorized to do business in each other jurisdiction wherein its ownership of property or conduct of business legally requires such authorization; (b) has the power and authority to own its properties and assets and to carry on its business as now being conducted and as now contemplated; and (c) has the power and authority to execute, deliver and perform, and by all necessary action has authorized the execution, delivery and performance of all of its obligations under this Deed of Trust and the other Loan Documents.

46. Waiver of Right of Offset. No portion of the indebtedness secured by this Deed of Trust shall be offset or compensated by any claim, cause of action, counterclaim, or cross-claim, whether liquidated or unliquidated, that Trustor may have against Beneficiary. Trustor waives to the fullest extent permitted by applicable law, the benefits of California Code of Civil Procedure Section 431.70.

47. Notices. Except for any notice required by law to be given in another manner, (a) any notice to Trustor provided in-this Deed of Trust shall be in writing and shall be given and be effective upon (1) delivery to Trustor or (2) mailing such notice by certified mail, return receipt requested, addressed to Trustor at Trustor’s address stated herein or at such other address as Trustor may designate in writing by notice to Beneficiary as provided herein and (b) any notice to Beneficiary shall be in writing and shall be given and be effective upon (1) delivery to Beneficiary or (2) mailing such notice by certified mail, return receipt requested, addressed to Beneficiary stated herein or to such other address as Beneficiary may designate by notice to Trustor as provided herein. Any notice provided for in this Deed of Trust shall be deemed to have been given to Trustor or Beneficiary when given in the manner designated herein.

48. Successors and Assigns. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto and their successors and the terms “Trustor,” “Trustee” and “Beneficiary” include their successors and assigns.

49. Controlling Document. In the event of a conflict or inconsistency between the terms and conditions of this Deed of Trust and the terms and conditions of any other of the Loan Documents (except for any separate Assignment of Leases and Rents which shall prevail over this Deed of Trust), the terms and conditions of this Deed of Trust shall prevail.

-16-

50. Invalidity of Terms and Conditions. If any term or condition of this Deed of Trust is found to be invalid, the invalidity shall not affect any other term or condition of this Deed of Trust and this Deed of Trust shall be construed as if not containing the invalid term or condition.

51. Rules of Construction. This Deed of Trust shall be construed so that whenever applicable, the use of the singular shall include the plural, the plural shall include the singular, and the use of any gender shall be applicable to all genders and shall include corporations, partnerships, limited liability companies, trusts and limited partnerships.

52. Section Headings. The heading to the various sections have been inserted for convenience of reference only and shall not be used to construe this Deed of Trust.

53. Applicable Law. This Deed of Trust shall be construed, interpreted, enforced and governed by and in accordance with the Laws of the State of California, including the laws governing the creation, perfection, enforceability and priority of the liens and security interests created by this Deed of Trust and the procedures for foreclosure and for enforcement of the rights and remedies of Beneficiary under this Deed of Trust. In the event that any provision of this Deed of Trust shall be inconsistent with any provision of the laws of California, the laws of California shall govern over the provisions of this Deed of Trust, but shall not invalidate or render unenforceable any other provision of this Deed of Trust that can be construed in a manner consistent with California law.

54. Request For Notice. Trustor requests that a copy of any notice of default and of any notice of sale hereunder be mailed to it at the address hereinabove set forth.

TRUSTOR:

BRYAN FAMILY PARTNERSHIP II LTD., a California limited partnership

By:	BFZ, LLC, a California limited liability company, Its General Partner
	By:	/s/ Robert A. Frazer
		Robert A. Frazer, Manager
	By:	/s/ John D. Frazer
		John D. Frazer, Manager

(Signatures must be acknowledged)

-17-

STATE OF California

COUNTY OF Santa Clara

On 6/28/07, before me, L. Tugade, the undersigned Notary Public, personally appeared Robert A. Frazer [    ] personally known to me -OR- [    ] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) are/is subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacities, and that by his/her/their signature(s) on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal

/s/ L. Tugade

SIGNATURE OF NOTARY PUBLIC

STATE OF California

COUNTY OF Santa Clara

On 6/22/07, before me, Lisa W. Lemoin, the undersigned Notary Public, personally appeared John D. Frazer [    ] personally known to me -OR- [    ] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) are/is subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacities, and that by his/her/their signature(s) on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

/s/ Lisa W. Lemoin

SIGNATURE OF NOTARY PUBLIC

-1-

EXHIBIT “A” TO DEED OF TRUST, ASSIGNMENT OF RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

This Exhibit “A” is attached to and made a part of the Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated June 20, 2007, between BRYAN FAMILY PARTNERSHIP II, LTD., a California limited partnership, (“’Trustor”), FIRST AMERICAN TITLE INSURANCE COMPANY, a corporation, (“Trustee”) and Symetra Life Insurance Company, a Washington corporation, (“Beneficiary”), for the purpose of securing a note in the principal amount of $6,750,000.00.

(Legal Description of Real Property)

Land and improvements situated in the City of Campbell, County of Santa Clara, State of California, described as follows;

PARCEL ONE, AS SHOWN ON THAT CERTAIN PARCEL MAP FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA ON OCTOBER 11, 1984 IN BOOK 535 OF MAPS, PAGES 24 AND 25.

EXCEPTING THEREFROM THAT THE INTEREST THEREOF AS CONVEYED TO THE CITY OF CAMPBELL, FOR STREET PURPOSES BY DEED RECORDED DECEMBER 10, 1984 IN BOOK J101, PAGE 321, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

BEGINNING AT THE MOST EASTERLY CORNER OF PARCEL ONE AS SAID PARCEL IS SHOWN ON THAT CERTAIN PARCEL MAP FILED IN BOOK 535 OF MAPS AT PAGES 24 AND 25 IN THE OFFICE OF THE COUNTY RECORDER, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA. THENCE SOUTHWESTERLY FROM SAID CORNER SOUTH 31° 31’ 00” WEST 490.81 FEET ALONG THE SOUTHEASTERLY LINE OF SAID “PARCEL ONE” TO ITS MOST SOUTHERLY CORNER. THENCE NORTHWESTERLY FROM LAST SAID CORNER 67° 52’ 58” WEST 4.05 FEET ALONG THE SOUTHWESTERLY LINE OF SAID “PARCEL ONE” TO A POINT LYING DISTANT 4.00 FEET NORTHWESTERLY BY PERPENDICULAR MEASUREMENT FROM SOUTHEASTERLY LINE OF SAID “PARCEL ONE.” THENCE NORTHEASTERLY FROM LAST SAID POINT AND ALONG LAST SAID PARALLEL LINE NORTH 31° 31’ 00” EAST 491.47 FEET TO A POINT LYING ON THE NORTHEASTERLY LINE OF SAID “PARCEL ONE.” THENCE SOUTHEASTERLY FROM LAST SAID POINT AND ALONG LAST SAID LINE SOUTH 58° 29’ 00” EAST 4.00 FEET RETURNING-TO THE POINT OF BEGINNING.

APN: 406-21-019 and 406-21-016 and 406-21-017

-1-

FIRST AMENDMENT TO PRUCHASE AND SALE AGREEMENT

THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (“First Amendment”) is made and entered into effective as of October 28, 2011, by and between BRYAN FAMILY PARTNERSHIP II, LTD., a California limited partnership (“Seller”), and BARRACUDA NETWORKS, INC., a Delaware corporation, or assignee (“Buyer”).

RECITALS

A, Seller and Buyer entered into that certain Purchase and Sale Agreement, dated as of July 31, 2011 (the “Agreement”), for the purchase of certain improved real property located at 3165 and 3175 Winchester Boulevard, City of Campbell, County of Santa Clara, State of California, which is commonly identified by APNs 406-21-016, 406-21-017 and 406-21-019 and more particularly described in Exhibit A to the Agreement.

B. Seller and Buyer desire to amend the Agreement as described below.

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements in this First Amendment and the Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer hereby agree as follows:

AMENDMENT

1. Capitalized Terms. Capitalized terms not otherwise defined herein, shall have the meanings given them in the Agreement.

2. Closing Date. The Closing Date shall be no later than November 15, 2011, the new outside closing date.

3. Effect of Amendment. Except as expressly modified by this First Amendment, the. Agreement shall continue in full force and effect according to its terms, and Buyer and Seller hereby. ratify and affirm all their respective rights and obligations under the Agreement. In the event of any conflict between this First Amendment and the Agreement, this First Amendment shall govern.

4. Counterparts. This First Amendment may be executed in one or more counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument. Furthermore, this First Amendment may be executed and delivered by the exchange of electronic facsimile or PDF (or similar) copies or counterparts of the signed documents, which facsimile or PDF (or similar) copies or counterparts shall be binding on the parties.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

-1-

IN WITNESS WHEREOF, Seller and Buyer have executed this First Amendment effective as of the date set forth above.

SELLER:

BRYAN FAMILY PARTNERSHIP II, LTD.

a California limited partnership

/s/ Ross E. Bryan
By:	Ross E. Bryan
Its:	Managing Partner

BUYER:

BARRACUDA NETWORKS, INC.

a Delaware corporation

/s/ David Faugno
By:	David Faugno
Its:

-2-

THIRD AMENDMENT TO PRUCHASE AND SALE AGREEMENT

THIS THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT (“Third Amendment”) is made and entered into effective as of November 30, 2011, by and between BRYAN FAMILY PARTNERSHIP II, LTD., a California limited partnership (“Seller”), BARRACUDA NETWORKS, INC., a Delaware corporation, or assignee (“Buyer”).

RECITALS

A. Seller and Buyer entered into that certain Purchase and Sale Agreement, dated as of July 31, 2011, as amended by that certain First Amendment to Purchase and Sale Agreement dated October 28, 2011 and as amended by that certain Second Amendment to Purchase and Sale Agreement November 15, 2011 (collectively, the “Agreement”), for the purchase of certain improved real property located at 3165 and 3175 Winchester Boulevard, City of Campbell, County of Santa Clara, State California, which is commonly identified by APNs 406-21-016, 406-21-017 and 406-21-019 and more particularly described in Exhibit A to the Agreement.

B. Seller and Buyer desire to amend the Agreement as described below.

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements in Third Amendment and the Agreement, and for other good and valuable consideration, the receipt sufficiency of which are hereby acknowledged, Seller and Buyer hereby agree as follows:

AMENDMENT

1. Capitalized Terms. Capitalized terms not otherwise defined herein shall have the meanings given them in the Agreement.

2. Closing Date. The Closing Date shall be no later than December 21, 2011, the new outside closing date.

3. Effect of Amendment. Except as expressly modified by this Third Amendment, the Agreement shall continue in full force and effect according to its terms, and Buyer and Seller hereby ratify and affirm all their respective rights and obligations under the Agreement. In the event of any conflict between this Third Amendment and the Agreement, this Third Amendment shall govern.

4. Counterparts. This Third Amendment may be executed in one or more counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument. Furthermore, this Third Amendment may be executed and delivered by the exchange of electronic facsimile or PDF (or similar) copies or counterparts of the signed documents, which facsimile or PDF (or similar) copies or counterparts shall be binding on the Parties.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

-1-

IN WITNESS WHEREOF, Seller and Buyer have executed this Third Amendment effective as of the date set forth above.

SELLER:

BRYAN FAMILY PARTNERSHIP II, LTD.

a California limited partnership

By:

Its:

BUYER:

BARRACUDA NETWORKS, INC.

a Delaware corporation

By:

Its:

-2-

EX-10.15

Exhibit 10.15

Execution

RECAPITALIZATION AGREEMENT

by and among

BARRACUDA NETWORKS, INC.,

THE INVESTORS NAMED HEREIN

and

THE SELLING STOCKHOLDERS NAMED HEREIN

August 23, 2012

[***] Information has been omitted and submitted separately to the Securities and Exchange Commission.

Confidential treatment has been requested with respect to the omitted portions.

TABLE OF CONTENTS

		Page
ARTICLE 1 DIVIDEND
1A.	Dividend		1
ARTICLE 2 STOCK PURCHASE AND REPURCHASE
2A.	Authorization		2
2B.	Investment Transaction		2
2C.	Repurchase Transaction		3
2D.	Closing		3
2E.	Closing Documents		4
ARTICLE 3 CONDITIONS TO THE OBLIGATIONS OF THE INVESTORS
3A.	Representations and Warranties		5
3B.	Covenants		5
3C.	Closing Certificate		5
3D.	Opinion		5
3E.	Repurchase Transaction		5
3F.	Litigation		5
3G.	Third Party Consents and Approvals		5
3H.	Governmental Consents and Approvals		6
3I.	Good Standing Certificate		6
3J.	Material Adverse Effect		6
3K.	Internal Investigation Report		6
ARTICLE 4 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
4A.	Representations and Warranties		6
4B.	Covenants		6
4C.	Litigation		6
4D.	Governmental Consents and Approvals		7
4E.	Investment Transaction		7
4F.	Repurchase Transaction		7
4G.	Opinion		7
ARTICLE 5 CONDITIONS TO THE OBLIGATIONS OF THE SELLING STOCKHOLDERS
5A.	Representations and Warranties		7
5B.	Covenants		7
5C.	Litigation		7
5D.	Opinion		8
5E.	Repurchase Transaction		8
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
6A.	Organization, Corporate Power and Licenses		8
6B.	Capital Stock and Related Matters		8
6C.	Subsidiaries; Investments		10
6D.	Authorization; No Breach		10
6E.	Financial Statements		10
6F.	Absence of Undisclosed Liabilities		11
6G.	Accounts Receivable		11
6H.	No Material Adverse Effect		11
6I.	Absence of Certain Developments		12

-i-

TABLE OF CONTENTS

(Continued)

		Page
6J.	Assets		13
6K.	Indebtedness		13
6L.	Tax Matters		13
6M.	Contracts and Commitments		15
6N.	Intellectual Property Rights		16
6O.	Litigation, Etc		17
6P.	Brokerage		18
6Q.	Insurance		18
6R.	Employees		18
6S.	ERISA		18
6T.	Compliance with Laws; Licenses; Certain Operations		19
6U.	Affiliated Transactions		20
6V.	Real Property		20
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS
7A.	Capacity; Power and Authority		21
7B.	Authorization; No Breach		21
7C.	Title to Shares, Etc		21
7D.	Brokerage		22
7E.	Litigation, Etc		22
7F.	Representations and Warranties of the Company		22
7G.	Access to Data		22
7H.	Advisors; Tax Liability		22
ARTICLE 8 REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
8A.	Organization, Power and Authority		23
8B.	Authorization; No Breach		23
8C.	Brokerage		23
8D.	Investment Representations		23
8E.	Rule 144		24
8F.	Access to Data		25
8G.	Tax Advisors		25
8H.	Legends		25
8I.	Litigation, Etc		26
ARTICLE 9 INDEMNIFICATION AND OTHER AGREEMENTS
9A.	Survival of Representations and Warranties		26
9B.	General Indemnification		26
9C.	Special Indemnification		29
9D.	Certain Waivers		31
9E.	Press Release and Announcements		31
9F.	Confidentiality		31
9G.	Further Assurances		32
9H.	Certain Restrictions		32
9I.	Pre-Closing Covenants		32
ARTICLE 10 DEFINITIONS
ARTICLE 11 TERMINATION
11A.	Termination		39
11B.	Effect of Termination		40

-ii-

TABLE OF CONTENTS

(Continued)

		Page
ARTICLE 12 MISCELLANEOUS
12A.	Fees and Expenses		40
12B.	Remedies		40
12C.	Consent to Amendments		40
12D.	Successors and Assigns		40
12E.	Severability		41
12F.	Counterparts		41
12G.	Descriptive Headings; Interpretation		41
12H.	Entire Agreement		41
12I.	No Third-Party Beneficiaries		41
12J.	Governing Law		42
12K.	Notices		42
12L.	No Strict Construction		43
12M.	California Corporate Securities Law		43
12N.	Waiver of Potential Conflicts of Interest		43
12O.	Waiver of All Rights		44

-iii-

EXHIBITS AND SCHEDULES

Exhibits:

Exhibit A	–	Amended and Restated Certificate of Incorporation
Exhibit B	–	Amended and Restated Voting Agreement
Exhibit C	–	Amended and Restated Investors Rights Agreement
Exhibit D	–	Right of First Refusal Agreement
Exhibit E	–	Management Rights Agreement for Sequoia Capital
Exhibit F	–	Management Rights Agreement for Francisco Partners
Exhibit G	–	Director Indemnification Agreement
Exhibit H	–	Non-Competition Agreement
Exhibit I	–	No-Hire and Non-Solicitation Agreement

Schedules:

Dividend Schedule

Schedule of Investors

Schedule of Selling Stockholders

-iv-

RECAPITALIZATION AGREEMENT

THIS RECAPITALIZATION AGREEMENT (this “Agreement”) is made and entered into as of August 23, 2012, by and among Barracuda Networks, Inc., a Delaware corporation (the “Company”), the Persons listed on the Schedule of Investors attached hereto (collectively referred to herein as the “Investors” and individually as an “Investor”), the Persons listed on the Schedule of Selling Stockholders attached hereto (collectively referred to herein as the “Selling Stockholders” and individually as a “Selling Stockholder”). The Company, the Investors and the Selling Stockholders are sometimes collectively referred to herein as the “Parties” and individually as a “Party.” Capitalized terms used herein and not otherwise defined herein have the meanings given to such terms in ARTICLE 10.

WHEREAS, the Selling Stockholders own an aggregate of 88,024,941 shares of the Company’s Common Stock, par value $0.001 per share (the “Common Stock”), representing approximately 55.9% of the Common Stock on a Fully-Diluted Basis;

WHEREAS, the Investors and their Affiliates own an aggregate of 30,150,753 shares of the Company’s Series A Preferred Stock, par value $0.001 per share (the “Series A Preferred”), and 7,539,186 shares of Common Stock representing approximately 23.9% of the Common Stock on a Fully-Diluted Basis;

WHEREAS, the Company desires to pay a dividend to all stockholders of the Company;

WHEREAS, the Company desires to issue and sell to the Investors and the Investors desire to purchase from the Company newly-authorized shares of Series B Preferred Stock of the Company, par value $0.001 (the “Series B Preferred” and, together with the Series A Preferred, the “Preferred Stock”), a portion of which will be paid by certain Investors by reinvesting all or part of the Dividend received by such Investors; and

WHEREAS, the Company desires to use the entire amount raised in connection with the sale of the Series B Preferred to repurchase shares of Common Stock from the Selling Stockholders.

NOW, THEREFORE, in consideration of the mutual covenants, agreements and understandings contained herein, and intending to be legally bound, the Parties hereby agree as follows:

ARTICLE 1

DIVIDEND

1A. Dividend

The Company shall use cash on hand to pay a dividend (the “Dividend”) pursuant to the terms of the Company’s Certificate of Incorporation in an amount as close to One Hundred Thirty Million Dollars ($130,000,000) as possible (taking rounding into account). For information purposes only, the portion of the Dividend which would be payable to each of the Company’s stockholders if there are no changes to the Company’s issued and outstanding capital stock prior to the record date set by the Board in connection with the declaration of the Dividend (the “Record Date”) is set forth on the Dividend Schedule attached hereto. The Company shall provide a final, updated Dividend Schedule (the “Final Dividend Schedule”) based on the issued and outstanding capital stock as of the Record Date promptly following such Record Date and in any event, no later than two (2) business days prior to the Closing.

ARTICLE 2

STOCK PURCHASE AND REPURCHASE

2A. Authorization

(i) Subject to the satisfaction or waiver of the conditions set forth in ARTICLE 4, immediately prior to the Closing, the Company shall file the Amended and Restated Certificate of Incorporation of the Company, in the form of Exhibit A attached hereto (the “Certificate of Incorporation”), with the Secretary of State of the State of Delaware.

(ii) Subject to the satisfaction or waiver of the conditions set forth in ARTICLE 4, immediately prior to the Closing, the Company shall authorize the issuance to the Investors of an aggregate of Twenty Two Million Seven Hundred Twenty Seven Thousand Nine Hundred Thirteen (22,727,913) shares of Series B Preferred, having the rights and preferences set forth in the Certificate of Incorporation. The Series B Preferred shall be initially convertible into Twenty Two Million Seven Hundred Twenty Seven Thousand Nine Hundred Thirteen (22,727,913) shares of Common Stock (representing 14.4% of the Company’s Common Stock on a Fully-Diluted Basis as of the Closing, assuming conversion of the Series B Preferred, the Series A Preferred and the issuance of all unallocated stock options.

2B. Investment Transaction

On the basis of the representations, warranties, covenants and agreements set forth herein and subject to the satisfaction or waiver of the conditions set forth in ARTICLE 3 and ARTICLE 4 and the simultaneous consummation of the Repurchase Transaction (as defined below), the Company and each of the Investors agree to and shall consummate the following transaction (the “Investment Transaction”) at the Closing:

(i) the Company shall sell to the Investors, and the Investors shall purchase from the Company, an aggregate of Twenty Two Million Seven Hundred Twenty Seven Thousand Nine Hundred Thirteen (22,727,913) shares of Series B Preferred, with the number of shares of Series B Preferred to be purchased by each Investor set forth opposite such Investor’s name on the Schedule of Investors attached hereto (as such number of shares may be adjusted, if necessary, in accordance with the footnotes set forth on the Schedule of Investors) for an aggregate purchase price equal to One Hundred Twenty Seven Million Seven Hundred Fifty Two Thousand Two Hundred Seventy Two Dollars and Eighty Eight Cents ($127,752,272.88) (the “Preferred Stock Purchase Price”), payable in the manner set forth in Paragraph 2D(iii) below; and

(ii) the Investors shall pay to the Company (in the manner set forth in Paragraph 2D(iii) below) the portion of the Preferred Stock Purchase Price set forth opposite such Investor’s name on the Schedule of Investors attached hereto (as such amount may be adjusted, if necessary, in accordance with the footnotes set forth on the Schedule of Investors).

-2-

2C. Repurchase Transaction

On the basis of the representations, warranties, covenants and agreements set forth herein and subject to the satisfaction or waiver of the conditions set forth in ARTICLE 4 and the simultaneous consummation of the Investment Transaction, the Company and each of the Selling Stockholders agree to and shall consummate the following transaction (the “Repurchase Transaction”) at the Closing:

(i) each Selling Stockholder shall sell, transfer, assign and deliver to the Company, and the Company shall accept, assume and receive from each Selling Stockholder, the number of shares of Common Stock set forth opposite such Selling Stockholder’s name on the Schedule of Selling Stockholders attached hereto for an aggregate purchase price equal to One Hundred Twenty Seven Million Seven Hundred Fifty Two Thousand Two Hundred Seventy Two Dollars and Eighty Six Cents ($127,752,272.86) (the “Common Stock Purchase Price”), payable in the manner set forth in Paragraph 2D(iv) below; and

(iii) the Company shall pay to each Selling Stockholder (in the manner set forth in Paragraph 2D(iv) below) the portion of the Common Stock Purchase Price set forth opposite such Selling Stockholder’s name on the Schedule of Selling Stockholders attached hereto.

2D. Closing

The closing of the Dividend, the Investment Transaction and Repurchase Transaction (the “Closing”) shall take place at the offices of Kirkland & Ellis LLP, 950 Page Mill Road, Palo Alto, California 94304, or at such other place as may be mutually agreeable to each of the Parties, at 10:00 a.m., local time, on (i) the second business day following the satisfaction or waiver by the Party entitled to the benefit thereof of the conditions to the Closing set forth in ARTICLE 3, ARTICLE 4 and ARTICLE 5 (other than the conditions to be satisfied at the Closing, but subject to the satisfaction of such conditions at the Closing), or (ii) such other date as the Investors, the Company and the Selling Stockholders mutually agree (the “Closing Date”). The Dividend, the Investment Transaction and the Repurchase Transaction shall each constitute a separate transaction hereunder. Subject to the satisfaction of the conditions to the Closing set forth in ARTICLE 3, ARTICLE 4 and ARTICLE 5, at the Closing, the Parties shall consummate the Dividend, the Investment Transaction and the Repurchase Transaction in the following manner and in the following order (except that each of the transactions shall be deemed to have been consummated simultaneously and none of the transactions described below shall be consummated unless all of such transactions are consummated):

(i) The Company shall pay to each stockholder the percentage of the Dividend set forth opposite such stockholder’s name on the Final Dividend Schedule; provided that any Investor shall be entitled to direct the Company to apply all or any portion of such dividend payment to be received by such Investor towards such Investor’s obligation to make a payment to the Company under Paragraph 2D(ii) below. Payments to be made pursuant to this Paragraph 2D(i) to Investors and Selling Stockholders shall be made by wire transfer of immediately available funds to an account designated by such Person.

(ii) Each Investor shall deliver to the Company such Investor’s portion of the Preferred Stock Purchase Price as set forth on the Final Dividend Schedule by wire transfer of immediately available funds to an account designated by the Company or by offsetting such amount by the amount payable to such Investor under Paragraph 2D(i) above.

(iv) The Company shall deliver to each Investor a stock certificate representing the shares of Series B Preferred purchased by such Investor, as set forth opposite such Investor’s name on the Schedule of Investors attached hereto, registered in such Investor’s name.

(v) The Company shall pay to each Selling Stockholder by wire transfer of immediately available funds to an account designated by such Selling Stockholders an amount equal to such Selling Stockholder’s portion of the Common Stock Purchase Price allocable to each of the Selling Stockholders as set forth on the Schedule of Selling Stockholders attached hereto (the “Repurchase Transaction Proceeds”).

-3-

(vi) Each of the Selling Stockholders shall deliver to the Company the original stock certificate(s) representing the shares of Common Stock sold by such Selling Stockholder to the Company, as set forth on the Schedule of Stockholders attached hereto, duly endorsed in blank; and, if a Selling Stockholder delivers a stock certificate(s) representing more than the number of shares of Common Stock sold by such Selling Stockholders to the Company, the Company shall deliver to such Selling Stockholder a stock certificate representing the shares of Common Stock owned by such Selling Stockholder after such sale.

2E. Closing Documents

Subject to the satisfaction or waiver of the conditions to the Closing set forth in ARTICLE 3 and ARTICLE 4, at the Closing:

(i) the Company shall deliver to the Investors all of the following documents: (a) certified copies of the resolutions duly adopted by the Board authorizing the execution, delivery and performance of this Agreement and the other Transaction Agreements to which it is a party and the transactions contemplated hereby and thereby, including without limitation, the adoption and filing of the Certificate of Incorporation, the amendment to the Equity Incentive Plan, the declaration of the Dividend and the approval of the Investment Transaction and the Repurchase Transaction; and (b) certified copies of the Certificate of Incorporation and the Bylaws of the Company, both of which shall be in full force and effect under the laws of the State of Delaware as of the Closing and shall not have been amended or modified.

(ii) the Company, the Selling Stockholders, the Investors and all Persons listed on the signature pages attached thereto shall enter into: (a) an Amended and Restated Voting Agreement in the form of Exhibit B attached hereto (the “Voting Agreement”); (b) an Amended and Restated Investor Rights in the form of Exhibit C attached hereto (the “Investors Rights Agreement”); and (c) an Amended and Restated Right of First Refusal Agreement in the form of Exhibit D attached hereto (the “ROFR Agreement”).

(iii) the Company shall enter into a Management Rights Agreements with the Investors in the forms of Exhibit E and Exhibit F attached hereto (the “Management Rights Agreements”).

(iv) the Company and the Directors nominated by the Investors (as defined in the Voting Agreement) shall enter into a Director Indemnification Agreement in the form of Exhibit G attached hereto (the “Director Indemnification Agreement”).

(v) each of the Selling Stockholders shall execute and deliver a Non-Competition Agreement in the form of Exhibit H attached hereto (the “Non-Competition Agreement”).

(vi) each of the Selling Stockholders shall execute and deliver a No-Hire and Non-Solicitation Agreement in the form of Exhibit I attached hereto (the “No-Hire and Non-Solicitation Agreement”).

-4-

ARTICLE 3

CONDITIONS TO THE OBLIGATIONS OF THE INVESTORS

The obligation of the Investors to consummate the transactions contemplated hereby at the Closing is subject to the satisfaction as of the Closing of the following conditions (any of which may be waived in whole or in part solely by the unanimous consent of all Investors):

3A. Representations and Warranties

Each of the representations and warranties contained in ARTICLE 6 and ARTICLE 7 hereof that are subject to materiality qualifications shall be true and correct in all respects at and as of the Closing, and each of the representations and warranties contained in ARTICLE 6 and ARTICLE 7 hereof that are not subject to materiality qualifications shall be true and correct in all material respects at and as of the Closing, in each case as though made on and as of the Closing Date.

3B. Covenants

The Company and the Selling Stockholders shall have performed in all material respects all of the covenants required to be performed by such Parties hereunder prior to the Closing.

3C. Closing Certificate

The Investors shall have received a certificate of the Company, signed by an officer of the Company, stating that the conditions specified in Paragraphs 3A and 3B have been fully satisfied.

3D. Opinion

The Company shall have received the opinion of Valuation Research Corporation that the payment of the Dividend (i) will not cause the Company to be insolvent and (ii) satisfies the financial requirements of applicable corporate law and the Dividend shall have been declared by the Company’s board of directors (“Board”) with a record date prior to the Closing Date.

3E. Repurchase Transaction

The Company and the Selling Stockholders shall have simultaneously consummated the Repurchase Transaction in the manner set forth in Paragraph 2C.

3F. Litigation

No suit, action or other proceeding shall be pending or threatened before any Governmental Entity seeking to restrain or prohibit the transactions contemplated hereby (other than any such suit, action or proceeding brought by any of the Parties against any of the other Parties), and no injunction, judgment, order, decree or ruling with respect thereto shall be in effect.

3G. Third Party Consents and Approvals

The Company shall have received or obtained all consents and approvals that are required in order to prevent a breach of or default under, a termination or modification of, or acceleration of the terms of, any contract, agreement or document identified with an asterisk “(*)” on the attached Contracts Schedule (collectively, the “Third Party Approvals”) as a result of the consummation of the transactions contemplated hereby, in each case on terms and conditions reasonably satisfactory to the Investors.

-5-

3H. Governmental Consents and Approvals

The Parties shall have received or obtained all governmental and regulatory consents and approvals that are required to consummate the transactions contemplated by this Agreement (collectively, the “Governmental Approvals”).

3I. Good Standing Certificate

The Investors shall have received a good standing certificate of the Company from the Secretary of State of the State of Delaware, dated as of a date not more than three (3) business days prior to the Closing Date.

3J. Material Adverse Effect

Since February 29, 2011, there shall have been no Material Adverse Effect.

3K. Internal Investigation Report

The Investors shall have received the final report detailing the results of the Company’s internal investigation regarding the Company’s compliance with applicable U.S. export control and economic sanctions laws, regulations administered by the U.S. Office of Foreign Asset Control (“OFAC”), the U.S. Department of Commerce (“Commerce”) and the Department of State (“State”) (the “Internal Investigation Report”) and shall have had ten (10) business days to review the Internal Investigation Report.

ARTICLE 4

CONDITIONS TO THE OBLIGATIONS OF THE COMPANY

The obligation of the Company to consummate the transactions contemplated hereby at the Closing is subject to the satisfaction as of the Closing of the following conditions (any of which may be waived in whole or in part solely by the Company):

4A. Representations and Warranties

Each of the representations and warranties contained in ARTICLE 7 and ARTICLE 8 hereof that are subject to materiality qualifications shall be true and correct in all respects at and as of the Closing, and each of the representations and warranties contained in ARTICLE 7 and ARTICLE 8 hereof that are not subject to materiality qualifications shall be true and correct in all material respects at and as of the Closing, in each case as though made on and as of the Closing Date. Covenants. The Investors shall have performed in all material respects all of the covenants required to be performed by the Investors hereunder prior to the Closing. The Selling Stockholders shall have performed in all material respects all of the covenants required to be performed by the Selling Stockholders hereunder prior to the Closing.

4C. Litigation

No suit, action or other proceeding shall be pending or threatened before any Governmental Entity seeking to restrain or prohibit the transactions contemplated hereby (other than any such suit, action or proceeding brought by any of the Parties against any of the other Parties), and no injunction, judgment, order, decree or ruling with respect thereto shall be in effect.

-6-

4D. Governmental Consents and Approvals

The Parties shall have received or obtained all Governmental Approvals that are required to consummate the transactions contemplated hereby.

4E. Investment Transaction

The Investors shall have simultaneously purchased the shares of Series B Preferred and delivered the Preferred Stock Purchase Price to the Company in the manner set forth in Paragraph 2B.

4F. Repurchase Transaction

The Selling Stockholders shall have tendered their shares of Common Stock to consummate the Repurchase Transaction in the manner set forth in Paragraph 2C.

4G. Opinion

The Company shall have received the opinion of Valuation Research Corporation that the payment of the Dividend (a) will not cause the Company to be insolvent and (b) satisfies the financial requirements of applicable corporate law.

ARTICLE 5

CONDITIONS TO THE OBLIGATIONS OF THE SELLING STOCKHOLDERS

The obligation of the Selling Stockholders to consummate the transactions contemplated hereby at the Closing is subject to the satisfaction as of the Closing of the following conditions (any of which may be waived in whole or in part solely by the unanimous consent of the Selling Stockholders):

5A. Representations and Warranties

Each of the representations and warranties contained in ARTICLE 8 that are subject to materiality qualifications shall be true and correct in all respects at and as of the Closing, and each of the representations and warranties contained in ARTICLE 8 hereof that are not subject to materiality qualifications shall be true and correct in all material respects at and as of the Closing, in each case as though made on and as of the Closing Date.

5B. Covenants

The Company shall have performed in all material respects all of the covenants required to be performed by the Company hereunder in connection with the Repurchase Transaction prior to the Closing.

5C. Litigation

No suit, action or other proceeding shall be pending or threatened before any Governmental Entity seeking to restrain or prohibit the Repurchase Transaction (other than any such suit, action or proceeding brought by any of the Parties against any of the other Parties), and no injunction, judgment, order, decree or ruling with respect thereto shall be in effect.

-7-

5D. Opinion

The Company shall have received the opinion of Valuation Research Corporation that the payment of the Dividend (i) will not cause the Company to be insolvent and (ii) satisfies the financial requirements of applicable corporate law and the Dividend shall have been declared by the Company’s Board with a record date prior to the Closing Date.

5E. Repurchase Transaction

The Company and the Selling Stockholders shall have simultaneously consummated the Repurchase Transaction in the manner set forth in Paragraph 2C.

ARTICLE 6

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

As a material inducement to the Investors to enter into this Agreement and purchase the Series B Preferred hereunder, the Company hereby represents and warrants to the Investors, as of the date of this Agreement, that except as set forth in the disclosure letter delivered by the Company to the Investors pursuant to Paragraph 9I(ix) hereof (which disclosures shall identify the paragraph or subparagraph of this Agreement to which they apply but shall also qualify such other paragraphs or subparagraphs of this Agreement to the extent that it is reasonably apparent on its face (with or without a specific cross-reference) from a reading of the disclosure items that such disclosure is applicable to such other paragraph or subparagraph) (the “Company Disclosure Letter”) as follows:

6A. Organization, Corporate Power and Licenses

The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is qualified to do business in every jurisdiction in which its ownership of property or conduct of business requires it to qualify, except where the failure to be so qualified would not have a Material Adverse Effect. The Company possesses all requisite corporate power and authority and all Licenses and authorizations necessary to own and operate its properties, to carry on its businesses as now conducted and to carry out the transactions contemplated by this Agreement, except for those Licenses the failure of which to have would not reasonably be expected to (x) subject the Company to any material liability or (y) adversely affect in any material respect the Company’s ability to conduct its business as presently conducted. A correct and complete copy of the Company’s current Bylaws have been furnished or made available to the Investors’ counsel, and there are no amendments to the Company’s current Bylaws that have not been furnished or made available to the Investors’ counsel. The attached Officers and Directors Schedule lists all of the current officers and directors of the Company and each of its Subsidiaries on the date hereof.

6B. Capital Stock and Related Matters

(i) On the date hereof, the authorized capital stock of the Company consists of (a) 31,500,000 shares of preferred stock, of which 31,500,000 shares are designated as Series A Preferred Stock and 30,150,753 of which are outstanding and held by certain of the Investors as set forth on the attached Capitalization Schedule and (b) 195,000,000 shares of Common Stock, of which 105,762,189 shares are issued and outstanding and held of record by the Selling Stockholders and other Persons as set forth on the attached Capitalization Schedule, 31,500,000 shares are reserved for issuance upon conversion of the Series A Preferred and 21,516,196 shares are reserved for issuance upon exercise of stock options or vesting of restricted stock units issued or available for issuance under the Equity Incentive Plan.

-8-

(ii) Immediately following the consummation of the Investment Transaction and the Repurchase Transaction, the authorized capital stock of the Company will consist of (a) 52,878,666 shares of preferred stock, of which 30,150,753 are outstanding shares will be designated as Series A Preferred Stock and held by certain of the Investors as set forth on the attached Capitalization Schedule and 22,727,913 shares will be designated as Series B Preferred Stock and held by the Investors as set forth on the Schedule of Investors and (b) 210,307,804 shares of Common Stock, of which 83,034,276 shares shall be issued and outstanding and held of record by the Selling Stockholders and other Persons as set forth on the attached Capitalization Schedule, 52,878,666 shares shall be reserved for issuance upon conversion of the Series A Preferred and the Series B Preferred and 21,516,196 shares shall be reserved for issuance upon exercise of stock options or vesting of restricted stock units issued or available for issuance under the Equity Incentive Plan.

(iii) Except as set forth on the Capitalization Schedule and except as provided in this Agreement, on the date hereof, neither the Company or any of its Subsidiaries will have authorized or outstanding any stock or securities convertible or exchangeable for any shares of its capital stock or containing any profit participation features, nor any rights (whether contract rights or otherwise) or options to subscribe for or to purchase or otherwise acquire its capital stock or any stock or securities convertible into or exchangeable for its capital stock or any stock appreciation rights or phantom stock plans. Neither the Company or any of its Subsidiaries is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock or any warrants, options or other rights to acquire its capital stock, other than in connection with the Repurchase Transaction and as set forth in the Certificate of Incorporation. All of the outstanding shares of the Company’s capital stock were validly issued and are fully paid and non-assessable.

(iv) Except as set forth on the Capitalization Schedule and except as provided in the Investors’ Rights Agreement, there are no statutory or contractual shareholder preemptive rights or rights of first refusal or other similar restrictions with respect to the issuance of the Series B Preferred hereunder, the issuance of any Common Stock upon the conversion of the Preferred Stock or the consummation of the Repurchase Transaction, provided, however, the Common Stock issuable upon conversion of the Preferred Stock is subject to restrictions on transfer under applicable federal or state securities Laws. Subject to the accuracy of the Investors’ representations and warranties in ARTICLE 8, and the representations and warranties made by all of the Company’s investors in connection with the offer, sale or issuance of all equity securities previously issued, the Company has not violated, in any material respect, any applicable federal or state securities Laws in connection with the offer, sale or issuance of any of its equity securities and the issuance of the Series B Preferred hereunder and the issuance of Common Stock upon the conversion of the Preferred Stock does not require registration under the Securities Act or any applicable state securities Laws. Except as set forth in the Voting Agreement, there are no agreements or understandings between the Company, on the one hand, and the Company’s shareholders or any other Person on the other hand with respect to the voting or transfer of the Company’s capital stock or with respect to any other aspect of the Company’s governance and, to the Company’s knowledge, there is no agreement among the Company’s shareholders or among any other person with respect to the foregoing.

-9-

6C. Subsidiaries; Investments

The attached Investments and Subsidiaries Schedule correctly sets forth the name of each Subsidiary of the Company, the jurisdiction of its incorporation and, with respect to any wholly-owned Subsidiary, the Persons owning the outstanding capital stock of such Subsidiary and, with respect to any non wholly-owned Subsidiary, the ownership interest of the Company or its direct or indirect Subsidiary in such entity. Each Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, possesses all requisite corporate power and authority and all material Licenses and authorizations necessary to own its properties and to carry on its businesses as now being conducted and is qualified in every jurisdiction in which the failure to so qualify has had or could reasonably be expected to have a Material Adverse Effect. All of the outstanding shares of capital stock of each Subsidiary are validly issued, fully paid and nonassessable, and all such shares that are owned by the Company or another Subsidiary are free and clear of any Encumbrance and not subject to any option or right to purchase any such shares. Neither the Company nor any Subsidiary has any obligation to make any additional Investments in any Person.

6D. Authorization; No Breach

The execution, delivery and performance of this Agreement, the Voting Agreement, the Investors’ Rights Agreement and all of the other agreements and instruments contemplated hereby to which the Company is a party, the offering, sale and issuance of the Series B Preferred, the consummation of the Repurchase Transaction and the issuance of Common Stock upon the conversion of the Preferred Stock have been duly authorized by the Company. This Agreement, when executed and delivered by the Company, constitutes a valid and binding obligation of the Company, enforceable in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws from time to time in effect which affect creditors’ rights generally and by general principles of equity, and the Certificate of Incorporation, when filed under the laws of the State of Delaware in accordance with the terms hereof, and all other agreements and instruments contemplated hereby to which the Company is a party, except for the Non-Competition Agreement and No-Hire and Non-Solicitation Agreements, when executed and delivered by the Company in accordance with the terms hereof, shall each constitute a valid and binding obligation of the Company, enforceable in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws from time to time in effect which affect creditors’ rights generally and by general principles of equity. The execution and delivery by the Company of this Agreement, the Voting Agreement, the Investors’ Rights Agreement and all other agreements and instruments contemplated hereby to which the Company is a party, the issuance of the Series B Preferred, the consummation of the Repurchase Transaction, the issuance of Common Stock upon the conversion of the Preferred Stock and the fulfillment of and compliance with the respective terms hereof and thereof by the Company do not and shall not (i) conflict with or result in a breach of the material terms, conditions or provisions of, (ii) constitute a default under (whether with or without the passage of time, the giving of notice or both), (iii) result in the creation of any Lien or Encumbrance upon the Company’s capital stock or assets pursuant to, (iv) give any third party the right to modify, terminate or accelerate any obligation under, (v) result in a violation of, or (vi) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any third party or any Governmental Entity pursuant to, the Certificate of Incorporation or Bylaws, or any Law to which the Company is subject, or any Material Contract, order, judgment or decree to which the Company is subject, and, in the case of Laws to which the Company is subject and Material Contracts, as could not reasonably be expected to have a Material Adverse Effect.

6E. Financial Statements

Attached hereto as the Financial Statements Schedule are the following financial statements (the “Financial Statements”):

(i) the audited consolidated balance sheet of the Company and its consolidated Subsidiaries as of February 28, 2011 and February 28, 2010 and the related statements of income and cash flows (or the equivalent) for the fiscal year then ended; and

-10-

(ii) the unaudited consolidated balance sheet of the Company and its consolidated Subsidiaries as of May 31, 2012 and the related statements of income and cash flows (or the equivalent) for the fiscal year then ended (the “Latest Balance Sheet”).

Each of the foregoing Financial Statements (including the notes thereto, if any) presents fairly in all material respects the financial condition and results of operations and cash flows of the Company and its consolidated Subsidiaries as of the dates thereof and for the periods covered thereby (subject, in the case of the unaudited Financial Statements, to normal and recurring year-end audit adjustments) and has been prepared in accordance with GAAP consistently applied throughout the periods covered thereby (subject, in the case of the Latest Balance Sheet, to the absence of footnote disclosures and normal and recurring year-end audit adjustments (none of which are expected to be material)).

6F. Absence of Undisclosed Liabilities

Neither the Company nor any of its Subsidiaries has any obligation or liability (whether accrued, absolute, contingent, unliquidated or otherwise, whether due or to become due and regardless of when asserted) arising out of transactions entered into by the Company or any of its Subsidiaries, or state of facts existing at or prior to the date hereof, or any action or inaction on the part of the Company or any of its Subsidiaries at or prior to the date hereof, other than: (i) liabilities set forth on the face of the Latest Balance Sheet (rather than in any notes thereto); (ii) liabilities and obligations which have arisen after the date of the Latest Balance Sheet in the ordinary course of business (none of which is a liability resulting from noncompliance with any applicable Laws, breach of contract, breach of warranty, tort, infringement, claim or lawsuit); (iii) obligations in respect of the transactions contemplated hereby; (iv) obligations under executory contracts entered into by the Company or any of its Subsidiaries in the ordinary course of business consistent with past practice and (v) liabilities that individually could not reasonably be expected to exceed $500,000. Notwithstanding the foregoing, this representation and warranty will not apply to (and will exclude) any liability arising out of or related to facts, events, transactions, or actions or inactions, the subject matter of which is specifically addressed by another representation or warranty set forth in this Article 6.

6G. Accounts Receivable

All accounts and notes receivable reflected on the Latest Balance Sheet and all accounts receivable which have arisen after that date (net of allowances for doubtful accounts or provision for returns or other offsets as reflected thereon or, with respect to accounts receivable that have arisen since the date of the Latest Balance Sheet in the books and records of the Company and its consolidated Subsidiaries) are not, to the knowledge of the Company, subject to any valid set-off or counterclaim. No Person has any Lien on such receivables or any part thereof (other than Permitted Encumbrances).

6H. No Material Adverse Effect

Since February 29, 2012 through the date hereof, there has not occurred any fact, event or circumstance which has had or would reasonably be expected to have a Material Adverse Effect. Since February 29, 2012 through the date hereof, the Company and each of its Subsidiaries has conducted its business only in the ordinary course of business.

-11-

6I. Absence of Certain Developments

Except as expressly contemplated by this Agreement and all of the other agreements and instruments contemplated hereby to which the Company is a party, since February 29, 2012 through the date hereof, neither the Company nor any of its Subsidiaries has:

(i) issued any notes, bonds or other debt or any capital stock or other equity securities or any securities or rights convertible, exchangeable or exercisable into any capital stock or other equity securities;

(ii) borrowed or incurred or become subject to any material liabilities, except as set forth in the Latest Balance Sheet or Section 6(g) of the Company Disclosure Letter and except for current liabilities incurred in the ordinary course of business;

(iii) discharged or satisfied any material Lien or paid any obligations in excess of $500,000, other than current liabilities paid in the ordinary course of business;

(iv) declared, set aside or made any payment or dividend of cash or other property to any of the Company’s stockholders, or purchased, redeemed or otherwise acquired any stockholders’ equity securities (including any warrants, options or other rights to acquire equity securities), except for repurchases from employees, directors or consultants pursuant to the terms of their stock option or purchase agreements or similar agreements;

(v) mortgaged or pledged any of its properties or assets or subjected them to any Lien, except for Permitted Encumbrances;

(vi) sold, assigned, leased, licensed or otherwise transferred any of its material tangible assets, except in the ordinary course of business consistent with past practice;

(vii) canceled, compromised, waived, or released any material right or claim (outside of the ordinary course of business);

(viii) other than in the ordinary course of business, sold, assigned, transferred, leased, licensed or otherwise encumbered any material Company Intellectual Property Rights, disclosed any proprietary confidential information related to any Company Intellectual Property Rights to any Person (other than to the Investors and other than in circumstances in which it has imposed reasonable confidentiality restrictions), or abandoned or permitted to lapse any Company Intellectual Property Rights material to its business;

(ix) made or granted any bonus or any wage or salary increase to any executive officer (except as approved by the Compensation Committee of the Board or required by pre-existing Material Contracts and for changes in compensation in the ordinary course of business and consistent with past practice in connection with promotions or periodic reviews), or, except as approved by the Compensation Committee of the Board or as required by Law, made or granted any material increase in any employee benefit plan or arrangement applicable to any executive officer, or amended or terminated any existing employee benefit plan or arrangement or adopted any new employee benefit plan or arrangement applicable to any executive officer;

(x) made capital expenditures or commitments therefor that aggregate in excess of $500,000, except as otherwise contemplated and permitted by the Company’s current business plan and budget approved by the Board of Directors;

-12-

(xi) made any loans or advances to, guarantees for the benefit of, or any Investments in, any Person (including incorporation of any Subsidiary), other than advances to employees in the ordinary course of business consistent with past practice;

(xii) made any charitable contributions or pledges exceeding in the aggregate $200,000 or made any political contributions;

(xiii) suffered any damage, destruction or casualty loss exceeding in excess of $200,000, that is not covered by insurance;

(xiv) made any change in any method of accounting or accounting policies that is material, except as required by concurrent changes in GAAP;

(xv) amended its certificate of incorporation, bylaws or other organizational documents;

(xvi) entered into any agreement or arrangement prohibiting or restricting it from freely engaging in its current business;

(xvii) entered into any collective bargaining agreement or other agreement with a labor organization;

(xviii) entered into any Material Contract outside of the ordinary course of business; or

(xix) agreed to do any of the foregoing.

6J. Assets

The Company or one of its Subsidiaries has good and valid title to, a valid leasehold interest in, or a valid license to use, the properties and tangible assets, used by it, located on its premises or shown on the Latest Balance Sheet or acquired thereafter, free and clear of all Liens, except for (i) properties and tangible assets disposed of in the ordinary course of business since the date of the Latest Balance Sheet, (ii) Liens disclosed on the Latest Balance Sheet and (iii) Permitted Encumbrances. Each of the Company and its Subsidiaries owns or has a valid leasehold interest in, all of the material tangible assets, properties and rights necessary for the conduct of its business as presently conducted. Notwithstanding any other provision of this Paragraph (k) to the contrary, no representation or warranty is made in this Paragraph (k) with respect to Intellectual Property Rights.

6K. Indebtedness

Neither the Company nor any of its consolidated Subsidiaries has any Indebtedness. As of the Closing, neither the Company, nor any of its consolidated Subsidiaries shall have any Indebtedness.

6L. Tax Matters

(a) each of the Company and each of its Subsidiaries has filed all Tax Returns which it is required to file under applicable laws and regulations, and all such Tax Returns are complete and correct in all material respects and have been prepared in material compliance with all applicable laws and regulations;

-13-

(b) each of the Company and each of its Subsidiaries has paid all Taxes due and owing by it (whether or not such Taxes are shown or required to be shown on a Tax Return) and has withheld and paid over to the appropriate taxing authority all Taxes which it is required to withhold from amounts paid or owing to any employee, shareholder, creditor or other third party;

(c) none of the Company or any of its Subsidiaries has (1) waived any statute of limitations with respect to any Taxes or agreed to any extension of time for filing any Tax Return which has not been filed or (2) consented to extend to a date later than the date hereof the period in which any Tax may be assessed or collected by any taxing authority;

(d) the Latest Balance Sheet contains an adequate accrual or reserve for all Tax liabilities of the Company and its Subsidiaries as of the date thereof in accordance with relevant GAAP, and, since the date of the Latest Balance Sheet, none of the Company or any of its Subsidiaries has incurred any liability for Taxes other than in the ordinary course of business;

(e) no foreign, federal, state or local tax audits or administrative or judicial Tax proceedings are being conducted, pending, or, to the knowledge of the Company, threatened, with respect to the Company or any of its Subsidiaries;

(f) none of the Company or any of its Subsidiaries has received from any foreign, Federal, state or local taxing authority any notice of deficiency or proposed adjustment for any amount of Tax;

(g) there are no written claim has been made within the past three (3) years by a taxing authority in a jurisdiction where the Company or any of its Subsidiaries does not file Tax Returns that allege such entity is or may be subject to Taxes assessed by such jurisdiction;

(h) none of the Company or any of its Subsidiaries has filed or been included in a combined, consolidated or unitary income Tax Return or any Person other than the Company;

(i) none of the Company or any of its Subsidiaries is (1) a party to or bound by any Tax allocation or Tax sharing agreement or (2) liable for the Taxes of another Person (A) as a transferee or successor or (B) by contract, indemnity, or otherwise;

(j) none of the Company or any of its Subsidiaries has filed or been included in a combined, consolidated or unitary income Tax Return or any Person other than the Company;

(k) none of the Company or any of its Subsidiaries is (1) a party to or bound by any Tax allocation or Tax sharing agreement or (2) liable for the Taxes of another Person (A) as a transferee or successor or (B) by contract, indemnity, or otherwise;

(l) none of the Company or any of its Subsidiaries has a permanent establishment in any foreign country, as defined in the relevant tax treaty between the United States and such foreign country;

(m) to the Company’s knowledge, none of the Company or any of its Subsidiaries has (1) granted to any Person an interest in a nonqualified deferred compensation plan (as defined in Code Section 409A(d)(1)) which interest has been or, upon the lapse of a substantial risk of forfeiture with respect to such interest, will be subject to the Tax imposed by Code Sections 409A(a)(1)(B) or 409A(b)(4)(A), (2) modified the terms of any nonqualified

-14-

deferred compensation plan in a manner that could cause an interest previously granted under such plan to become subject to the Tax imposed by Code Sections 409A(a)(1)(B) or 409A(b)(4), or (3) any obligation to indemnify or otherwise reimburse any employee or other service provider for Taxes imposed on such Person as a result of the application of Section 409A of the Code to any deferred compensation arrangement to which the Corporation or the Company is a party; and

(n) there are no Liens for Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company or any of its Subsidiaries.

Notwithstanding the foregoing representations and warranties in this Section 6L, for purposes of disclosure only (i.e. not for indemnification purposes) the Company and its Subsidiaries shall have no obligation to provide disclosure with respect to any individual matter as to which the aggregate liability for Taxes related thereto is not expected to exceed an aggregate of $50,000 (each, an “Undisclosed Tax Matter”). For the avoidance of doubt, each Undisclosed Tax Matter shall be subject to indemnification pursuant to the provisions of Paragraph 9B below.

6M. Contracts and Commitments

(i) Except as expressly contemplated by this Agreement, as of the date hereof, neither the Company nor any of its Subsidiaries is a party to or bound by any:

(a) contract (other than distribution agreements, reseller agreements and intercompany agreements) which provides for the grant of rights to manufacture, produce, assemble, market, or sell the Company Products to any other Person, or that limits the Company’s and its Subsidiaries’ exclusive right to develop, manufacture, assemble, distribute, market or sell the Company Products, in each case that involves annual consideration in excess of $500,000;

(b) contract which imposes any limitation on the Company’s and its Subsidiaries freedom to engage or participate, or compete with any other Person, in any line of business, market or geographic area;

(c) contract pursuant to which it has agreed to provide any Person with access to the Source Code for any of the material Company Products, or to provide for the Source Code of any of the Company Products to be put in escrow;

(d) contract which includes any settlement, consent-to-use, standstill or standalone indemnification obligation with respect to Company Intellectual Property rights, which involve total consideration in excess of $500,000; or

(e) any other agreement that is material to the operation of the Company’s business and which involves annual consideration in excess of $500,000, other than agreements in the ordinary course of business.

(ii) All of the contracts, agreements and instruments set forth or required to be set forth in Section 6(m) of the Company Disclosure Letter (each, a “Material Contract”) are valid, binding and enforceable against the Company or its Subsidiaries, as applicable, and, to the knowledge of the Company, against the other parties thereto, in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws from time to time in effect which affect creditors’ rights generally and by general principles

-15-

of equity. Each of the Company and its Subsidiaries is not in receipt of any claim of material default or material breach under each Material Contract; and neither the Company nor any of its Subsidiaries has any knowledge of any breach or cancellation or anticipated cancellation by the other parties to any Material Contract.

(iii) Investors’ counsel have been furnished with a true and correct copy of each Material Contract, together with all amendments, waivers or other changes thereto, other than Material Contracts with any of the Company’s Subsidiaries that are wholly-owned.

6N. Intellectual Property Rights

(i) To the knowledge of the Company, the Company and/or its Subsidiaries exclusively own and possess all right, title and interest in and to, or have the right to use pursuant to a valid license set forth in subsections (a) through (c) of Section 6(n) of the Company Disclosure Letter (or not required to be listed therein) all Intellectual Property used in or necessary to operate the Company’s and its Subsidiaries’ business as currently conducted, free and clear of all Liens, except for Permitted Encumbrances; provided, that the Investors acknowledge that the Open Source Software used in or necessary to operate the Company’s and its Subsidiaries’ business as currently conducted are not owned by the Company.

(ii) Section 6(n)(ii) of the Company Disclosure Letter sets forth true, complete and correct lists, as of the date hereof, of all of the following of the Company and its Subsidiaries: (a) issued patents and pending patent applications; (b) trademark and service mark registrations and pending applications for registration thereof; (c) copyright registrations and applications for registration thereof; (d) Internet domain name registrations; and (e) Company Products. All such registered Intellectual Property is owned solely by the Company and its Subsidiaries and, to the knowledge of Company, is not invalid or unenforceable, and has not expired or been cancelled or abandoned except for Intellectual Property not material to the business of the Company or its Subsidiaries.

(iii) All employees, officers, consultants and independent contractors of the Company and its Subsidiaries that are engaged in the development of any material Intellectual Property for the Company have executed a written nondisclosure agreement (in the form provided to counsel for the Investors) applicable to the protection of Confidential Information and to the ownership by the Company and its Subsidiaries of Intellectual Property. To the Company’s knowledge, none of its or any of its Subsidiaries’ employees, officers, consultants or independent contractors is in violation thereof. Other than under an appropriate confidentiality or nondisclosure agreement or contractual provision relating to confidentiality and nondisclosure, there has been no disclosure to any Person of material Confidential Information or trade secrets of the Company or any of its Subsidiaries.

(iv) The Company and its Subsidiaries has made reasonable business determinations with respect to the steps it has taken to maintain, protect and enforce all of the material Company Intellectual Property Rights.

(v) The consummation of the transactions contemplated by this Agreement will not (a) entitle any Person to claim any right to use or practice the Company Intellectual Property Rights or cause the Company or any of its Subsidiaries to grant, or be obligated to grant, to any Person any additional or new rights or licenses to the Company Intellectual Property Rights, or (b) impair the right, title or interest of the Company or any of its Subsidiaries in or to any of the Company Intellectual Property Rights.

-16-

(vi) To the Company’s knowledge, (A) neither the Company nor any of its Subsidiaries has, infringed, misappropriated, diluted or otherwise violated (collectively, “Infringement”, “Infringe”, “Infringed” or “Infringing”), and (B) the conduct of the business of the Company and its Subsidiaries as previously conducted and as currently conducted does not Infringe, any Intellectual Property Rights of any Person. The Company (a) does not know of any facts or circumstances that are reasonably likely to give rise to a third Person prevailing in a claim of Infringement against Company or its Subsidiaries and (b) no suit has been made within the past four (4) years, is presently pending, or, to the Company’s knowledge, is threatened related to infringement or, challenging the Company’s or its Subsidiaries’, as applicable, exclusive ownership, or the validity, enforceability or registrability, of any of the Company Intellectual Property Rights, and (c) neither the Company nor any Subsidiary has requested nor received any opinions of counsel related to the foregoing.

(vii) Neither the Company nor any Subsidiary has disclosed or licensed, and neither the Company nor any Subsidiary has a duty or obligation (whether present, contingent, or otherwise) to disclose or license the Source Code for any Company Product to any escrow agent or to any Person who is not, as of the date of this Agreement, an employee of the Company or one of its Subsidiaries. To the Company’s knowledge, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to, result in the disclosure or license of the Source Code for any Company Product to any Person who is not, as of the date of this Agreement, an employee of the Company or one of its Subsidiaries.

(viii) Neither the Company nor any Subsidiary has any obligation to develop any Software, content, technology or other Intellectual Property on behalf of any third party.

6O. Litigation, Etc

As of the date hereof, (i) there are no (and in the last four years there have not been any) written actions, suits, proceedings (including any administrative, self regulatory organization or arbitration proceedings), orders, or, to the Company’s knowledge, investigations or claims pending or threatened against the Company or its Subsidiaries (or to the Company’s knowledge, pending or threatened against any of the officers, directors or employees of the Company or any of its Subsidiaries with respect to or its businesses), or pending or threatened by the Company or any of its Subsidiaries against any Person, at law or in equity, or before or by any Governmental Entity (including any actions, suits, proceedings or investigations with respect to the transactions contemplated by this Agreement) that would result in material liability, either individually or in the aggregate, to the Company and its Subsidiaries; and (ii) neither the Company nor any of its Subsidiaries is subject to any arbitration proceedings under collective bargaining agreements or otherwise or any governmental investigations or inquiries. The foregoing includes, without limitation, written actions pending or threatened involving the prior employment of any of the current employees of the Company or any of its Subsidiaries, their use in connection with the Company’s or any of its Subsidiaries’ business of any information or techniques allegedly proprietary to any of their former employers or their obligations under any agreements with prior employers. As of the date hereof, neither the Company nor any of its Subsidiaries is subject to any judgment, order or decree of any court or other governmental agency or self-regulatory organization, and neither the Company nor any of its Subsidiaries has received any opinion or memorandum or advice from legal counsel or compliance personnel to the effect that it is exposed, from a legal standpoint, to any liability which may be (individually or in the aggregate) material to its business.

-17-

6P. Brokerage

There are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement to which the Company or any of its Subsidiaries is a party or to which the Company or any of its Subsidiaries is bound.

6Q. Insurance

The Company and each of its Subsidiaries maintains commercially reasonable levels of insurance with respect to its properties, assets and business, and each such policy is in full force and effect as of the date hereof. Neither the Company nor each of its Subsidiaries is in default in any material respect with respect to its obligations under any insurance policy maintained by it. Neither the Company nor each of its Subsidiaries has any self-insurance or co-insurance programs.

6R. Employees

To the Company’s knowledge, no executive officer of the Company or any of its Subsidiaries and no key group of employees or independent contractors of the Company or any of its Subsidiaries has any plans to terminate employment with the Company or its Subsidiaries. The Company and each of its Subsidiaries have complied in all material respects with all Laws relating to the employment of labor (including, without limitation, provisions thereof relating to wages, hours, equal opportunity, collective bargaining and the payment of social security and other taxes) and have complied in all material respects with all Laws related to the licensing of employees under its applicable Licenses. To the Company’s knowledge, the Company is not a party to any deferred compensation arrangement subject to Section 409A of the Code that does not comply with the requirements of Sections 409A(b)(2), (3), and (4).

6S. ERISA

(i) Neither the Company nor any of its Subsidiaries maintains, contributes to or has any actual or potential material liability with respect to any (x) “employee pension benefit plan” (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) (a “Savings Plan”), (y) “employee welfare benefit plan” (as defined in Section 3(1) of ERISA) (a “Welfare Plan”) or (z) to the Company’s knowledge, any nonqualified deferred compensation, incentive, bonus, severance, retention, change-in-control, material fringe benefit, stock bonus or other material benefit arrangements (collectively (x), (y) and (z) above referred to as the “Plans”).

(ii) Neither the Company nor any of its Subsidiaries maintains, contributes to or has any actual or potential liability with respect to any active or terminated, funded or unfunded (w) employee benefit plan subject to Section 412 of the Code or Section 302 of Title I of ERISA, (x) multiemployer plan (as defined in Section 3(37) of ERISA), (y) defined benefit plan (as defined in Section 3(35) of ERISA) or (z) plan or arrangement to provide medical, health, life insurance or other welfare-type benefits for current or future retired or terminated employees (except for continued health benefit coverage required to be provided under Section 4980B of the Code or similar state Law).

-18-

(iii) The Company has provided to the Investors accurate and complete copies of each of the Plans and any related trusts, insurance contracts or other agreements, the most recent IRS favorable determination letter (if any) issued with respect to any Savings Plan, IRS Form 5500s (including all attachments) for any Savings Plan and any Welfare Plan for the most recently completed plan year (unless the time for filing such 5500, including extensions has not yet passed, in which case the last filed 5500 shall be provided) and the most recent financial statement with respect to any Savings Plan.

(iv) Each of the Plans and all related funding arrangements materially comply in all material respects in form and operation with its terms and the applicable requirements of ERISA, the Code and any other Laws. Any Savings Plan has received a favorable GUST determination letter that it qualifies under the Code (and that its trust is exempt from Tax under the Code). Neither the Company nor any of its Subsidiaries has taken any action and, to the knowledge of the Company, nothing has occurred since the date of such favorable determination letter that could reasonably be expected to adversely affect the qualified status of any Savings Plan or the tax-exempt status of the trust. No asset of the Company or any of its Subsidiaries is subject to any Lien under ERISA or the Code. No Welfare Plan is self-insured.

(v) None of the Company or any of its Subsidiaries, nor, to the knowledge of the Company, any trustee or administrator of any Plan or other Person has engaged in any transaction with respect to any Plan which could subject the Stockholders or any of its employees to any material Tax, penalty or other liability imposed by ERISA or the Code. No material actions, suits, investigations, inquiries, audits or written claims with respect to any of the Plans (other than routine claims for benefits) are pending or, to the knowledge of the Company, threatened, and the Company is not aware of any facts or circumstances which could reasonably be expected to give rise to any such actions, suits, investigations, inquiries, audits or claims. The Company has complied in all material respects with the requirements of Section 4980B of the Code and Section 601 et seq. of ERISA (“COBRA”). To the Company’s knowledge, each individual who has received compensation for the performance of services on behalf of the Stockholders has been properly classified as an employee or independent contractor in accordance with applicable laws and each Plan has complied in all material respects with the “leased employee” provisions of the Code, if applicable. All contributions which are due under each of the Plans has been made, and all other contributions not yet due have been properly accrued for by the Company and its Subsidiaries. None of the Plans has any unfunded liabilities which are not fully accrued on the Latest Balance Sheet. The Company and its Subsidiaries have complied in all material respects with all reporting and disclosure obligations with respect to the Plans.

(vi) Neither the Company nor any of its Subsidiaries nor any affiliate has any material liability with respect to any “employee benefit plan” (as defined in Section 3(3) of ERISA) solely by reason of being treated as a single employer under Section 414 of the Code with any trade, business or entity other than the Company and its Subsidiaries.

6T. Compliance with Laws; Licenses; Certain Operations

(i) To the Company’s knowledge, the Company and its Subsidiaries are, and since January 1, 2012 have been, in compliance in all material respects with all applicable Laws of all Governmental Entities. No written notices have been received by and no claims have been filed against the Company or any of its Subsidiaries alleging a violation of any such Laws. To the Company’s knowledge, neither the Company nor any of its Subsidiaries is under investigation with respect to violations of such Laws.

-19-

(ii) Since January 1, 2012, the Company and its Subsidiaries hold and are in compliance in all material respects with all Licenses of or from Governmental Entities required for the conduct of their businesses as presently conducted and the ownership of their properties, and the attached Licenses Schedule sets forth a list of all of such Licenses; and no written notices have been received by the Company or any of its Subsidiaries alleging the failure to hold any of the foregoing. All of such Licenses will be available for use by the Company and its Subsidiaries immediately after the Closing.

(iii) To the Company’s knowledge, neither the Company nor any of its Subsidiaries has at any time made any bribes, kickback payments or unlawful compensation payments to Government Officials to obtain or retain business. The Company represents that it has not (and has not permitted any of its Subsidiaries or any of its or their respective directors, officers, managers, employees, independent contractors, representatives or agents to) promise, authorize or make any payment to, or otherwise contribute any item of value to, directly or indirectly, to any third party, including any Non-U.S. Official, in each case, in violation of the Foreign Corrupt Practices Act of 1977, as amended, or any other similar applicable U.S. federal or state or non-U.S. Laws (the “FCPA”), the U.K. Bribery Act, or any other applicable anti-bribery or anticorruption law.

(iv) Neither the Company nor any of its Subsidiaries, nor any of their officers or directors, nor any agent acting on their behalf (i) has been or is designated on the OFAC’s Specially Designated Nationals and Blocked Persons List, Commerce’s Denied Persons List, the Commerce Entity List, the State Department Debarred List, or any similar list of a Governmental Entity. Neither the Company nor any of its Subsidiaries has (ii) participated in any transaction involving such designated person or entity, or any country that is subject to U.S. sanctions administered by OFAC and would be in violation of the OFAC sanctions regulations and (iii) exported or re-exported, directly or indirectly, any good, technology or service in violation of any applicable U.S. export control or economic sanctions laws, regulations or orders administered by OFAC, Commerce or the State Department.

6U. Affiliated Transactions

No officer, director, shareholder or Affiliate of the Company (other than any of its Subsidiaries) or, to the Company’s knowledge, any individual related by blood, marriage or adoption to any such individual or any entity in which any such Person or individual owns any beneficial interest, is a party to any material agreement, contract, commitment or transaction with the Company or any of its Subsidiaries or has any interest in any property used by the Company or any of its Subsidiaries (including any Company Intellectual Property Rights).

6V. Real Property

Section 6(w) of the Company Disclosure Letter sets forth a list of all leases, subleases, licenses or other agreements for the use or occupancy of any real property (the “Leased Real Property”) (including all amendments) held by the Company or any of its Subsidiaries (collectively, the “Leases”) and the address for each Leased Real Property. The Company has delivered or made available to the Investors a true and complete copy of each material Lease. With respect to each of the Leases: (i) the Lease is valid, binding and enforceable against the Company and its Subsidiaries, as applicable, and, to the knowledge of the Company, against the other parties thereto, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws from time to time in effect which affect creditors’ rights generally and by general principles of equity, and in full force and effect; (ii) the consummation of the transactions contemplated hereunder will not result in a breach of or default under the Lease;

-20-

(iii) neither the Company, any of its Subsidiaries nor, to the Company’s knowledge, any other party to the Lease is in material breach or default under the Lease; (iv) neither the Company nor any of its Subsidiaries nor, to the Company’s knowledge, the other party to the Lease has repudiated any term thereof; and (v) neither the Company or any of its Subsidiaries has assigned, subleased, mortgaged, deeded in trust or otherwise transferred or encumbered the Lease or any interest therein. The Company and all of its Subsidiaries have valid title to all owned real property.

ARTICLE 7

REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS

As a material inducement to the Investors to enter into this Agreement and purchase the Series B Preferred hereunder, each Selling Stockholder, severally as to itself and not jointly with any other, or as to any other, Selling Stockholder hereby represents and warrants to the Investors and the Company as follows:

7A. Capacity; Power and Authority

Such Selling Stockholder possesses all requisite capacity, power and authority to enter into and carry out the transactions contemplated by this Agreement.

7B. Authorization; No Breach

This Agreement and all other agreements contemplated hereby to which such Selling Stockholder is a party, when executed and delivered by such Selling Stockholder in accordance with the terms hereof, shall each constitute a valid and binding obligation of such Selling Stockholder, enforceable against such Selling Stockholder in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws from time to time in effect which affect creditors’ rights generally and by general principles of equity. The execution and delivery by such Selling Stockholder of this Agreement and all other agreements contemplated hereby to which such Selling Stockholder is a party, the repurchase of such Selling Stockholder’s shares of Common Stock hereunder, and the fulfillment of and compliance with the respective terms hereof and thereof by such Selling Stockholder, do not and shall not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under (whether with or without the passage of time, the giving of notice or both), (iii) result in the creation of any lien, security interest, charge or encumbrance upon such Selling Stockholder’s assets pursuant to, (iv) give any third party the right to modify, terminate or accelerate any obligation under, (v) result in a violation of, or (vi) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any third party or any Governmental Entity pursuant to, any Law to which such Selling Stockholder is subject, or any agreement, instrument, order, judgment or decree to which such Selling Stockholder is subject.

7C. Title to Shares, Etc

Such Selling Stockholder is the sole record and beneficial owner of, and has good and marketable title to, the shares of Common Stock set forth adjacent to such Selling Stockholder’s name on the Schedule of Selling Stockholders, free and clear of all Liens, agreements, voting trusts, proxies and other arrangements or restrictions of any kind whatsoever (collectively, “Encumbrances”), other than Encumbrances created by this Agreement, the Voting Agreement and restrictions on transfer under applicable federal and state securities laws. At the Closing, such Selling Stockholder shall assign, transfer, and contribute to the Company good and marketable title to shares of Common Stock set forth adjacent to such Selling Stockholder’s name on the Schedule of Selling Stockholders free and clear of all Encumbrances, other than Encumbrances created by the Voting Agreement and restrictions on transfer under applicable federal and state securities laws.

-21-

7D. Brokerage

Except as set forth on the attached Brokerage Schedule, there are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement to which such Selling Stockholder is a party or to which such Selling Stockholder is subject.

7E. Litigation, Etc

As of the date hereof, there are no actions, suits, proceedings (including any arbitration proceedings), orders, investigations or claims pending or, to such Selling Stockholder’s knowledge, threatened against or affecting such Selling Stockholder in which it is sought to restrain or prohibit or to obtain damages or other relief in connection with the transactions contemplated hereby.

7F. Representations and Warranties of the Company

To the actual knowledge of such Selling Stockholder, each of the representations and warranties contained in ARTICLE 6 are true and correct in all respects as of the date hereof and as of the Closing.

7G. Access to Data

Such Selling Stockholder has had an opportunity to ask questions of, and receive answers from, the officers of Company concerning this Agreement and any Transaction Agreements and transactions contemplated hereby and thereby, as well as the Company’s business, management and financial affairs. Such Selling Stockholder believes that it has received all the information such Selling Stockholder considers necessary or appropriate for deciding whether to enter into this Agreement and any Transaction Agreements to which it is a party and to accept an amount equal to such Selling Stockholder’s portion of the Common Stock Purchase Price allocable to such Selling Stockholder set forth on the Schedule of Selling Stockholders attached hereto as consideration payable by the Company in connection with the Repurchase Transaction.

7H. Advisors; Tax Liability

Such Selling Stockholder has reviewed with its own counsel and advisors the federal, state, local and foreign Tax consequences of the transaction contemplated by this Agreement and any Transaction Agreements to which such Selling Stockholder is a party. Such Selling Stockholder acknowledges that it is relying solely on its own counsel and not on any statements or representations of the Company or its agents for legal or Tax advice with respect to this Agreement, the Transaction Agreements and transactions contemplated hereby and thereby. Such Selling Stockholder understands that it (and not the Company) shall be responsible for any Tax liability of such Selling Stockholder that may arise as a result of the transaction contemplated by this Agreement and any Transaction Agreements to which such Selling Stockholder is a party.

-22-

ARTICLE 8

REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

As a material inducement to the Company and the Selling Stockholders to enter into this Agreement and take the actions set forth in ARTICLE 1 and ARTICLE 2, each Investor hereby represents and warrants to the Company and the Selling Stockholders as follows:

8A. Organization, Power and Authority

Such Investor is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Such Investor possesses all requisite power and authority necessary to enter into and carry out the transactions contemplated by this Agreement.

8B. Authorization; No Breach

The execution, delivery and performance of this Agreement and all other agreements contemplated hereby to which such Investor is a party have been duly authorized by such Investor. This Agreement and all other agreements contemplated hereby to which such Investor is a party, when executed and delivered by such Investor in accordance with the terms hereof, shall each constitute a valid and binding obligation of such Investor, enforceable in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws from time to time in effect which affect creditors’ rights generally and by general principles of equity. The execution and delivery by such Investor of this Agreement and all other agreements contemplated hereby to which such Investor is a party, the purchase of shares of Series B Preferred hereunder, and the fulfillment of and compliance with the respective terms hereof and thereof by such Investor, do not and shall not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under (whether with or without the passage of time, the giving of notice or both), (iii) result in the creation of any lien, security interest, charge or encumbrance upon such Investor’s assets pursuant to, (iv) give any third party the right to modify, terminate or accelerate any obligation under, (v) result in a violation of, or (vi) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any Governmental Entity pursuant to, the organizational documents of such Investor, or any Law to which such Investor is subject, or any agreement, instrument, order, judgment or decree to which such Investor is subject.

8C. Brokerage

There are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement to which such Investor is a party or to which such Investor is subject.

8D. Investment Representations

(i) Such Investor is acquiring Restricted Securities hereunder for its own account with the present intention of holding such securities for purposes of investment, and such Investor has no intention of selling such securities in a public distribution in violation of the federal securities Laws or any applicable state securities Laws; provided that nothing contained herein shall prevent such Investor or any subsequent holder of such Restricted Securities from transferring such securities in compliance with the provisions of Paragraph 12C below.

-23-

(ii) Such Investor is an “accredited investor” as defined in Rule 501(a) under the Securities Act.

(iii) Such Investor has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company and acknowledges that such Investor can protect its own interests. Such Investor has such knowledge and experience in financial and business matters so that such Investor is capable of evaluating the merits and risks of its investment in the Company.

(iv) Such Investor understands and acknowledges that the Company has a limited financial and operating history and that an investment in the Company is highly speculative and involves substantial risks. Such Investor can bear the economic risk of its investment and is able, without impairing the Investor’s financial condition, to hold the Preferred Stock and the Common Stock issuable on conversion of the Preferred Stock for an indefinite period of time and to suffer a complete loss of such Investor’s investment.

(v) Such Investor understands that the Restricted Securities to be purchased by it hereunder have not been registered under the Securities Act on the basis that the sale provided for in this Agreement is exempt from the registration provisions thereof and that the Company’s reliance on such exemption is predicated in part upon the representations of the Investors set forth herein.

(vi) Such Investor understands and acknowledges that no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the Company’s securities.

8E. Rule 144

Such Investor acknowledges that the Preferred Stock and the Common Stock issuable on conversion of the Preferred Stock must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available. Such Investor is aware of the provisions of Rule 144 promulgated under the Securities Act which permit resale of shares purchased in a private placement subject to the satisfaction of certain conditions, which may include, among other things, the availability of certain current public information about the Company; the resale occurring not less than a specified period after a party has purchased and paid for the security to be sold; the number of shares being sold during any three-month period not exceeding specified limitations; the sale being effected through a “brokers’ transaction,” a transaction directly with a “market maker” or a “riskless principal transaction” (as those terms are defined in the Securities Act or the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder); and the filing of a Form 144 notice, if applicable. Such Investor understands that the current public information referred to above is not now available and the Company has no present plans to make such information available. Such Investor acknowledges and understands that notwithstanding any obligation under the Investors’ Rights Agreement, the Company may not be satisfying the current public information requirement of Rule 144 at the time the Investor wishes to sell the Preferred Stock and the Common Stock issuable on conversion of the Preferred Stock, and that, in such event, such Investor may be precluded from selling such securities under Rule 144, even if the other applicable requirements of Rule 144 have been satisfied. Such Investor acknowledges that, in the event the applicable requirements of Rule 144 are not met, registration under the Securities Act or an exemption from registration will be required for any disposition of the Preferred Stock and the Common Stock issuable on conversion of the Preferred Stock. Such Investor understands that, although Rule 144 is not exclusive, the Securities and Exchange Commission has expressed its opinion that persons proposing to sell restricted securities received in a private offering other than in a

-24-

registered offering or pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales and that such persons and the brokers who participate in the transactions do so at their own risk.

8F. Access to Data

Such Investor has had an opportunity to ask questions of, and receive answers from, the officers of the Company concerning this Agreement and all of the other agreements and instruments contemplated hereby to which Such Investor is a party, as well as the Company’s business, management and financial affairs, which questions were answered to its satisfaction. Such Investor believes that it has received all the information such Investor considers necessary or appropriate for deciding whether to purchase the Series B Preferred and the Common Stock issuable on conversion of the Preferred Stock. Such Investor acknowledges that any business plans prepared by the Company have been, and continue to be, subject to change and that any projections included in such business plans or otherwise are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. Such Investor also acknowledges that it is relying solely on its own counsel and not on any statements or representations of the Company or its agents for legal advice with respect to this investment or the transactions contemplated by this Agreement and all of the other agreements and instruments contemplated hereby to which Such Investor is a party. The foregoing, however, does not limit or modify the representations and warranties of the Company in ARTICLE 6 of this Agreement or the right of the Investors to rely thereon.

8G. Tax Advisors

Each Investor has reviewed with its own tax advisors the U.S. federal, state, local and foreign tax consequences to such Investor of this investment and the transactions contemplated by this Agreement and all other agreements contemplated hereby to which such Investor is a party. With respect to such matters, such Investor relies solely on such advisors and not on any statements or representations of the Company or any of its agents, written or oral. Such Investor understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement and all other agreements contemplated hereby to which such Investor is a party.

8H. Legends

Such Investor understands and agrees that the certificates evidencing the Series B Preferred and the Common Stock issuable on conversion of the Preferred Stock, or any other securities issued in respect thereof upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall bear the following legend (in addition to any legend required by the Investors’ Rights Agreement or under applicable state securities laws):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

-25-

8I. Litigation, Etc

As of the date hereof, there are no actions, suits, proceedings (including any arbitration proceedings), orders, investigations or claims pending or, to such Investor’s knowledge, threatened against or affecting such Investor in which it is sought to restrain or prohibit or to obtain damages or other relief in connection with the transactions contemplated hereby.

ARTICLE 9

INDEMNIFICATION AND OTHER AGREEMENTS

9A. Survival of Representations and Warranties

The representations and warranties in this Agreement and the schedules attached hereto or in any writing delivered by any Party to another Party in connection with this Agreement shall survive the Closing as follows:

(i) the representations and warranties in Paragraphs 6A, 6B(i), 6B(ii), 6B(iii), 6C, 6D (the first two sentences), 6N(i), 6N(vi), 7A, 7B, 7C, 7D, 8A, 8B (the first two sentences) and 8C (each, an “Excluded Representation”) shall survive until the applicable statute of limitations for which an Indemnitee may have liability thereunder; and

(ii) all other representations and warranties in this Agreement (and the Parties’ right to make indemnification claims hereunder based on such representations) shall terminate on the first anniversary of the date hereof;

provided that a Party’s right to seek indemnification pursuant to Paragraph 9B for any particular inaccuracy or breach shall survive the time at which it would otherwise terminate pursuant to this Paragraph 9A if a Claim Notice shall have been delivered to the Party against whom such indemnity may be sought prior to such time (regardless of when Losses in respect thereof may actually be incurred).

9B. General Indemnification

(i) Indemnification by the Company. Subject to the applicable limitations set forth in this ARTICLE 9, the Company shall indemnify each of the Investor Parties and save and hold each of them harmless against and pay on behalf of or reimburse such Investor Parties as and when incurred for Losses which any such Investor Party suffers, sustains or becomes subject to as a result of: (a) any breach of any representation or warranty of the Company under this Agreement; (b) any nonfulfillment or breach of any covenant, agreement or other provision under this Agreement by the Company; provided that (i) the Company shall not be liable to indemnify any of the Investor Parties pursuant to clause (a) above (other than with respect to any Excluded Representation unless and until the Losses related thereto exceed an amount equal to $2,500,000 in the aggregate (the “Basket”); (ii) the Company’s aggregate cash liability under clauses (a) and (b) above (other than with respect to the Excluded Representations) shall in no event exceed $20,000,000, but with it being understood, however, that nothing in this Agreement (including this Paragraph 9B) shall limit or restrict any of the Investor Parties’ right to maintain or recover any amount from the Company in connection with any action or claim based upon fraud or intentional misrepresentation).

For purposes of determining under ARTICLE 6 the inaccuracy or breach of any representation or warranty herein or in any instrument or document delivered hereunder and the amount of any Losses that are indemnifiable hereunder, each such representation and warranty (other than the representation and

-26-

warranty contained in the first sentence of Paragraph 6H) shall be read without regard and without giving effect to any materiality or Material Adverse Effect or similar qualification contained therein (as if such standard or qualification were deleted from such representation or warranty). For the avoidance of doubt, the Parties agree that the dollar thresholds contained in Paragraphs 6M(i)(a), 6M(i)(d) and 6M(i)(e) shall not be disregarded by operation of the preceding sentence.

All indemnification payments received by any Investor Party under this Paragraph 9B(i) shall be deemed adjustments to the Preferred Stock Purchase Price in respect of such Investor.

(ii) Indemnification by the Selling Stockholders. Each of the Selling Stockholders shall severally and not jointly indemnify the Company Parties and save and hold each of them harmless against and pay on behalf of or reimburse such Company Party as and when incurred for any Losses in excess of the Basket (as defined in Section 9B(i)) which any such Company Party suffers, sustains or becomes subject to, as a result of: (a) any breach of any representation or warranty of such Selling Stockholder under this Agreement; or (b) any nonfulfillment or breach of any covenant, agreement or other provision in this Agreement by such Selling Stockholder; provided that a Selling Stockholder’s aggregate liability under clauses (a) and (b) above (other than with respect to the Excluded Representations) shall in no event exceed the amount paid to such Selling Stockholder in the Repurchase Transaction (the “Stockholder Cap”), but with it being understood, however, that nothing in this Agreement (including this Paragraph 9B) shall limit or restrict any of the Company Parties’ right to maintain or recover any amount from a particular Selling Stockholder in connection with any action or claim based upon fraud or intentional misrepresentation. For purposes of determining the inaccuracy or breach of any representation or warranty in ARTICLE 7 and the amount of any Losses that are indemnifiable hereunder, each such representation and warranty (including any representation or warranty referenced therein) shall be read without regard and without giving effect to any materiality or Material Adverse Effect or similar qualification contained therein (as if such standard or qualification were deleted from such representation or warranty). The indemnification obligations of each Selling Stockholder shall be several and not joint and no Selling Stockholder shall have any liability for any breach of representation or warranty by any other Selling Stockholder. All indemnification payments made by Selling Stockholders under this Paragraph 9B(ii) shall be deemed adjustments to the amount paid to such Selling Stockholder in the Repurchase Transaction.

(iii) Indemnification by the Investors. Each of the Investors shall severally and not jointly indemnify the Company Parties and save and hold each of them harmless against and pay on behalf of or reimburse such Company Party as and when incurred for Losses which any such Company Party may suffer, sustain or become subject to, as a result of: (a) any breach of any representation or warranty of the Investors under ARTICLE 8 of this Agreement; or (b) any nonfulfillment or breach of any covenant, agreement or other provision by the Investors under this Agreement

(iv) Nature of Certain Indemnification Obligations. The representations and warranties of each of the Selling Stockholders in ARTICLE 7 of this Agreement and the covenants and agreements made by each of the Selling Stockholders under this Agreement in such Selling Stockholder’s individual capacity that are required to be performed or complied with by such Selling Stockholder after the Closing (such as those set forth in Paragraph 9C of this Agreement) are several obligations. This means that the particular Selling Stockholder making the representation, warranty, covenant or agreement will be solely responsible for any Losses the Company Parties may suffer as a result of any breach or nonfulfillment of any such representations, warranties, covenants or agreements.

-27-

(v) Manner of Payment. Except as otherwise provided in this Paragraph 9B, any indemnification of the Investor Parties or the Company Parties pursuant to this Paragraph 9B shall be effected by wire transfer of immediately available funds from one or more of the Company, the Selling Stockholders or the Investors, as the case may be, to an account designated by any Investor Party or Company Party, as the case may be, within 15 days after the determination thereof.

(vi) Claims; Defense of Third Party Claims. Upon the occurrence of any event that any Person making a claim for indemnification (an “Indemnitee”) asserts to be the basis for a claim for indemnification against any Person obligated to provide indemnification to such Indemnitee (an “Indemnitor”) under this Paragraph 9B (a “Claim”), the Indemnitee shall deliver a Claim Notice to the Indemnitor in respect of the Claim in writing promptly after obtaining knowledge of the circumstances giving rise to such Claim (including, with respect to any Claim arising from any action, lawsuit, proceeding, investigation, demand or other claim by a third party (a “Third Party Claim”), receiving written notice of such Third Party Claim). For purposes hereof, a “Claim Notice” shall mean a certificate signed by an officer of such Party (A) stating that such Party has may suffer, sustain or become subject to Losses and specifying the individual items of Losses included in the amount so stated, (B) describing the Claim in reasonable detail, including the nature of the facts giving rise to such Claim and the basis thereof (specifying the applicable representation, warranty or covenant), and (C) together with supporting documentation as needed to provide the factual basis for such Claim, the amount reasonably necessary to satisfy such Claim, and the basis thereof. The delay or failure to so notify the Indemnitor shall not relieve the Indemnitor of its obligations hereunder except to the extent that (and only to the extent that) such failure shall have caused the damages for which the Indemnitor is obligated to be greater, in the reasonable estimation of the trier of fact, than such damages would have been had the Indemnitee given prompt notice hereunder. The Indemnitee shall respond promptly and in good faith to reasonable inquiries from the Indemnitor related to such Claim Notice. Whenever the Indemnitee shall have delivered a Claim Notice to the Indemnitor, the Indemnitor may, within thirty (30) days after receipt of such Claim Notice, notify the Indemnitee that the Indemnitor disputes the Claim for indemnification set forth in the Claim Notice, setting forth in reasonable detail the nature of the objections to the Claim in dispute (a “Dispute Notice”). If no Dispute Notice is delivered to the Indemnitee within such thirty (30) day period, such Claim shall be deemed valid, and the Indemnitor shall be obligated to pay the Indemnitee the amount specified in the Claim Notice with respect to such Claim. With respect to any Third Party Claim, the Indemnitor shall be entitled to control the defense of the action, lawsuit, proceeding, investigation, demand or other claim giving rise to such Claim. The Indemnitee shall reasonably cooperate with the Indemnitor in connection with the investigation and defense of such Third Party Claim and shall be entitled to participate in, but not determine or conduct, the defense of such Third Party Claim, and employ counsel of its own choice for such purpose, at its own expense, and at its option. The Indemnitee and its counsel and other representatives shall not communicate with the claimants with respect to any Third Party Claim, or their counsel or other representatives, about matters which may be relevant to such Third Party Claim or its defense or resolution, without the prior consent of the Indemnitor.

(vii) Losses Net of Insurance. The amount of any Loss for which indemnification is provided under this Paragraph 9B shall be net of any amounts actually recovered by the Indemnitee as a result of such Loss under insurance policies and any amount so recovered after the payment of indemnity shall be remitted to the Indemnitor(s) and, if more than one, on a pro rata basis based on the amount of indemnity originally paid.

-28-

(viii) Mini-Basket; Limitation on Diminution in Value Claims. Notwithstanding anything herein to the contrary, the Investors shall not be entitled to any indemnification for (x) any individual event, occurrence, condition or set of facts or circumstances that would otherwise be indemnifiable pursuant to Paragraph 9B (other than with regard to Excluded Representations) where the aggregate Loss actually incurred by the Company with respect thereto (together with Losses from any substantially similar event, occurrence, condition or set of facts or circumstances) is less than One Hundred Thousand Dollars ($100,000) or (y) any portion of a Loss which is based on the diminution in value of the Series B Preferred resulting from the event, occurrence, condition or facts or circumstances on which the indemnification claim was based.

(ix) Sole Remedy. Except as set forth in Paragraph 9C, the Parties each acknowledge and agree that, following the Closing, the indemnification provisions in this Paragraph 9B shall be the sole and exclusive remedy of the Parties for all matters arising under or relating to this Agreement, except in the case of fraud or intentional misrepresentation, in which case the party being subject to such fraud or intentional misrepresentation shall have all rights and remedies under this Agreement and provided by law against the party that committed such fraud or intentional misrepresentation.

9C. Special Indemnification

Notwithstanding anything to the contrary, including, but not limited to, any limitations on indemnification set forth in Paragraph 9B and any disclosures made by the Company or any other persons to the Investors on the Company Disclosure Letter attached hereto or otherwise or any knowledge of the Investors or their representatives or advisors, in the event that the Company incurs aggregate Losses related to or incurred in connection with any failure by the Company to comply with any United States economic sanctions and export control laws, orders and regulations, including those administered by the OFAC, Commerce, and any related state or local laws in excess of $10,000,000 (collectively, the “Excess Export Losses”, which, for the avoidance of doubt, shall apply to all Indemnitors), the Selling Stockholders will indemnify the Investors and hold them harmless from and against an amount (the “Export Loss Indemnity Amount”) equal to the product of (i) the Excess Export Losses and (ii) the quotient, expressed as a decimal, determined by dividing (i) the number of shares of Common Stock into which the Series B Preferred Stock then held by the Investors is then convertible by (ii) the total number of shares of Common Stock outstanding at such time (on an as-converted basis). The Export Loss Indemnity Amount shall be satisfied by a cash payment of the Export Loss Indemnity Amount by each Selling Stockholder equal to the Export Loss Indemnity Amount multiplied by such Selling Stockholders Indemnity Percentage, as set forth on the Schedule of Selling Stockholders, attached hereto. The liability of each Selling Stockholder pursuant to this Paragraph 9C shall be capped at the Repurchase Transaction Proceeds received by such Selling Stockholder as set forth on the Schedule of Selling Stockholders attached hereto. All payments to the Investors under this Paragraph 9C shall be allocated among the Investors pro rata in accordance with each Investors’ relative ownership interest in the Series B Preferred Stock at Closing (as set forth on the Schedule of Investors attached hereto). All indemnification payments under this Paragraph 9C shall be deemed to be adjustments to the purchase price paid by the Investors hereunder. All obligations of the Selling Stockholders pursuant to this Paragraph 9C shall expire upon the earlier of (i) twenty-four (24) months from the date hereof or (ii) a Public Offering (as defined in the Company’s Certificate of Incorporation). An example of how the special indemnification provided in this Paragraph 9C would operate is as follows:

[Remainder of page intentionally left blank]

-29-

SPECIAL INDEMNITY EXAMPLE – FOR ILLUSTRATIVE PURPOSES ONLY

Calculation of Export Loss Indemnity Amount
	$	20,000,000			Illustrative Export Losses
		(10,000,000	)		Deductible
	$	10,000,000		“A”	Excess Export Losses
		22,727,913			Series B Preferred Stock held by Investors (on an as converted basis)
		135,912,942			Total Common Stock outstanding (on as-converted basis), at time of payment
		16.7	%	“B”
	$	1,672,241		“C”= “A” x “B”	Export Loss Indemnity Amount
Calculation for Payment from Selling Stockholders
		4,500,000			Shares sold by Dean Drako
		1,404,127			Shares sold by Michael Perone
		16,825,766			Shares sold by Zach Levow
		22,727,913			Total shares sold by Selling Stockholders
		19.8	%	“D”	Dean Drako’s Indemnity Percentage
		6.2	%	“E”	Michael Perone’s Indemnity Percentage
		74.0	%	“F”	Zach Levow’s Indemnity Percentage
	$	331,094		“D” x “C”	Cash payment by Dean Drako
	$	103,165		“E” x “C”	Cash payment by Michael Perone
	$	1,237,981		“F” x “C”	Cash payment by Zach Levow
	$	1,672,241		“C”	Export Loss Indemnity Amount
Calculation for Payment to Investors
		14,204,946			Series B Preferred Stock shares purchased by FP
		8,522,967			Series B Preferred Stock shares purchased by Sequoia
		22,727,913			Total Series B shares purchased by Investors
		62.5	%	“G”	FP’s percentage ownership interest of Series B Preferred Stock
		37.5	%	“H”	Sequoia’s percentage ownership interest of Series B Preferred Stock
	$	1,045,150		“G” x “C”	Cash payment to FP
	$	628,090		“H” x “C”	Cash payment to Sequoia
	$	1,672,241		“C”	Export Loss Indemnity Amount

-30-

9D. Certain Waivers

Each Selling Stockholder agrees that such Selling Stockholder and its Affiliates shall not make or have any right to make any claim for indemnification against the Company or any of its Affiliates by reason of the fact that he or it is or was a shareholder, director, officer, employee or agent of the Company or any of its Affiliates or is or was serving at the request of the Company as a director, officer, employee or agent of another entity (whether such claim is for judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses or otherwise and whether such claim is pursuant to any statute, charter document, bylaw, agreement or otherwise) with respect to any action, suit, proceeding, complaint, claim or demand brought by any of the Investor Parties against such Selling Stockholder pursuant to this Agreement, and each Selling Stockholder hereby acknowledges and agrees that such Selling Stockholder shall not have any claim or right to contribution or indemnity from the Company or any of its Affiliates with respect to any amounts paid by such Selling Stockholder pursuant to this ARTICLE 9. Effective upon the Closing, each of the Selling Stockholders hereby irrevocably waives, releases and discharges, and shall cause its Affiliates to irrevocably waive, release and discharge, the Company Parties and all of their Affiliates from any and all liabilities and obligations to such Selling Stockholder of any kind or nature whatsoever, whether in its or his capacity as a shareholder, officer or director of the Company or otherwise (other than compensation as an employee of the Company), in each case whether absolute or contingent, liquidated or unliquidated, and whether arising under any agreement or understanding (other than this Agreement and any of the other agreements executed and delivered in connection herewith) or otherwise at law or equity, and no Selling Stockholder or its Affiliates shall seek to recover any amounts in connection therewith or thereunder from the Stockholders. In no event shall the Company have any liability to any of the Selling Stockholders or any of their Affiliates whatsoever for any breaches of the representations, warranties, agreements or covenants of the Selling Stockholders hereunder.

9E. Press Release and Announcements

Unless required by law (in which case each Party agrees to consult with the other Parties prior to any such disclosure as to the form and content of such disclosure), no press releases or other releases of information related to this Agreement or the transactions contemplated hereby will be issued or released by any Party without the consent of the Company, the Investors and the Selling Stockholders; provided, however, that it is understood and agreed that the Company may make any such filings that are required by applicable federal or state securities Laws, including but not limited to the filing of a Form D within the meaning of Regulation D, promulgated by the Securities and Exchange Commission, without consulting with or obtaining consent from the other Parties prior to such filings if such filings are approved by the Company’s Board of Directors.

9F. Confidentiality

Each Selling Stockholder and each Investor agrees not to disclose or use at any time (and shall cause each of its Affiliates not to disclose or use at any time) any Confidential Information (whether or not such information is or was developed by the Selling Stockholders), except to the extent that such disclosure or use is undertaken in good faith in connection with the performance of such Selling Stockholder’s or Investor’s (as the case may be) duties to the Company and its Subsidiaries. Each Selling Stockholder and each Investor further agrees to take all appropriate steps (and to cause or its Affiliates to take all appropriate steps) to safeguard such Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft. In the event that any of the Selling Stockholders or Investors is required by Law to disclose any Confidential Information, such Selling Stockholder or Investor (as the case may be) shall promptly notify the Company in writing (to the extent such notification is permitted by applicable Law), which notification shall include the nature of the legal requirement and the extent of the required disclosure, and shall cooperate with the Company to preserve the confidentiality of such information consistent with applicable Law, but such Selling Stockholder or Investor (as the case may be) shall in any event be permitted to make such disclosure solely to the extent required by Law.

-31-

9G. Further Assurances

In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement or the transactions contemplated hereby, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as any other Party may reasonably request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under ARTICLE 9).

9H. Certain Restrictions

The Company and its Subsidiaries shall not enter into any banking or nonbanking transaction with Green Dot Corporation or any of its subsidiaries (Next Estate Communications and Bonneville Bancorp) (collectively, “Green Dot”) without the prior written consent of Sequoia Capital; provided, however, that this Paragraph 9H shall terminate upon such time as Sequoia Capital and its Affiliates are no longer subject to passivity commitments to the Federal Reserve Board with respect to Green Dot (the “Green Dot Expiration Condition”). Sequoia Capital shall provide the Company with reasonably prompt written notice of the occurrence of the Green Dot Expiration Condition.

9I. Pre-Closing Covenants

The Parties agree as follows with respect to the period of time between the execution of this Agreement and the Closing:

(i) General. Each of the Parties will use his, her, or its reasonable best efforts to take all actions and to do all things necessary in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the Closing conditions set forth in ARTICLE 3, ARTICLE 4 and ARTICLE 5 above).

(ii) Operation of Business. The Company shall operate its business in the ordinary course consistent with past practices and not engage in any activity described in Paragraph 6J above, except as otherwise contemplated and permitted by the Company’s current business plan and budget approved by the Board of Directors. The Selling Stockholders will not cause or permit the Company or any of its Subsidiaries to engage in any practice, take any action, or enter into any transaction: (a) outside the ordinary course of business; or (b) of the sort described in Paragraph 6J above.

(iii) Preservation of Business. The Company and its Subsidiaries shall, and the Selling Stockholders will cause each of the Company and its Subsidiaries to, use commercially reasonable efforts to keep their business and properties substantially intact, including its present operations, physical facilities, working conditions, insurance policies, and relationships with lessors, licensors, suppliers, customers, and employees.

(iv) Third Party Consents and Approvals. The Company shall use reasonable best efforts to obtain all Third Party Approvals marked with an asterisk (*) on the Closing Condition Schedule and commercially reasonable efforts to get other Third Party Approvals required as a result of the consummation of the transactions contemplated hereby.

-32-

(v) Notice of Developments. The Company and the Selling Stockholders will give prompt written notice to the Investors of any material adverse development causing a breach of any of the representations and warranties in ARTICLE 6 above promptly after becoming aware of such material adverse development and the fact that such material adverse development would cause a breach of a representation and warranty in ARTICLE 6. No disclosure made pursuant to this Paragraph 9I(v) shall be deemed to amend or supplement the schedules attached hereto or to prevent or cure any misrepresentation, breach of warranty, or breach of covenant.

(vi) Access Rights. The Company and its Subsidiaries shall, and the Selling Stockholders shall cause the Company and its Subsidiaries to, cause each of their respective officers, employees, and agents to give the Investors and their representatives reasonable access, during normal business hours, to the premises, facilities, properties, employees, books, records (including tax records), contracts, and documents of the Company and its Subsidiaries as from time to time may be reasonably requested by the Investors.

(vii) Regulatory Filings. Each of the Investors and the Company shall make all applicable filings, notices, petitions, statements, registrations, submissions of information, applications or submissions of other documents required by any Governmental Entity in connection with the Investment Transaction and the transactions contemplated hereby, including, without limitation, the Notification and Report Forms with the United States Federal Trade Commission (the “FTC”) and the Antitrust Division of the United States Department of Justice (“DOJ”) as required by the HSR Act (and each of the Investors and the Company shall use reasonable best efforts to file such forms as soon as practicable, and in no event later than five (5) business days following the execution and delivery of this Agreement).

(viii) Insurance. Prior to Closing, the Company will purchase directors and officers liability insurance with terms and conditions, including premiums and exclusions, that are approved by the Board of Directors. In furtherance of the foregoing, the Investors and the Selling Stockholders will cause their representatives on the Board of Directors to consider and approve a directors and officers liability insurance policy on terms available in the marketplace with coverage reasonably comparable to private companies of the approximate size and in businesses similar to the Company.

(ix) Company Disclosure Letter. The Company and the Selling Stockholders shall mutually deliver to the Investors the Company Disclosure Letter as soon as practicable but in any event within twenty (20) days after the date hereof. The Company and the Selling Stockholders shall cooperate with one another in the production of the Company Disclosure Letter. The Company shall accept for inclusion therein any disclosure that any Selling Stockholder feels is necessary to make the representation and warranty of such Selling Stockholder set forth in Paragraph 7F true and correct (with such modifications as the Company and the Selling Stockholders shall agree are necessary to make such disclosure factually accurate based on the information otherwise available to the Company with respect thereto).

ARTICLE 10

DEFINITIONS

For the purposes of this Agreement, the following terms have the meanings set forth below:

“Affiliate” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.

-33-

“Affiliated Group” means any affiliated group as defined in Code §1504 that has filed a consolidated return for federal income tax purposes (or any similar group under state, local or foreign Law) for a period during which the Company or any of its Subsidiaries was a member.

“Cash” means as of any date of determination, the sum of the Company’s and its consolidated Subsidiaries’ actual consolidated cash (bank) balances (net of any bank overdrafts), as adjusted for any deposits in transit, any outstanding checks and any other proper reconciling items, in each case as determined in accordance with GAAP.

“Code” means the Internal Revenue Code of 1986, as amended, and any reference to any particular Code section shall be interpreted to include any revision of or successor to that section regardless of how numbered or classified.

“Company Intellectual Property Rights” means Intellectual Property owned by the Company or its Subsidiaries at any time prior to and through the Closing Date.

“Company Loss” means any Loss which the Company may suffer, sustain or become subject to, as a result of, in connection with, relating or incidental to or by virtue of any matter set forth in Paragraph 8B(i).

“Company Parties” means the Company and its Subsidiaries and each of its Affiliates, shareholders, officers, directors, employees, agents, representatives, successors and permitted assigns.

“Company Products” means the Company’s security solutions (e.g., Barracuda Spam & Virus Firewall, Barracuda Web Filter, Barracuda Web Application Firewall, Barracuda NG Firewall, Barracuda SSL VPN), Networking Solutions (e.g., Barracuda Load Balancer, Barracuda Link Balancer), data protection solutions (e.g., Barracuda Message Archiver, Barracuda Backup Service), and cloud services (Barracuda Web Security Flex, Barracuda Email Security Service).

“Confidential Information” means all information of a confidential or proprietary nature (whether or not specifically labeled or identified as “confidential”), in any form or medium, that relates to the Company or any of its Subsidiaries or their business relations and or its business activities. The term “Confidential Information” shall not apply to any information, documents or materials which are, as shown by appropriate written evidence, in the public domain or, as shown by appropriate written evidence, shall come into the public domain, other than by reason of breach by the applicable party bound hereunder or its Affiliates.

“Equity Incentive Plan” means the Company’s 2004 Stock Option Plan, the Company’s 2012 Stock Option Plan, Purewire, Inc.’s 2008 Stock Incentive Plan and Restricted Stock Units issued by the Company.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor federal law then in force.

“Fully-Diluted Basis”^„ means, as of the date of determination, all of the Company’s issued and outstanding Common Stock as of such date, assuming the exercise of all outstanding options, warrants, or other rights to acquire the Common Stock and the conversion of all outstanding convertible debt and equity securities and other instruments that are convertible into Common Stock (irrespective of whether (x) the holder of any such convertible, exchangeable or exercisable securities is entitled to convert, exchange or exercise such security as of such date, or (y) such security is “in the money” on such date).

-34-

“GAAP” means United States generally accepted accounting principles.

“Governmental Entity” means (i) any federal, state, local, municipal, foreign or other government; (ii) any governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, entity or self-regulatory organization and any court or other tribunal); or (iii) any body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature, including any arbitral tribunal.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.

“Indebtedness” means at any particular time, without duplication, (i) all indebtedness or other obligations of the Company and its Subsidiaries for borrowed money, whether current, short-term or long-term, secured or unsecured, (ii) all obligations of the Company and its Subsidiaries evidenced by any note, bond, debenture or other similar instrument or debt security, (iii) all indebtedness for the deferred purchase price of property or services with respect to which the Company or any of its Subsidiaries is liable, contingently or otherwise, as obligor or otherwise, which is not evidenced by a trade payable or other current liability, (iv) all obligations of the Company and its Subsidiaries under capitalized leases, (v) any indebtedness secured by a Lien on the assets of the Company or any of its Subsidiaries, and (vi) all guarantees by the Company or any of its Subsidiaries of the obligations of another Person; provided that trade payables incurred in the ordinary course of business and intra-company accounts shall not constitute “Indebtedness.”

“Intellectual Property” means any and all intellectual and proprietary rights, including any of the following: (i) patents and industrial designs (including utility model rights, design rights and industrial property rights), patent and industrial design applications, patent disclosures together with all reissues, continuations, continuations-in-part, revisions, divisionals, extensions, and reexaminations in connection therewith, (ii) internet domain names, trademarks, service marks, trade dress, trade names, logos and corporate names and registrations and applications for registration thereof together with all of the goodwill associated therewith, (iii) copyrights (registered or unregistered) and copyrightable works and registrations and applications for registration thereof, (iv) mask works and registrations and applications for registration thereof, (v) all Software, (vi) trade secrets and other Confidential Information (including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, copyrightable works, financial and marketing plans and customer and supplier lists and information).

“Investment” as applied to any Person means (i) any direct or indirect purchase or other acquisition by such Person of any notes, obligations, instruments, stock, securities or ownership interests (including Stockholders interests and joint venture interests) of any other Person and (ii) any capital contribution by such Person to any other Person.

“Investor Parties” means the Investors and their Affiliates, partners, members, officers, directors, employees, agents, representatives, successors and assigns and the Company, to the extent so designated from time to time by the Investors.

-35-

“knowledge” means, when referring to the “knowledge of the Company” or any similar phrase or qualification based on knowledge of the Company, the actual knowledge of any of the Selling Stockholders and David Faugno.

“Law” means any federal, state, local, municipal or foreign statute, law, ordinance, regulation, rule, code, order, principle of common law or judgment enacted, promulgated, issued, enforced or entered by any Governmental Entity.

“Licenses” means all licenses, memberships, registrations, certifications, accreditations, permits, bonds, franchises, approvals, authorizations, consents or orders of, or filings with, any Governmental Entity, necessary for the Company’s and its Subsidiaries business as presently conducted. For the avoidance of doubt, the term “License” shall not include any license of Intellectual Property.

“Lien” or “Liens” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, any sale of receivables with recourse against the Company or any of its Subsidiaries, any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar statute.

“Losses” means any loss, liability, cost, damage, fines, penalties, sanctions, deficiency, Tax, penalty, fine or expense, whether or not arising out of third party claims (including interest, penalties, reasonable attorneys’ fees and expenses and all amounts paid in investigation, defense or settlement of any of the foregoing). For the avoidance of doubt, the preceding sentence shall include all Losses relating to United States economic sanctions and export control laws, orders and regulations, including those administered by Office of Foreign Asset Control, the United States Department of Commerce, and any related state or local laws.

“Material Adverse Effect” means any change, event, effect, occurrence, or development that, individually or in the aggregate with any such other changes, events, effects, occurrences or developments has had a material adverse effect upon the business, operations, assets, liabilities, financial condition or operating results of the Company and or its Subsidiaries taken as a whole; provided, however, that any adverse change, event or effect arising from or attributable to any of the following shall not be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur with respect to such entity: (i) conditions generally affecting the United States economy or generally affecting the industries in which the Company and or its Subsidiaries operate; (ii) any natural disasters or any national or international political or social conditions, including terrorism or the engagement by the United State in hostilities or acts of war; (iii) any changes in financial, banking or securities markets and any changes in interest rates (including any disruption thereof, or the decline in the price of any security or any market index); (iv) changes in any Laws, (v) the negotiation, entry into, announcement or performance of this Agreement and all of the agreements and instruments contemplated hereby to which the Company is a party (including compliance with the covenants set forth herein, and any action taken or omitted to be taken at the request of the Investors) or the taking of any action contemplated hereby or thereby; or (vi) the resignation of Mr. Drako pursuant to the Separation Agreement; provided, however, that the exclusions in clauses (i), (ii) and (iii) above shall be inapplicable to the extent that such events, conditions or events impact the Company and its Subsidiaries in a manner that is materially disproportionate relative to other Persons engaged in similar commercial activities, in similar geographic areas, as the Company and its Subsidiaries.

“Net Working Capital” means, as of immediately following the Closing and taking into account all payments to be made at or in connection with the Closing, the excess of the Stockholders’s total current assets as of such date (excluding any restricted cash balances) over the Stockholders’s total current liabilities as of such date, in each case as determined on a consolidated basis in accordance with

-36-

GAAP. In determining total current assets and total current liabilities hereunder, (i) all accounting entries shall be taken into account regardless of their amount and all errors and omissions shall be corrected, (ii) all proper adjustments in accordance with GAAP shall be made and (iii) all appropriate reserves as determined in accordance with GAAP shall be included.

“Object Code” means computer software code, substantially or entirely in binary form, which is intended to be directly executable by a computer after suitable processing and linking but without the intervening steps of compilation or assembly.

“Option” means an option to purchase Common Stock (or a grant of restricted shares of Common Stock subject to vesting), and where referred to as a number of Options means the number of shares subject to such Option or the number of restricted shares granted, as applicable.

“Permitted Encumbrances” shall mean (i) statutory liens for current Taxes or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith by appropriate proceedings by the Company (or its Subsidiaries) and for which appropriate reserves have been established in accordance with GAAP; (ii) mechanics’, carriers’, workers’, repairers’ and similar statutory liens arising or incurred in the ordinary course of business for amounts which are not delinquent and which are not, individually or in the aggregate, significant; (iii) zoning, entitlement, building and other land use regulations imposed by Governmental Entities having jurisdiction over the Leased Real Property which are not violated by the current use and operation of the Leased Real Property; (iv) covenants, conditions, restrictions, easements and other similar matters of record affecting title to the Leased Real Property which do not materially impair the occupancy or use of the Leased Real Property for the purposes for which it is currently used in connection with the Company’s or any of its Subsidiaries’ business; (v) any interest or title of a lessor or sublessor under any lease of real estate (and any Liens created by such lessor or sublessor on such party’s leasehold); (vi) licenses, sublicenses, leases or subleases granted to third parties in the ordinary course of business not materially detracting from the value of the business of the Company and or its Subsidiaries; (vii) any interest or title of a licensor under any license entered into in the ordinary course of business and covering only the assets licensed; (viii) purchase money Liens and Liens securing payments under capital lease arrangements; and (ix) Liens securing indebtedness or liabilities that are reflected in the Financial Statements or incurred in the ordinary course of business since the date of the Latest Balance Sheet.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a Governmental Entity.

“Restricted Securities” means (i) the Series B Preferred issued hereunder, (ii) the Common Stock issued upon conversion of the Preferred Stock, (iii) any other securities of the Company held by any of the Parties as of the Closing Date and (iv) any securities issued or exchanged with respect to the securities referred to in clauses (i), (ii) and (iii) above by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. As to any particular Restricted Securities, such securities shall cease to be Restricted Securities when they have been (a) effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, (b) distributed to the public through a broker, dealer or market maker pursuant to Rule 144 (or any similar provision then in force) under the Securities Act or become eligible for sale pursuant to Rule 144 under the Securities Act or (c) otherwise transferred and new certificates for them not bearing the Securities Act legend set forth in Paragraph 8H have been delivered by the Company in accordance with Paragraph 12C(v). Whenever any particular securities cease to be Restricted Securities, the holder thereof shall be entitled to receive from the Company, without expense, new certificates representing such securities of like tenor not bearing a Securities Act legend of the character set forth in Paragraph 8H.

-37-

“Securities Act” means the Securities Act of 1933, as amended, or any successor federal law then in force.

“Sequoia Capital” means Sequoia Capital Franchise Partners, Sequoia Capital Franchise Fund, Sequoia Capital Growth Fund III, Sequoia Capital Growth Partners III and Sequoia Capital Growth III Principals Fund.

“Software” means any and all (i) computer programs, operating systems, applications systems, interfaces, firmware or software code of any nature, whether operational, under development or inactive, including all Object Code, Source Code, rules, definitions, models and methodologies derived from the foregoing and any derivations, updates, enhancements and customization of any of the foregoing, whether in machine-readable form or otherwise and irrespective of the programming language, and whether stored, encoded, recorded or written on disk, tape, film, memory device, paper or other media of any nature; (ii) databases and compilations, including any and all data and collections of data whether machine readable or otherwise; (iii) diagrams, descriptions, schematics, flow-charts and other work product used to design, plan, organize and develop any of the foregoing; and (iv) all documentation, including user documentation, user manuals and training materials relating to any of the foregoing.

“Source Code” means human-readable computer software code, in a form other than Object Code form or machine-readable form, including related programmer comments and annotations, help text, data and data structures, object-oriented and other code, which may be printed out or displayed in human-readable form.

“Subject Business” means the Company’s core SMB and Enterprise focused products, including physical appliance, virtual appliance, and cloud versions of: (a) Spam & Virus Firewall, Web Filter, Web Application Firewall, NG Firewall; (b) Load Balancer; and (c) Message Archiver and Backup Service.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity, a majority of the limited liability company, Stockholders or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of the limited liability company, partnership, association or other business entity gains or losses or shall be or control each managing member, managing director or general partner of such limited liability company, partnership, association or other business entity. Notwithstanding anything to the contrary herein, for the purposes of this Agreement, the following entities shall not be Subsidiaries: (i) Barracuda Network AG, an entity formed under the laws of Austria, and formerly known as Phion AG, and its respective Subsidiaries (ii) Third Iris Corporation, an entity formed under the laws of the Cayman Islands, and its respective Subsidiaries and (iii) Nutshell, Inc, a Delaware corporation.

-38-

“Tax” or “Taxes” means federal, state, county, local, foreign or other income, gross receipts, ad valorem, franchise, profits, sales or use, transfer, registration, excise, utility, environmental, communications, real or personal property, capital stock, license, payroll, wage or other withholding, employment, social security, severance, stamp, occupation, alternative or add-on minimum, estimated and other taxes of any kind whatsoever (including deficiencies, penalties, additions to tax, and interest attributable thereto) whether disputed or not.

“Tax Return” means any return, information report or filing with respect to Taxes, including any schedules attached thereto and including any amendment thereof.

“Transaction Agreements” means this Agreement, the Certificate of Incorporation, Voting Agreement, Investors’ Rights Agreement, ROFR Agreement, Management Rights Agreements, and Director Indemnification Agreements.

“Treasury Regulations” means the United States Treasury Regulations promulgated under the Code, and any reference to any particular Treasury Regulation section shall be interpreted to include any final or temporary revision of or successor to that section regardless of how numbered or classified.

ARTICLE 11

TERMINATION

11A. Termination

Except as provided in Paragraph 11A hereof, this Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing:

(i) By written consent of the Company, each of the Investors and each of the Selling Stockholders; or

(ii) By the Company or the Investors if the Closing Date shall not have occurred by October 1, 2012 (the “End Date”); provided, however, that in the event that the Internal Investigation Report is not delivered to the Investors on or prior to September 21, 2012, the End Date shall automatically be extended to the date which is ten (10) business days after the Internal Investigation Report is delivered to the Investors; and provided, further, that the right to terminate this Agreement under this Paragraph 11A shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Closing to occur on or before such date and such action or failure to act constitutes a breach of this Agreement; or

(iii) By the Investors, within five (5) business days from the receipt by the Investors of the Company Disclosure Letter, in the event the Company Disclosure Letter discloses any events, occurrences, conditions, facts or circumstances (x) not actually known by the Investors on the date hereof, and (y) which, in the good faith discretion of the Investors, subjects the Company to, or could reasonably be expected to subject the Company to, any material Loss or could reasonably be expected to materially impair the Company’s business, assets, properties, financial condition or prospects.

(iv) By the Investors, in their sole discretion, within five (5) business days from the receipt by the Investors of the Internal Investigation Report.

-39-

11B. Effect of Termination

In the event of termination of this Agreement by any Party as provided above, this Agreement shall forthwith become void and of no further force and effect without any liability on the part of any Party hereto, and all rights and obligations of any Party hereto shall cease, except that Paragraphs 9E, 9F and 11B and ARTICLE 12 shall survive such termination indefinitely.

ARTICLE 12

MISCELLANEOUS

12A. Fees and Expenses

The Investors shall pay all of their own costs, fees and expenses incurred by the Investors in connection with this Agreement and the consummation (or the preparation for the consummation) of the transactions contemplated hereby (including fees and expenses of legal counsel, accountants and other representatives and consultants) (collectively referred to herein as “Investor Expenses”); provided that if the Closing is effected, the Company shall pay the documented, third party Investor Expenses. The Selling Stockholders shall be solely responsible for and shall pay all of the costs, fees and expenses incurred by the Selling Stockholders in connection with this Agreement and the consummation (or the preparation for the consummation) of the transactions contemplated hereby (including fees and expenses of legal counsel) (collectively, referred to herein as “Selling Stockholder Expenses”); provided that if the Closing is effected, the Company shall pay the documented, third party Selling Stockholder Expenses.

12B. Remedies

(i) Each of the Parties acknowledges and agrees that the other Parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each of the Parties agrees that the other Parties shall be entitled to seek an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court of the United States or any state thereof having jurisdiction over the Parties and the matter.

12C. Consent to Amendments

This Agreement may be amended or modified only with the written consent of the Company, the Selling Stockholders and the Investors. Any provision of this Agreement for the benefit of a Party may be waived in a writing executed by such Party and referring specifically to the provision being waived. No course of dealing between or among the Parties shall be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any Party under or by reason of this Agreement.

12D. Successors and Assigns

. This Agreement and all of the covenants and agreements contained herein and rights, interests or obligations hereunder, by or on behalf of any of the Parties hereto, shall bind and inure to the benefit of the respective successors and permitted assigns of the Parties hereto whether so expressed or not, except that neither this Agreement nor any of the covenants and agreements herein or rights, interests or obligations hereunder may be assigned or delegated by the Company or the Selling Stockholders, without the prior written consent of the Investors. The rights of each Investor pursuant to this Agreement may be assigned only in connection with, and in proportion to, the transfer by such Investor of shares of Preferred Stock.

-40-

12E. Severability

Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement or the application of any such provision to any Person or circumstance shall be held to be prohibited by, illegal or unenforceable under applicable Law in any respect by a court of competent jurisdiction, such provision shall be ineffective only to the extent of such prohibition or illegality or unenforceability, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

12F. Counterparts

This Agreement may be executed simultaneously in counterparts (including by means of telecopied or electronically transmitted signature pages), any one of which need not contain the signatures of more than one Party, but all such counterparts taken together shall constitute one and the same Agreement.

12G. Descriptive Headings; Interpretation

The headings and captions used in this Agreement and the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Any capitalized terms used in any schedule or exhibit attached hereto and not otherwise defined therein shall have the meanings set forth in this Agreement. The use of the word “including” herein shall mean “including without limitation.” The Parties intend that each representation, warranty and covenant contained herein shall have independent significance. If any Party has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty or covenant. Any reference to the masculine, feminine or neuter gender shall be deemed to include any gender or all three as appropriate.

12H. Entire Agreement

This Agreement and the schedules attached hereto taken together with the other Transaction Agreements contain the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings (including that certain term sheet, dated March 23, 2012, by and between Francisco Partners III, L.P. and the Selling Stockholders), whether written or oral, relating to such subject matter in any way.

12I. No Third-Party Beneficiaries

This Agreement is for the sole benefit of the Parties and their successors and permitted assigns and nothing herein expressed or implied shall give or be construed to give any Person, other than the Parties and such successors and permitted assigns, any legal or equitable rights hereunder.

-41-

12J. Governing Law

(i) All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the schedules and exhibits attached hereto shall be governed by, and construed in accordance with, the laws of the State of Delaware without giving effect to any choice of law or conflict of laws rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. In furtherance of the foregoing, the internal law of the State of Delaware shall control the interpretation and construction of this Agreement (and all schedules and exhibits attached hereto), even though under that jurisdiction’s choice of law or conflict of laws analysis, the substantive law of some other jurisdiction would ordinarily apply.

(ii) Notwithstanding anything herein to the contrary, the Selling Stockholders hereto acknowledge and irrevocably agree (i) that any lawsuit, claim, complaint, or action, whether in law or in equity, whether in contract or in tort or otherwise (an “Action”), involving a Selling Stockholder arising out of, or relating to, the Restrictive Covenants shall be subject to the exclusive jurisdiction of any state or federal court sitting in the State of Delaware, and any appellate court thereof and each Selling Stockholder hereto submits for himself and his property with respect to any such Action to the exclusive jurisdiction of such court, (ii) not to bring or permit any of his Affiliates to bring or support anyone else in bringing any such Action in any court, other than the applicable courts specified in the preceding subclause (i), (iii) that service of process, summons, notice or document by registered mail addressed to them at their respective addresses provided herein shall be effective service of process against them for any such Action brought in any such court, (iv) to waive and hereby waive, to the fullest extent permitted by law, any objection which any of them may now or hereafter have to the laying of venue of, and the defense of an inconvenient forum to the maintenance of, any such Action in any such court, and (v) to waive and hereby waive any right to trial by jury in respect of any such Action.

12K. Notices

All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given when delivered personally to the recipient, one (1) day after being sent to the recipient by reputable overnight courier service (charges prepaid), upon machine-generated acknowledgment of receipt after transmittal by facsimile or five (5) days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid. Such notices, demands and other communications shall be sent to the Company at the address indicated below, to the Investors at the addresses indicated on the Schedule of Investors attached hereto and to the Selling Stockholders at the addresses indicated on the Schedule of Selling Stockholders attached hereto or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.

The Company:

Barracuda Networks, Inc.

3175 Winchester Blvd.

Campbell, California 95008

Attention: David Faugno

Telephone: (408)342-5400

Facsimile: (408)342-1061

Email: dfaugno@barracuda.com

-42-

with a copy to:

(which shall not constitute notice)

Wilson Sonsini Goodrich & Rosati

Professional Corporation

650 Page Mill Road

Palo Alto, California 94304

Attention: Steven E. Bochner

                 Michael S. Ringler

                 Mark B. Baudler

Facsimile: (650) 493-6811

Email: mbaudler@wsgr.com

An electronic communication (“Electronic Notice”) shall be deemed written notice for purposes of this Paragraph 12O if sent with return receipt requested to the electronic mail address specified by the receiving party in a signed writing in a nonelectronic form. Electronic Notice shall be deemed received at the time the party sending the Electronic Notice receives verification of receipt by the receiving party. Any party receiving Electronic Notice may request and shall be entitled to receive the notice on paper in nonelectronic form (“Nonelectronic Notice”), which shall be sent to the requesting party within ten (10) days of receipt of the written request for Nonelectronic Notice.

12L. No Strict Construction

The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

12M. California Corporate Securities Law

THE SALE OF THE PREFERRED STOCK HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

12N. Waiver of Potential Conflicts of Interest

Each of the Investors and the Company acknowledges that Wilson Sonsini Goodrich & Rosati, Professional Corporation (“WSGR”) may have represented and may currently represent certain of the Investors. In the course of such representation, WSGR may have come into possession of confidential information relating to such Investors. Each of the Investors and the Company acknowledges that WSGR is representing only the Company in this transaction. Pursuant to Rule 3-310 of the Rules of Professional Conduct promulgated by the State Bar of California, an attorney must avoid representations in which the attorney has or had a relationship with another party interested in the representation without the informed written consent of all parties affected. By executing this Agreement, each of the Investors and the Company hereby waives any actual or potential conflict of interest which may arise as a result of WSGR’s representation of such persons and entities and WSGR’s possession of such confidential information. Each of the Investors and the Company represents that it has had the opportunity to consult with independent counsel concerning the giving of this waiver.

-43-

12O. Waiver of All Rights

Each of the Investors and the Selling Stockholders, in his or its capacity as a stockholder of the Company, hereby consents to the Investment Transaction and the Repurchase Transaction and irrevocably waives all rights such Person may have to participate in the Investment Transaction or the Repurchase Transaction, except as expressly provided herein. Such waiver includes, without limitation, any preemptive rights such Person may have pursuant to Section 4 of the Investors Rights Agreement and any purchase rights such Person may have pursuant to Sections 2.3 of the ROFR Agreement.

*        *        *         *        *

-44-

IN WITNESS WHEREOF, the Parties hereto have executed this Recapitalization Agreement on the date first written above.

BARRACUDA NETWORKS, INC.:
By:	David Faugno, CFO
Its:	/s/ David Faugno
SELLING STOCKHOLDERS
By:	Dean M. Drako
By:	Dean M. Drako Living Trust
By:
Its:
By:	Michael Perone
By:	Zachary Levow

[Signature Page to Recapitalization Agreement]

SELLING STOCKHOLDERS
By:	Dean M. Drako
	/s/ Dean Drako
By:	Dean M. Drako Living Trust
By:	/s/ Dean Drako
Its:

[Signature Page to Recapitalization Agreement]

SELLING STOCKHOLDERS
By:	Zachary Levow
	/s/ Zachary Levow

[Signature Page to Recapitalization Agreement]

SELLING STOCKHOLDERS
By:	Michael Perone
	/s/ Michael Perone

[Signature Page to Recapitalization Agreement]

INVESTORS:
SEQUOIA CAPITAL FRANCHISE FUND SEQUOIA CAPITAL FRANCHISE PARTNERS
By:	SCFF Management, LLC a Delaware Limited Liability Company General Partner of Each
By:	/s/ Jim Goetz
Its:	Managing Member
SEQUOIA CAPITAL GROWTH FUND III SEQUOIA CAPITAL GROWTH PARTNERS III
SEQUOIA CAPITAL GROWTH III PRINCIPALS FUND
By:	SCGF III Management, LLC a Delaware Limited Liability Company General Partner of Each
By:	/s/ Jim Goetz
Its:	Managing Member

[Signature Page to Recapitalization Agreement]

INVESTORS:
FRANCISCO PARTNERS, L.P.
By:	Francisco Partners GP, LLC
Its:	General Partner
By:	/s/ David R. Golob
Its:	Authorized Representative
FRANCISCO PARTNERS FUND A, L.P.
By:	Francisco Partners GP, LLC
Its:	General Partner
By:	/s/ David R. Golob
Its:	Authorized Representative
FRANCISCO PARTNERS III, L.P.
By:	Francisco Partners GP III, L.P.
Its:	General Partner
By:	Francisco Partners GP III Management, LLC
Its:	General Partner
By:	/s/ David R. Golob
Its:	Manager
FRANCISCO PARTNERS PARALLEL FUND III, L.P.
By:	Francisco Partners GP III, L.P.
Its:	General Partner
By:	Francisco Partners GP III Management, LLC
Its:	General Partner
By:	/s/ David R. Golob
Its:	Manager

[Signature Page to Recapitalization Agreement]

Dividend Schedule

Name	Common Shares	Preferred Shares		Total Shares Available for Dividend		Dividend
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
David Faugno	2,019,704.00		0.00		2,019,704.00		$1,931,836.05
[***]	[***]		[***]		[***]		[***]
Dean Drako	15,969,524.00		0.00		15,969,524.00		$15,274,764.05
[***]	[***]		[***]		[***]		[***]
Dean M. Drako Living Trust	15,969,529.00		0.00		15,969,529.00		$15,274,768.83
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
Donna Drako	75,000.00		0.00		75,000.00		$71,737.10
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]

[***] Information has been omitted and submitted separately to the Securities and Exchange Commission.

Confidential treatment has been requested with respect to the omitted portions.

Name	Common Shares	Preferred Shares		Total Shares Available for Dividend		Dividend
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
FP Annual Fund Investors, LLC	2,165.00		0.00		2,165.00		$2,070.82
Francisco Partners Fund A, L.P.	16,886.00		0.00		16,886.00		$16,151.37
Francisco Partners, L.P.	3,429,224.00		0.00		3,429,224.00		$3,280,034.37
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
Gordon Stitt	150,000.00		0.00		150,000.00		$143,474.20
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
Jeffrey Allen	360,000.00		0.00		360,000.00		$344,338.07
Jeffry and Teri Allen Revocable Trust--Dated January 29, 2002	194,805.00		0.00		194,805.00		$186,329.94
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]

[***] Information has been omitted and submitted separately to the Securities and Exchange Commission.

Confidential treatment has been requested with respect to the omitted portions.

Name	Common Shares	Preferred Shares		Total Shares Available for Dividend		Dividend
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
Michael Perone	22,434,356.00		0.00		22,434,356.00		$21,458,341.18
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
Sequoia Capital Franchise Fund	900,000.00		0.00		900,000.00		$860,845.18
Sequoia Capital Franchise Partners	122,730.00		0.00		122,730.00		$117,390.59
Sequoia Capital Growth Fund III	2,887,464.00		0.00		2,887,464.00		$2,761,843.83
Sequoia Capital Growth III
Principals Fund	149,115.00		0.00		149,115.00		$142,627.70
Sequoia Capital Growth Partners III	31,602.00		0.00		31,602.00		$30,227.15
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
The Holly Levow 2010 Grantor Retained Annuity Trust	1,500,000.00		0.00		1,500,000.00		$1,434,741.96
The Michael Perone 2010 Four Year Grantor Retained Annuity Trust	1,402,147.00		0.00		1,402,147.00		$1,341,146.09
The Michael Perone 2010 Three Year Grantor Retained Annuity Trust	1,402,147.00		0.00		1,402,147.00		$1,341,146.09
The Michelle Perone 2010 Four Year Grantor Retained Annuity Trust	1,402,147.00		0.00		1,402,147.00		$1,341,146.09

[***] Information has been omitted and submitted separately to the Securities and Exchange Commission.

Confidential treatment has been requested with respect to the omitted portions.

Name	Common Shares	Preferred Shares		Total Shares Available for Dividend		Dividend
The Michelle Perone 2010 Three Year Grantor Retained Annuity Trust	1,402,147.00		0.00		1,402,147.00		$1,341,146.09
The Zach Levow 2010 Grantor Retained Annuity Trust	1,500,000.00		0.00		1,500,000.00		$1,434,741.96
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
Zachary Levow	25,042,944.00		0.00		25,042,944.00		$23,953,441.61
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
[***]	[***]		[***]		[***]		[***]
FP Annual Fund Investors, LLC	0.00		14,118.00		14,118.00		$13,503.80
Francisco Partners Fund A, L.P.	0.00		92,268.00		92,268.00		$88,253.85
Francisco Partners, L.P.	0.00		18,737,835.00		18,737,835.00		$17,922,638.67
Sequoia Capital Franchise Fund	0.00		2,487,438.00		2,487,438.00		$2,379,221.11
Sequoia Capital Franchise Partners	0.00		339,195.00		339,195.00		$324,438.20
Sequoia Capital Growth Fund III	0.00		7,999,938.00		7,999,938.00		$7,651,897.79
Sequoia Capital Growth III Principals Fund	0.00		391,770.00		391,770.00		$374,725.91
Sequoia Capital Growth Partners III	0.00		88,191.00		88,191.00		$84,354.22
	105,762,189.00		30,150,753.00		135,912,942.00		$130,000,000.95

[***] Information has been omitted and submitted separately to the Securities and Exchange Commission.

Confidential treatment has been requested with respect to the omitted portions.

SCHEDULE OF INVESTORS

Investor	Shares of Series B Preferred to be Purchased		Total Investment in Series B Preferred Stock
Francisco Partners III, L.P.		14,048,028.00	$	78,963,145.72
Francisco Partners Parallel Fund III, L.P.		156,918.00	$	882,026.93
Sequoia Capital Growth III Principals Fund*		92,040.00	$	517,351.47
Sequoia Capital Growth Partners III*		20,384.00	$	114,577.28
Sequoia Capital Growth Fund III**		7,755,512.00	$	43,593,280.44
Sequoia Capital Franchise Partners*		78,604.00	$	441,828.50
Sequoia Capital Franchise Fund*		576,427.00	$	3,240,062.54

* In the event that the amount of the Dividend paid to this Investor is less than the amount of the aggregate Preferred Stock Purchase Price to be paid by this Investor pursuant to this Schedule, (x) the number of shares of Series B Preferred Stock to be purchased by this Investor at the Closing shall be reduced to the maximum whole number of shares which can be purchased by this Investor using the entire amount of the Dividend paid to this Investor and (y) the aggregate Preferred Stock Purchase Price to be paid by this Investor reduced to reflect such lesser number of shares of Series B Preferred Stock purchased.

** In the event that the number of shares of Series B Preferred Stock to be purchased by other funds managed by Sequoia Capital are reduced at the Closing pursuant to this Schedule, (x) the number of shares of Series B Preferred Stock to be purchased by this Investor at the Closing shall be increased by the number of shares so reduced and (y) the aggregate Preferred Stock Purchase Price to be paid by this Investor increased to reflect such greater number of shares of Series B Preferred Stock purchased.

c/o Francisco Partners

One Letterman Drive

Building C

Suite 410

San Francisco, CA 94129

Attention: David Golob

Telephone: (415) 418-2900

Facsimile: (415) 418-2999

Email: golob@franciscopartners.com

c/o Sequoia Capital

3000 Sand Hill Road

Building 4, Suite 180

Menlo Park, CA 94025

Attention: Jim Goetz

Telephone: (650) 854-3927

Telecopy: (650) 854-2977

Email: goetz@sequoiacap.com

with a copy to:

(which shall not constitute notice to such Investors)

Kirkland & Ellis LLP

Page Mill Road

Palo Alto, CA 94304

Attention: Adam D. Phillips

Telephone: (650) 859-7050

Telecopy: (650) 859-7500

Email: aphillips@kirkland.com

SCHEDULE OF SELLING STOCKHOLDERS

Selling Stockholder	Shares of Common Stock to be Repurchased		Repurchase Transaction Proceeds		Indemnity Percentage
Dean M. Drako		2,250,000.00	$	12,647,118.72		9.9	%
Dean M. Drako Living Trust		2,250,000.00	$	12,647,118.72		9.9	%
Michael Perone		1,402,147.00	$	7,881,386.48		6.2	%
Zachary Levow		16,825,766.00	$	94,576,648.94		74.0	%
Total:		22,727,913.00	$	127,752,272.86		100.00	%

EX-10.16

Exhibit 10.16

AMENDMENT NO. 1 AND WAIVERS TO

RECAPITALIZATION AGREEMENT

THIS AMENDMENT NO. 1 AND WAIVERS TO RECAPITALIZATION AGREEMENT (this “Amendment”), is made as of October 3, 2012 by and among Barracuda Networks, Inc., a Delaware corporation (the “Company”), the Persons listed on the Schedule of Investors attached hereto (collectively referred to herein as the “Investors” and individually as an “Investor”), the Persons listed on the Schedule of Selling Stockholders attached hereto (collectively referred to herein as the “Selling Stockholders” and individually as a “Selling Stockholder”).

BACKGROUND

A. The Company, the Investors and the Selling Stockholders are parties to that certain Recapitalization Agreement, dated as of August 23, 2012 (the “Recapitalization Agreement”).

B. Section 12C of the Recapitalization Agreement requires the written consent of the Company, the Investors and the Selling Stockholders to amend, alter, or modify the terms of the Recapitalization Agreement.

C. The Company, the Investors and the Selling Stockholders desire to amend the Recapitalization Agreement in the manner set forth below.

NOW THEREFORE, in consideration of the matters set forth in the recitals and the covenants and provisions herein set forth, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

AGREEMENT

Section 1. Definitions. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Recapitalization Agreement.

Section 2. Amendments to the Recapitalization Agreement. As of the date hereof:

2.1. In Section 2B(i) of the Recapitalization Agreement the reference to “One Hundred Twenty Seven Million Seven Hundred Fifty Two Thousand Two Hundred Seventy Two Dollars and Eighty Eight Cents ($127,752,272.88)” shall be replaced by “One Hundred Twenty Seven Million Five Hundred Forty Four Thousand One Hundred Four Dollars and Ninety Three Cents ($127,544,104.93)”;

2.3. In Section 2C(i) of the Recapitalization Agreement the reference to “One Hundred Twenty Seven Million Seven Hundred Fifty Two Thousand Two Hundred Seventy Two Dollars and Eighty Six Cents ($127,752,272.86)” shall be replaced by “One Hundred Twenty Seven Million Five Hundred Forty Four Thousand One Hundred Four Dollars and Ninety Three Cents ($127,544,104.93)”;

[***] Information has been omitted and submitted separately to the Securities and Exchange Commission.

Confidential treatment has been requested with respect to the omitted portions.

2.6. Section 6B(i) of the Recapitalization Agreement shall be amended and restated in its entirety to read as follows:

“(i) On October 2, 2012, the authorized capital stock of the Company consists of (a) 31,500,000 shares of preferred stock, of which 31,500,000 shares are designated as Series A Preferred Stock and 30,150,753 of which are outstanding and held by certain of the Investors as set forth on the attached Capitalization Schedule and (b) 195,000,000 shares of Common Stock, of which 105,810,591 shares are issued and outstanding and held of record by the Selling Stockholders and other Persons as set forth on the attached Capitalization Schedule, 31,500,000 shares are reserved for issuance upon conversion of the Series A Preferred and 21,724,738 shares are reserved for issuance upon exercise of stock options or vesting of restricted stock units issued or available for issuance under the Equity Incentive Plan.”

2.7. Section 6B(ii) of the Recapitalization Agreement shall be amended and restated in its entirety to read as follows:

“(ii) Immediately following the consummation of the Investment Transaction and the Repurchase Transaction, the authorized capital stock of the Company will consist of (a) 52,878,666 shares of preferred stock, of which 30,150,753 will be designated as Series A Preferred Stock and held by certain of the Investors as set forth on the attached Capitalization Schedule and 22,727,913 shares will be designated as Series B Preferred Stock and held by the Investors as set forth on the Schedule of Investors and (b) 157,429,138 shares of Common Stock, of which 83,082,678 shares shall be issued and outstanding and held of record by the Selling Stockholders and other Persons as set forth on the attached Capitalization Schedule, 52,878,666 shares shall be reserved for issuance upon conversion of the Series A Preferred and the Series B Preferred and 21,724,738 shares shall be reserved for issuance upon exercise of stock options or vesting of restricted stock units issued or available for issuance under the Equity Incentive Plan.”

2.8. Section 6N(vi) of the Recapitalization Agreement shall be amended and restated in its entirety to read as follows:

“(vi) To the Company’s knowledge as of the date hereof, (A) neither the Company nor any of its Subsidiaries has, infringed, misappropriated, diluted or otherwise violated (collectively, “Infringement”, “Infringe”, “Infringed” or “Infringing”), and (B) the conduct of the business of the Company and its Subsidiaries as previously conducted and as currently conducted does not Infringe, any Intellectual Property Rights of any Person. As of the date hereof, the Company (a) does not know of any facts or circumstances that are reasonably likely to give rise to a third Person prevailing in a claim of Infringement against Company or its Subsidiaries and (b) no suit has been made within the past two (2) years, is presently pending, or, to the Company’s knowledge, is threatened by any third Person that has more than $100,000,000 in annual revenues and that is related to infringement or, that challenges the Company’s or its Subsidiaries’, as applicable, exclusive ownership, or the validity, enforceability or registrability, of any of the Company Intellectual Property Rights, and (c) neither the Company nor any Subsidiary has requested nor received any opinions of

-2-

counsel related to the foregoing. For purposes of the Company’s representations and warranties in the last sentence of this Paragraph 6N(vi), “knowledge” or “know” means the actual knowledge of any of the Selling Stockholders, David Faugno and Kevin Cook that they have obtained following substantial communications with third Persons with respect to the matters referenced therein.”

2.9. Section 9A(i) of the Recapitalization Agreement shall be amended and restated in its entirety to read as follows:

“(i) the representations and warranties in Paragraphs 6A, 6B(i), 6B(ii), 6B(iii), 6C, 6D (the first two sentences), 7A, 7B, 7C, 7D, 8A, 8B (the first two sentences) and 8C (each, an “Excluded Representation”) shall survive until the applicable statute of limitations for which an Indemnitee may have liability thereunder;”

2.10. A new Section 9A(ii) shall be added to the Recapitalization Agreement to read as follows:

“(ii) the representations and warranties in Paragraphs 6N(i) and 6N(vi) (each, a “Special IP Representation”) shall survive until the applicable statute of limitations for which an Indemnitee may have liability thereunder; and”

2.11. The existing Section 9A(ii) of the Recapitalization Agreement shall be renumbered to Section 9(a)(iii).

2.12. The first paragraph of Section 9B(i) of the Recapitalization Agreement shall be amended and restated in its entirety to read as follows:

“(i) Indemnification by the Company. Subject to the applicable limitations set forth in this ARTICLE 9, the Company shall indemnify each of the Investor Parties and save and hold each of them harmless against and pay on behalf of or reimburse such Investor Parties as and when incurred for Losses which any such Investor Party suffers, sustains or becomes subject to as a result of: (a) any breach of any representation or warranty of the Company under this Agreement; (b) any nonfulfillment or breach of any covenant, agreement or other provision under this Agreement by the Company; provided that (i) the Company shall not be liable to indemnify any of the Investor Parties pursuant to clause (a) above (other than with respect to any Excluded Representation or Special IP Representation) unless and until the Losses related thereto exceed an amount equal to $2,500,000 in the aggregate (the “Basket”); (ii) the Company shall not be liable to indemnify any of the Investor Parties pursuant to clause (a) above with respect to any Special IP Representation unless and until the Losses related thereto exceed an amount equal to $1,000,000 in the aggregate (the “Mini Basket”); (iii) the Company’s aggregate cash liability under clauses (a) and (b) above (other than with respect to the Excluded Representations and the Special IP Representations) shall in no event exceed $20,000,000, but with it being understood, however, that nothing in this Agreement (including this Paragraph 9B) shall limit or restrict any of the Investor Parties’ right to maintain or recover any amount from the Company in connection with any action or claim based upon fraud or intentional misrepresentation).”

-3-

2.13. Section 9B(ii) of the Recapitalization Agreement shall be amended and restated in its entirety to read as follows:

“(ii) Indemnification by the Selling Stockholders. Each of the Selling Stockholders shall severally and not jointly indemnify the Company Parties and save and hold each of them harmless against and pay on behalf of or reimburse such Company Party as and when incurred for any Losses in excess of the Basket (as defined in Section 9B(i)) which any such Company Party suffers, sustains or becomes subject to, as a result of: (a) any breach of any representation or warranty of such Selling Stockholder under this Agreement; or (b) any nonfulfillment or breach of any covenant, agreement or other provision in this Agreement by such Selling Stockholder; provided that a Selling Stockholder’s aggregate liability under clauses (a) and (b) above (other than with respect to the Excluded Representations and the Special IP Representations) shall in no event exceed the amount paid to such Selling Stockholder in the Repurchase Transaction (the “Stockholder Cap”), but with it being understood, however, that nothing in this Agreement (including this Paragraph 9B) shall limit or restrict any of the Company Parties’ right to maintain or recover any amount from a particular Selling Stockholder in connection with any action or claim based upon fraud or intentional misrepresentation. For purposes of determining the inaccuracy or breach of any representation or warranty in ARTICLE 7 and the amount of any Losses that are indemnifiable hereunder, each such representation and warranty (including any representation or warranty referenced therein) shall be read without regard and without giving effect to any materiality or Material Adverse Effect or similar qualification contained therein (as if such standard or qualification were deleted from such representation or warranty). The indemnification obligations of each Selling Stockholder shall be several and not joint and no Selling Stockholder shall have any liability for any breach of representation or warranty by any other Selling Stockholder. All indemnification payments made by Selling Stockholders under this Paragraph 9B(ii) shall be deemed adjustments to the amount paid to such Selling Stockholder in the Repurchase Transaction.”

2.14. A new Section 9J shall be added to the Recapitalization Agreement to read as follows:

Certificate of Incorporation Amendment. Promptly following the Closing, the Company shall use its reasonable best efforts to obtain the requisite approval from its Board and stockholders in order to amend the Certificate of Incorporation to revise the aggregate number of authorized shares of capital stock and to revise the aggregate number of authorized shares of Common Stock in such amounts as shall be mutually agreed upon by the Company and the Investors (the “Charter Amendment”) and to promptly thereafter file the Charter Amendment with the Secretary of State of the State of Delaware.

2.15. The Dividend Schedule shall be amended and restated as set forth on the Dividend Schedule, attached hereto as Exhibit A;

2.16. The Schedule of Investors shall be amended and restated as set forth on the Schedule of Investors, attached hereto as Exhibit B;

-4-

2.17. The Schedule of Selling Stockholders shall be amended and restated as set forth on the Schedule of Selling Stockholders, including, but not limited to, the addition of the Zach Levow 2010 Grantor Retained Annuity Trust and the Holly Levow 2010 Grantor Retained Annuity Trust as Selling Stockholders, in the form attached hereto as Exhibit C;

2.18. The Certificate of Incorporation attached to the Recapitalization Agreement as Exhibit A shall be amended and restated in the form attached hereto as Exhibit D;

2.19. The Voting Agreement attached to the Recapitalization Agreement as Exhibit B shall be amended and restated in the form attached hereto as Exhibit E; and

2.20. The Investors’ Rights Agreement attached to the Recapitalization Agreement as Exhibit C shall be amended and restated in the form attached hereto as Exhibit F.

2.21. The ROFR Agreement attached to the Recapitalization Agreement as Exhibit D shall be amended and restated in the form attached hereto as Exhibit G.

Section 3. Waivers.

3.1 The Investors hereby irrevocably waive their right to receive the Internal Investigation Report pursuant to Section 3K of the Recapitalization Agreement.

3.2 The Investors hereby irrevocably waive their right to receive the Company Disclosure Letter within twenty (20) business days of the date of the Recapitalization Agreement. The Company Disclosure Letter, attached hereto as Exhibit H, is hereby incorporated by reference into the Recapitalization Agreement and made a part thereof.

Section 4. Miscellaneous.

4.1 Effect of Amendment. The execution, delivery and effectiveness of this Amendment shall not constitute a waiver or amendment of any provision of the Recapitalization Agreement, except as specifically set forth herein.

4.2 Counterparts. This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Delivery of the executed counterpart of this Amendment by telecopy or electronic mail shall be as effective as delivery of a manually executed counterpart to this Amendment.

4.3 Severability. The illegality or unenforceability of any provision of this Amendment or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Amendment or any instrument or agreement required hereunder.

4.4 Captions. Section captions used in this Amendment are for convenience only, and shall not affect the construction of this Amendment.

-5-

4.5 Entire Agreement. This Amendment embodies the entire agreement and understanding among the parties hereto and supersedes all prior or contemporaneous agreements and understandings of such parties, verbal or written, relating to the subject matter hereof.

4.6 References. Any reference to the Recapitalization Agreement contained in any notice, request, certificate, or other document executed concurrently with or after the execution and delivery of this Amendment shall be deemed to include this Amendment unless the context shall otherwise require. Reference in any of this Amendment or the Recapitalization Agreement shall be a reference to the Recapitalization Agreement as amended hereby and as further amended, modified, restated, supplemented or extended from time to time.

Section 5. Governing Law. This Amendment shall be governed by and construed in accordance with the domestic laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

*    *    *    *    *

-6-

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the day and year first above written.

BARRACUDA NETWORKS, INC.:
By:	/s/ David Faugno
Its:	CFO

[Signature Page to Amendment No. 1 to Recapitalization Agreement]

SELLING STOCKHOLDER:
By:	Dean M. Drako
/s/ Dean M. Drako
By:	Dean M. Drako Living Trust
By:	/s/ Dean M. Drako
Its:

[Signature Page to Amendment No. 1 to Recapitalization Agreement]

SELLING STOCKHOLDER:
By:	Michael Perone
/s/ Michael Perone

[Signature Page to Amendment No. 1 to Recapitalization Agreement]

SELLING STOCKHOLDER:
By:	Zachary Levow
/s/ Zachary Levow

[Signature Page to Amendment No. 1 to Recapitalization Agreement]

SELLING STOCKHOLDER:
THE HOLLY LEVOW 2010 GRANTOR RETAINED ANNUITY TRUST
By:	/s/ Holly Levow
Name:	Holly Levow
Title:
THE ZACH LEVOW 2010 GRANTOR RETAINED ANNUITY TRUST
By:	/s/ Zachary Levow
Name:	Zachary Levow
Title:

[Signature Page to Amendment No. 1 to Recapitalization Agreement]

INVESTORS:
SEQUOIA CAPITAL FRANCHISE FUND SEQUOIA CAPITAL FRANCHISE PARTNERS
By:	SCFF Management, LLC a Delaware Limited Liability Company General Partner of Each
By:	/s/ Jim Goetz
Its:	Managing Member
SEQUOIA CAPITAL GROWTH FUND III
SEQUOIA CAPITAL GROWTH PARTNERS III
SEQUOIA CAPITAL GROWTH III PRINCIPALS FUND
By:	SCGF III Management, LLC a Delaware Limited Liability Company General Partner of Each
By:	/s/ Jim Goetz
Its:	Managing Member

[Signature Page to Amendment No. 1 to Recapitalization Agreement]

INVESTORS:
FRANCISCO PARTNERS, L.P.
By:	Francisco Partners GP, LLC
lts:	General Partner
By:	/s/ David Golob
Its:
FRANCISCO PARTNERS FUND A, L.P.
By:	Francisco Partners GP, LLC
Its:	General Partner
By:	/s/ David Golob
Its:
FRANCISCO PARTNERS III, L.P.
By:	Francisco Partners GP III, L.P.
Its:	General Partner
By:	Francisco Partners GP III Management, LLC
Its:	General Partner
By:	/s/ David Golob
Its:
FRANCISCO PARTNERS PARALLEL FUND III, L.P.
By:	Francisco Partners GP III, L.P.
Its:	General Partner
By:	Francisco Partners GP III Management, LLC
Its:	General Partner
By:	/s/ David Golob
Its:

[Signature Page to Amendment No. 1 to Recapitalization Agreement]

Exhibit A

DIVIDEND SCHEDULE

Name	Common Shares	Series A Preferred	Total Shares Available for Dividend		Dividend
[***]	[***]			[***]		[***]
Jeffry and Teri Allen Revocable Trust--Dated January 29, 2002	554,805.00			554,805.00		$530,479.09
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]

[***] Information has been omitted and submitted separately to the Securities and Exchange Commission.

Confidential treatment has been requested with respect to the omitted portions.

Name	Common Shares	Series A Preferred	Total Shares Available for Dividend		Dividend
[***]	[***]			[***]		[***]
David Faugno	2,035,606.00			2,035,606.00		$1,946,353.08
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]

[***] Information has been omitted and submitted separately to the Securities and Exchange Commission.

Confidential treatment has been requested with respect to the omitted portions.

Name	Common Shares	Series A Preferred	Total Shares Available for Dividend		Dividend
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
Sequoia Capital Franchise Partners	122,730.00			122,730.00		$117,348.80
Sequoia Capital Franchise Fund	900,000.00			900,000.00		$860,538.72
Sequoia Capital Growth Fund III	2,887,464.00			2,887,464.00		$2,760,860.62
Sequoia Capital Growth Partners III	31,602.00			31,602.00		$30,216.39
Sequoia Capital Growth III Principals Fund	149,115.00			149,115.00		$142,576.93
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]

[***] Information has been omitted and submitted separately to the Securities and Exchange Commission.

Confidential treatment has been requested with respect to the omitted portions.

Name	Common Shares	Series A Preferred	Total Shares Available for Dividend		Dividend
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
Donna Drako	75,000.00			75,000.00		$71,711.56
Gordon Stitt	150,000.00			150,000.00		$143,423.12
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
[***]	[***]			[***]		[***]
The Michelle Perone 2010 Three Year Grantor Retained Annuity Trust	1,114,793.00			1,114,793.00		$1,065,913.93
The Michelle Perone 2010 Four Year Grantor Retained Annuity Trust	1,203,600.00			1,203,600.00		$1,150,827.11

[***] Information has been omitted and submitted separately to the Securities and Exchange Commission.

Confidential treatment has been requested with respect to the omitted portions.

Name	Common Shares	Series A Preferred		Total Shares Available for Dividend		Dividend
The Michelle Perone 2010 Four Year Grantor Retained Annuity Trust	1,203,600.00				1,203,600.00		$1,150,827.11
The Michael Perone 2010 Four Year Grantor Retained Annuity Trust	1,203,600.00				1,203,600.00		$1,150,827.11
The Michael Perone 2010 Three Year Grantor Retained Annuity Trust	1,114,793.00				1,114,793.00		$1,065,913.93
Michael Perone	22,920,257.00				22,920,257.00		$21,915,298.30
Michelle Perone	485,901.00				485,901.00		$464,596.25
The Holly Levow 2010 Grantor Retained Annuity Trust	1,192,592.00				1,192,592.00		$1,140,301.77
Holly Levow	307,408.00				307,408.00		$293,929.43
Zachary Levow	25,350,352.00				25,350,352.00		$24,238,843.66
The Zach Levow 2010 Grantor Retained Annuity Trust	1,192,592.00				1,192,592.00		$1,140,301.77
Dean Drako	15,969,524.00				15,969,524.00		$15,269,326.26
Dean M. Drako Living Trust	15,969,529.00				15,969,529.00		$15,269,331.04
FP Annual Fund Investors, LLC			14,118.00		14,118.00		$13,498.99
Francisco Partners, L.P.			18,737,835.00		18,737,835.00		$17,916,258.25
Francisco Partners Fund A, L.P.			92,268.00		92,268.00		$88,222.43
Sequoia Capital Franchise Partners			339,195.00		339,195.00		$324,322.70
Sequoia Capital Franchise Fund			2,487,438.00		2,487,438.00		$2,378,374.11
Sequoia Capital Growth Fund III			7,999,938.00		7,999,938.00		$7,649,173.73
Sequoia Capital Growth Partners III			88,191.00		88,191.00		$84,324.19
Sequoia Capital Growth III Principals Fund			391,770.00		391,770.00		$374,592.51
Total:	105,810,591.00		30,150,753.00		135,961,344.00		$130,000,001.07

[***] Information has been omitted and submitted separately to the Securities and Exchange Commission.

Confidential treatment has been requested with respect to the omitted portions.

Exhibit B

SCHEDULE OF INVESTORS

Investor	Shares of Series B Preferred to be Purchased	Total Investment in Series B Preferred Stock
Francisco Partners III, L.P.	14,048,028.00	$78,834,478.00
Francisco Partners Parallel Fund III L.P.	156,918.00	$880,589.69
Sequoia Capital Growth III Principals Fund	92,157.00	$517,165.04
Sequoia Capital Growth Partners III	120,410.00	$114,536.48
Sequoia Capital Growth Fund III	7,754,534.00	$43,516,758.37
Sequoia Capital Franchise Partners	78,704.00	$441,669.73
Sequoia Capital Franchise Fund	577,162.00	$3,238,907.62

c/o Francisco Partners

One Letterman Drive

Building C

Suite 410

San Francisco, CA 94129

Attention: David Golob

Telephone: (415) 418-2900

Facsimile: (415) 418-2999

Email: golob@franciscopartners.com

c/o Sequoia Capital

3000 Sand Hill Road

Building 4, Suite 180

Menlo Park, CA 94025

Attention: Jim Goetz

Telephone: (650) 854-3927

Telecopy: (650) 854-2977

Email: goetz@sequoiacap.com

with a copy to:

(which shall not constitute notice to such Investors)

Kirkland & Ellis LLP

950 Page Mill

Road Palo Alto, CA 94304

Attention: Adam D. Phillips

Telephone: (650) 859-7050

Telecopy: (650) 859-7500

Email: aphillips@kirkland.com

Exhibit C

SCHEDULE OF SELLING STOCKHOLDERS

Selling Stockholder	Shares of Common Stock to be Repurchased	Repurchase Transaction Proceeds	Indemnity Percentage
Dean M. Drako	2,250,000.00	$12,626,510.67	9.9%
Dean M. Drako Living Trust	2,250,000.00	$12,626,510.67	9.9%
Michael Perone	1,402,147.00	$7,868,544.03	6.2%
Zachary Levow	15,378,794.00	$86,302,447.38	67.6%
The Zach Levow 2010 Grantor Retained Annuity Trust	723,486.00	$4,060,046.09	3.2%
The Holly Levow 2010 Grantor Retained Annuity Trust	723,486.00	$4,060,046.09	3.2%
Total:	22,727,913.00	$127,544,104.93	100.00%

Exhibit D

Certificate of Incorporation

Please see attached.

Exhibit E

Voting Agreement

Please see attached.

Exhibit F

Investors’ Rights Agreement

Please see attached.

Exhibit G

ROFR Agreement

Please see attached.

Exhibit H

Company Disclosure Letter

Please see attached.

EX-10.17

Exhibit 10.17

LEASE

LEASE, entered into May 24, 2012 between 317 Maynard LLC, a Michigan limited liability company (hereinafter referred to as “Host”) whose address is c/o First Martin Corporation, 115 Depot Street, Ann Arbor, Michigan 48104 and Barracuda Networks, Inc,, a Delaware corporation (hereinafter referred to as “Guest”) whose address is 3175 S. Winchester Boulevard, Campbell, California 95008, by which the parties agree as follows:

1. Leased Premises. Host leases to Guest certain premises (hereinafter referred to as the “Premises”) located at 317 Maynard Street, Ann Arbor, Michigan (hereinafter sometimes referred to as the “Building”), as shown on Exhibit A attached hereto, containing a rentable area of approximately 42,204 square feet.

2. Term. The term of this Lease shall commence on the later of the date Host’s Improvements for the Premises (as defined in Paragraph 3 hereof) is Substantially Complete or October 1, 2012 (“Commencement Date”), and shall continue through and until October 31, 2017. As used herein, the term “Lease Year” shall mean a period of twelve (12) consecutive months. The first Lease Year shall begin November 1, 2012. For purposes of the Lease, “substantially completed” shall mean constructed in a good and workmanlike manner and fully finished in accordance with the requirements of all applicable laws, regulations, governmental permits and the provisions of the Lease, excepting only punch-list items which do not affect the use or aesthetic appearance of the Premises or related facilities. Notwithstanding anything to the contrary contained herein, the commencement of this Lease and all of Guest’s obligations hereunder are contingent upon Guest receiving approval for state and local incentives totaling at least $1.2 million dollars (the “Contingency”). Guest shall give Host notice that it is waiving such contingency on or before July 15, 2012; otherwise this Lease shall terminate and neither party shall have any further obligation to the other.

3. Construction of Initial Improvements. Host shall provide at its sole cost the improvements set forth, in Exhibit B attached (“Host’s Improvements”). Except as otherwise agreed, Guest shall be responsible for the costs of all other improvements, which costs shall be paid by Guest within thirty (30) days of receipt of invoices. All improvements to the Premises shall be done by Host or Host’s designated contractors, provided such costs are consistent with bids obtained by Guest for the work from other licensed contractors.

4. Rent. Guest shall pay to Host as monthly rent for the Premises for the term hereof the amounts set forth below in advance on the first day of each month.

Lease Month	Monthly Amount
Commencement Date to 30 days after Commencement Date	$	0.00
1-12	$	55,392.75
13-24	$	57,151.25
25-36	$	58,909.75
37-48	$	60,668.25
49-60	$	62,426.75

Guest shall be entitled to 30 days free rent at commencement of the lease. In order to retain the above payment schedule, Guest shall receive a credit against the first month’s payable rent for that number of days less than 30 of free rent not already received based on the actual Commencement Date. Partial months shall be prorated based on a 365-day year. If any rent payment due hereunder is more than seven days late, Guest shall pay Host a service fee equal to one percent (1%) of said rent payment. The payment of this late payment service fee will not constitute a waiver by Host of any default by Guest under this Lease. The rent to be paid by Guest hereunder shall not be diminished by the additional payments to be made by Guest as provided in Paragraphs 5, 6 and 8 hereof.

5. Utilities. Guest shall pay for the cost of all gas, electricity, water and other utilities used by Guest in or for the Premises. Said utilities shall be separately metered.

6. Janitorial Service. Guest shall provide, at its sole expense, janitorial service for the Premises. Host shall provide at its sole expense light bulb replacement for building standard lights (fluorescent tubes) and window washing once a year.

7. Increase in Operating Expenses Pass-Through. Deleted.

8. Taxes.

(a) Guest shall be liable for and shall pay thirty days prior to delinquency the following:

(i) taxes, levies and assessments levied against or measured by the cost or value of Guest’s equipment, fixtures and other personal property located in the Premises including the cost or value of any leasehold improvements made in or to the Premises by Guest or for Guest after commencement of the Lease, regardless of whether Guest paid for such improvements. Guest shall report annually all leasehold improvements for the Premises on the City of Ann Arbor’s personal property assessment form and send a copy to the Host within five (5) days after the date the form is due to the City of Ann Arbor.

(ii) taxes, levies and assessments levied upon or measured by the Rental or any other sum payable hereunder or on Host’s business of leasing the Premises excepting only net income taxes and that portion, if any, of income and franchise taxes which may hereafter be assessed in lieu of or substituted in whole or in part for real estate and personal property taxes the increases in which are payable by Guest and other Guests pursuant to Paragraph 4 hereof.

(iii) taxes, levies and assessments levied against or with respect to the possessions, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Guest of the Premises; or

(iv) taxes, levies and assessments levied against or upon the transaction or any document to which Guest is a party creating or transferring an interest in the Premises.

-2-

(b) If any of the taxes, levies and assessments mentioned in subparagraph 8(a) above are levied against Host or Host’s property, including the Building, or if the assessed value of the Building is increased by a value placed upon the property described in (i) above, and if Host pays such taxes, levies and assessments or the portion of such taxes, levies and assessments resulting from such increase in the assessment, such amounts shall not be payable by Guest to Host.

9. Security Deposit. Guest shall deposit with Host upon satisfaction of the Contingency the amount of $55,392.75 as security for Guest’s faithful performance of its obligations hereunder. If Guest fails to pay the rent or otherwise defaults with respect to any provision of this Lease, Host may use, apply or retain all or any portion of said deposit for the payment of any rent or other charge in default, or for the payment of any other sum to which Host may become obligated by reason of Guest’s default or to compensate Host for any loss or damage which Host may suffer thereby. Said deposit shall not be a limitation on Host’s damages or other rights under this Lease, or a payment of liquidated damages or an advance payment of the rent. If Host so uses or applies all or any portion of said deposit, Guest shall, within fifteen (15) days after written, demand thereof, deposit cash with Lessor in an amount sufficient to restore said deposit to the full amount hereinabove stated and Guest’s failure to do so shall be a material breach of this Lease. Host shall not be required to keep said deposit separate from its general accounts. If Guest performs all of Guest’s obligations hereunder, said deposit, or so much thereof as has not theretofore been applied by Host, shall be returned, without payment of interest or other increment for its use, to Guest at the expiration of the term hereof, within fifteen days and after Guest has vacated the Premises. No trust relationship is created herein between Host and Guest with respect to said security deposit.

10. Place and Form for Payment of Rent. All payments of rent shall be delivered to Host at First Martin Corporation, 115 Depot Street, Ann Arbor, Michigan 48104 or at such other place as Host shall designate from time to time in writing. Rent payments shall be made payable to 317 Maynard LLC.

11. Financing.

(a) If in connection with obtaining by Host of any financing or refinancing for the Building, the lender shall request reasonable modifications in this Lease as a condition to such financing or refinancing, Guest will not unreasonably withhold, delay or defer its consent thereto, provided that such modifications do not increase the obligations of Guest hereunder or in any manner adversely affect the leasehold interest hereby created.

(b) Guest agrees that this Lease shall be subordinate to any mortgages that may hereafter be placed or made upon the Building, provided the mortgagee named in any such mortgages shall agree to recognize the lease of Guest in the event of foreclosure if Guest is not in default.

(c) Guest agrees within thirty (30) days after request by Host to execute in recordable form and deliver to Host a statement, in writing, certifying (a) that this Lease is in full force and effect, (b) the date of commencement of the term of this Lease, (c) that rent is paid currently without any off-set or defense thereto, (d) the amount of rent, if any, paid in advance, and (e) that there are no uncured defaults by Host or stating those claimed by Guest, provided that, in fact, such facts are accurate and ascertainable.

-3-

(d) If proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under, any mortgage made by Host covering the leased Premises, Guest shall become the guest of, and attorn to, the purchaser upon any such foreclosure or sale and recognize such purchaser as the Host under this Lease. The obligation of Guest hereunder to attorn to the purchaser shall be conditioned upon the agreement of such purchaser to recognize the rights of Guest under this Lease.

12. Use of Premises.

(a) Guest shall use and occupy the Premises only for office use consistent with the zoning of the Building.

(b) Guest will keep the Premises clean and shall not create any nuisance, noises, vibrations, electrical discharges, radiation or other disturbances that shall in any way unreasonably impair the peace, quietness, comfort, or security of the building wherein the Premises are situated nor do anything that will cause any extra hazard, impair the validity of any policy of insurance now or hereafter placed on the Building, or any of its contents, or that will increase the rate of premium on any such policy or that will violate any prohibitions in any such policy.

(c) Guest, shall, at its own cost and expense, comply with all of the requirements of all valid laws and regulations, municipal, state and federal, now in force, or which may hereafter be in force, pertaining to the Premises, and the use and occupancy thereof. Host hereby warrants, represents and covenants that upon Host’s tender of possession of the Premises to Guest, the premises and Guest’s occupancy and use thereof as contemplated by the Lease shall comply with all applicable governmental laws, rules, regulations and ordinances, including without limitation all applicable fire and building codes (provided that Guest’s Work, if any, complies with all such rules, regulations, ordinances and codes); all air quality standards established by law; all covenants, conditions, restrictions and easements affecting the Premises; and the requirements of all other leases for space within the Building. For the term of this lease and apart from Guest’s use, Host warrants, represents and covenants that the Premises and the Building shall so comply.

(d) Guest shall not sell, rent or keep drug paraphernalia, pornographic materials or sexually explicit materials in or from the Premises; Guest shall not use the Premises for any activity included in the definition of “adult entertainment business” in the City of Ann Arbor Zoning Ordinance, regardless of whether an activity is a “principal” activity.

13. Acceptance of Premises.

(a) When Host is ready to grant possession of the Premises to Guest, the parties shall walk through the Premises together and shall set forth any punch-list items in writing signed by Host and Guest. Notwithstanding anything to the contrary contained in the Lease, Guest’s acceptance of the Premises shall be subject to (a) Host’s correction of all such Punch-list items within thirty (30) days after the Delivery Date; (b) latent defects; and (c) Host’s warranties as to defects.

-4-

(b) Notwithstanding any provision to the contrary contained in the Lease, if the Delivery Date has not occurred by the date which is one hundred twenty (120) days after the issuance of a building permit, Guest shall have the right to cancel the Lease upon five (5) days written notice to Host. Upon such cancellation, Host shall refund any prepaid rent to Guest, and Host and Guest shall have no liability thereafter accruing the Lease.

(c) Host hereby warrants, represents and covenants that on the Commencement Date, the Premises and the building systems shall be free from faults or defects and that the Premises and the common areas shall comply with all applicable laws, statutes, ordinance, governmental rules, regulations and requirements, including without limitation all applicable fire and building codes, all covenants, conditions, restrictions and easements affecting the Premises. With regard to the Americans with Disabilities Act, the Premises shall comply with the Act and all standards provided for by the Act which are applicable to the Building and Premises. If, within one (1) year after the Commencement Date, any portion of the Premises is found to be faulty or defective or not in conformance with the provisions of the Lease, Host shall cause the same to be corrected at its own expense promptly after receipt of a written notice from Guest to do so.

(d) Host, at Host’s expense, shall engage a qualified industrial hygienist to survey the Building for asbestos and prepare a report on his findings, which report shall be provided to Guest within thirty (30) days of the date hereof. Said report shall include the Hygienist’s recommendations as to what asbestos, if any, is hazardous to human health and should be removed; and Host shall remove such asbestos prior to the Commencement Date. Host warrants that any asbestos remaining in the building will not be injurious to Guest’s employees, agents and visitors. Host shall indemnify, defend and hold Guest harmless against all claims, losses or liabilities arising out of or in connection with the presence of any asbestos and Guest shall be entitled to claim from Host all consequential damages arising out of Host’s breach of the warranty contained in the previous sentence.

Notwithstanding any provision to the contrary contained in the Lease, if the recommendations of the Hygienist for removal of asbestos are not completed prior to Commencement Date, Guest shall have no obligation to commence the Lease and shall have the right to cancel the Lease upon five (5) days written notice to Host. Upon such cancellation, Host shall refund any prepaid rent to Guest, and Host and Guest shall have no liability thereafter accruing the Lease.

(e) As soon as Host’s Work (if any) is sufficiently complete to allow the commencement of Guest’s Work, Host shall allow Guest to enter the Premises for the purpose of completing Guest’s Work and installing Guest’s trade fixtures, equipment, furnishings and other personal property. Such entry shall not be deemed to be an acceptance of the Premises by Guest for the purpose of commencement of the Lease Term, unless the conditions for commencement of the Lease Term as described in Section 1.1 have been satisfied.

-5-

14. Host’s Repairs.

(a) With the exception of premises janitorial service, Host, at its sole cost and expense, shall keep in good order, maintain and repair the Premises, the Common Areas and the structural and public areas of the Building such as lobbies, stairs, corridors, common restrooms, roof, elevators, HVAC (with the exception of dedicated air conditioning units for Guest’s computer room), escalators, and structural elements; provided, however, Host shall not be responsible for repair or replacement of damage or unusual wear and tear to same which is the result of omission, negligence or willful misconduct of Guest or Guest’s agents, employees, contractors, subcontractors, subguests or invitees, such damage or wear and tear being the sole responsibility of Guest and Guest shall promptly accomplish repairs or replacements due to such damage or wear and tear upon demand by Host. Guest shaft secure a maintenance contract for said dedicated air conditioning units for the computer room. Said contract shall be with a qualified air conditioning contractor and shall provide for regular maintenance and inspection at the intervals recommended by the manufacturer of said units. Guest shall not be required to make any structural repairs or alterations or capital improvements to the Premises or the fire-proofing system serving the Premises (including the existing sprinkler system) which may be required by law (whether presently existing or hereinafter enacted), insurance regulations or otherwise, except as may be required solely by Guest’s negligence or Guest’s particular use of the Premises. In addition, Guest shall not be required to make any changes to the entrances and exits to the Premises (including exterior doorways) or any structural changes to the Premises required by the Americans with Disabilities Act and any rules or regulations related thereto. Host, at Host’s expense, shall provide exterior trash and recycling containers for Guest’s use and shall cause said containers to be emptied as required. Notwithstanding the foregoing, should the quantity of trash generated by Guest be substantially in excess of the amount customarily generated by an office tenant, Guest shall be responsible for the cost of removing said excess.

(b) Except as otherwise provided in the Paragraph hereof relating to Destruction and in the Paragraph hereof relating to Eminent Domain, there shall be no allowance, abatement of rental, or liability to Guest for diminution of rental value or interference with Guest’s business and no claim by Guest for eviction from said Premises by reason of inconvenience, annoyance or injury to Guest arising from any repairs, alterations, replacements or improvements made to said Premises, Building, Common Areas or any portion thereof by Host, its agents, employees or contractors, or by Host’s mortgagee. To the extent Host may be responsible for repairs under this Lease, Host shall not be liable to Guest for failure to make repairs to the Premises, Building, Common Areas or any portion thereof, unless Host has received from Guest written notice of the need for such repairs and has failed to commence and diligently complete such repairs within thirty (30) days of such notice or such greater length of time as is reasonably required by Host to make such repairs. Notwithstanding the foregoing, in the event of an emergency, in which case no notice shall be required, Guest shall have the right (but not the obligation) to perform such obligation on Host’s behalf and the reasonable cost thereof shall be due and payable to Guest within thirty (30) days after notice thereof.

(c) Guest acknowledges that the Building cooling system is designed for a maximum internally generated heat load per zone or room of 1 person per 100 square feet and 3 watts of lighting and equipment per square foot in the aggregate. Excluding the server/data room, should the heat load in the Premises exceed the aforesaid maximum, Guest shall be responsible for the cost of any consequent modification to the cooling system.

-6-

15. Alterations by Guest. Except for improvements costing less than Twenty Five Thousand Dollars ($25,000.00) that do not affect the structural elements of the Building, Guest shall not make any alterations, additions and improvements to the Premises without the Host’s written consent, which consent shall not be unreasonably withheld, delayed, or conditioned, and all alterations, additions and improvements made by either of the parties hereto upon the Premises, except movable office furniture and trade fixtures put in at the expense of the Guest, shall be the property of the Host, and shall remain upon and be surrendered with the Premises at the termination of this Lease; provided, however, that the Guest shall have the option of removing additions made by it if the Premises are restored to good condition following such removal and any damages to the Premises resulting from such removal are repaired. Provided Host has given notice to Guest at the time Host approves the alteration or addition, Host may, at its option, require Guest to remove, at Guest’s sole expense, improvements made for or by Guest, other than the Initial Improvements and repair any damage resulting therefrom, upon the expiration or earlier termination of this Lease. Should Guest make any alterations to the Premises, Guest shall have the plans for the Premises revised to reflect such alterations and shall provide Host with a set of the revised plans. In no event shall Guest have the obligation to remove any improvements installed prior to Lease Commencement

16. Building Access. Prior to the Commencement Date, Building access shall be coordinated between Host and Guest; Host shall install and maintain at its expense a proximity card system on the main building entrance. After the Commencement Date, Guest shall have 24/7 access to the Premises. Guest will be given an adequate number of cards for current, future and guest employees. At Guest’s election, Guest may install its own building access system.

17. Insurance. Host shall maintain special form perils property insurance coverage on the Building in which the Premises are located. Guest shall maintain special form perils property insurance coverage on the contents of the Premises. In addition, Guest shall maintain a policy of commercial general liability insurance coverage with a combined single occurrence limit of not less than $1,000,000.00 [pending] insuring Host and Guest against any liability arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be issued by an insurance company acceptable to Host, with an A.M. Best rating of not less than A-, Guest shall provide Host with a certificate of insurance for said policy naming Host as an additional insured party; Host, although named as an additional insured, shall nevertheless be entitled to recover under said policy for any loss sustained by it as a result of the acts or omissions of Guest. No such policy shall be cancelable or subject to reduction of coverage or other modification except after thirty (30) days’ prior written notice to Lessor. Host and Guest and all other parties claiming under them hereby mutually release and discharge each other from all claims and liabilities to the extent covered by insurance, regardless of the cause of any damage, loss or injury to person or property, to the extent such waiver of liability is permitted by any applicable policies of insurance maintained by Host and/or Guest, as the case may be. Provided other Guests of Host waive subrogation against Guest, Guest waives any and all rights Guest may have against said other Guests for damage to or destruction of the demised Premises due to any casualty insurable by the customary form of special form perils property insurance coverage, whether such damage or destruction be due to said Guests’ negligence or otherwise. In the event that this Lease is in effect for longer than five years, the single limit of the aforesaid insurance which Guest is required to maintain shall be adjusted at the beginning of the sixth Lease Year and every fifth year thereafter to the amount then being required by new leases entered into by Host.

-7-

18. Guests Personal Property. All personal property of Guest kept on the Premises shall be at Guests sole risk, and Guest hereby waives all right of recovery which it might otherwise have against Host for any loss, theft or damage to Guest’s personal property.

19. Destruction—Fire or Other Cause. If the Premises shall be rendered untenantable by fire or other casualty, then Host shall make the Premises tenantable as speedily as possible, and the rent shall be abated in whole or in part, according to the portion of the Premises which is rendered untenantable, during the period of untenantability, except that there shall be no such abatement if such fire or other casualty shall be caused by the gross negligence of Guest or its agents, employees, invitees or licensees, and further, there shall be no abatement for the time required for the replacement or repair of any property of Guest, in excess of the time required to make the Premises tenantable. In the event that the Premises cannot be made tenantable within ninety (90) days, then Guest may terminate this Lease by notification to Host of such termination within ten (10) days after Host shall have notified Guest of the time required to make them tenantable. Host shall, in its sole judgment, reasonably exercised, determine the length of time required to make the Premises tenantable, and shall notify Guest of such determination within ten (10) days after the occurrence of the fire or other casualty. Notwithstanding the foregoing, in the event that the Premises shall be so damaged by fire or other casualty that greater than 35% of the premises is rendered untenantable and the premises cannot be made tenantable within 180 days, then Host may terminate this Lease by notifying the Guest of such termination within thirty (30) days after the date of such damage.

20. Eminent Domain. In the event that all or a substantial portion of the Premises be lawfully condemned or taken in any manner for any public or quasipublic use, this Lease shall terminate as of the date of actual taking. In the event that any insubstantial part of the Premises be so condemned or taken, either party shall have the right to terminate this Lease as of the date of actual taking by giving written notice of such termination; but should this Lease not so terminate, this Lease shall cease as to the part taken and the rent adjusted so that Guest shall pay a pro rata portion of the rent determined by the amount of space (and rate therefor) remaining after the taking. Host shall be entitled to receive the entire award from any such condemnation or taking of the Premises or any part thereof without deduction therefrom for any estate or interest granted to Guest by this Lease, provided, that nothing herein contained shall be deemed to prevent Guest from claiming compensation for relocation costs or loss for interruption of business in the event an award with respect thereto is provided for by law or is fixed in the proceeding in which such taking shall occur. In the event of a partial taking insufficient in size to cause termination of the Lease, Host shall build, repair or replace any outer walls, floor, or roof necessary to make the Premises tenantable.

21. Assignment and Subletting.

(a) Guest shall not assign this Lease or sublet the Premises or any part thereof without the written consent of Host, which consent shall not be unreasonably withheld or delayed. Any other provision of this Paragraph to the contrary notwithstanding, Host shall not be required to give its consent to an assignment or subletting of the leased Premises, or any part thereof, if the

-8-

effect of such assignment or subletting would be to create a profit of more than 50% of the Rental income for the Guest after deducting Guests costs to sublet. In such cases, any profit from the assignment or subletting shall be paid 50% to the Host after deducting Guest’s expenses related to the assignment or sublease including, but not limited to brokerage fees, improvements, attorney’s fees. Guest agrees that it shall not be unreasonable for Host to withhold its consent to a proposed assignment or subletting if: (1) Host believes that the proposed assignee or sublessee is not as financially responsible as Guest on the date hereof unless Guest remains liable under the lease in which case there shall be no such condition to assignment or sublease; (ii) the proposed assignee or sublessee will not conduct on the Premises a business of a quality equal to that conducted by Guest. Host’s consent to one assignment or sublease shall not waive the requirement of its consent to any subsequent assignment or sublease. In the event Host consents to Guest’s subletting, Guest shall include in such sublease all of the pertinent terms contained herein, and Guest shall furnish Host with a certified copy of any and all subleases affecting the demised Premises prior to such consent; and in case of default by Guest giving Host right of entry for breach of condition subsequent, Guest, at Host’s option, shall assign all of Guest’s right, title and interest in any subleases to Host, and Guest shall incorporate such provision in any and all subleases made by Guest. Host’s consent to an assignment shall not be effective until Host has received a written document in which the assignee has assumed and agreed to perform all of Guest’s obligations in the Lease. Host’s consent to an assignment or sublease shall not release the Guest from the payment and performance of its obligations in the Lease, but rather the Guest and its assignee shall be jointly and severally primarily liable for such payment and performance. Guest shall reimburse Host for all reasonable costs not to exceed $1,000.00 incurred by Host in connection with a sublease or assignment (including a proposed sublease or assignment which is not consummated).

(b) Host’s prior consent shall not be required for any assignment, sublease or other transfer of Guest’s interest in the Premises or the Lease to any corporation with which Guest may merge, transfer substantially all assets to or consolidate or become affiliated as a parent, subsidiary, holding company or otherwise, or to an entity in which Guest has a controlling interest.

(c) A subsequent public offering and sale of stock in Guest’s business, or a transfer of any amount of Guest’s stock shall not constitute a change in ownership of Guest or an assignment of the Lease.

22. Default, Eviction, Termination and Damages. If Guest shall fail to pay any rent or other charges due hereunder within fifteen (15) days of the date said charges are due on more than two occasions and Host has notified Guest in writing, or if Guest shall fail to comply with any details, provisions, or covenants of this Lease other than the payment of rent and shall not cure such failure within thirty (30) days after written notice thereof (unless Guest has attempted to cure and diligently pursues cure), or if Guest shall be adjudged bankrupt by a court of competent jurisdiction, or if a receiver or trustee shall be appointed for all or substantially all of the assets of Guest, then in any such event, Guest shall be deemed in default. When Guest is in default, Host, besides other rights or remedies it may have, shall have the right to declare this Lease terminated and the term ended, shall have the right to evict Guest under Summary Proceeding law, and shall have the additional and immediate right of reentry and may remove all persons and property from the leased Premises and such property may be removed and stored in a public warehouse or elsewhere at the cost of, and for the account of Guest, without evidence of notice or resort to legal process and

-9-

without being deemed guilty of trespass, or becoming liable for any loss or damage which may be occasioned thereby. Should Host elect to reenter, as herein provided, or should it take possession pursuant to legal proceedings or pursuant to any notice provided for by law, it may either terminate this Lease or it may from time to time, without terminating this Lease, make such alterations and repairs as it may deem appropriate in order to re-rent the Premises, and re-rent said Premises or any part thereof for such term or terms (which may be for a term extending beyond the term of this Lease) and at such rental or rentals and upon such other terms and conditions as Lessor in its sole discretion may deem advisable provided that Host shall use reasonable efforts to re-rent the Premises on behalf of Guest and all rental proceeds shall be deducted from the balance of rent owed by Guest under the Lease. Upon each such re-renting, all rentals and other sums received in any month by Host from such re-renting shall be applied, first to the payment of any indebtedness other than rent due hereunder from Guest to Host; second, to the payments of any costs and expenses of such re-renting, including reasonable brokerage fees and attorneys’ fees and of costs and repairs; third, to the payment of rent and other charges due and unpaid hereunder; and the residue, if any, shall be held by Host and applied in payment of future rent as the same may become due and payable hereunder. If such rentals and other sums received from such re-renting during any month be less than that to be paid during that month by Guest hereunder, Guest shall pay such deficiency to Host. Such deficiency shall be calculated and paid monthly. No such re-entry or taking possession of said Premises by Host shall be construed as an election on its part to terminate this Lease unless a written notice of such intention be given to Guest or unless the termination thereof be decreed by a court of competent jurisdiction. Notwithstanding any such re-renting without termination, Host may at any time hereafter elect to terminate this Lease for such previous default. Should Host at any time terminate this Lease for any default, in addition to any other remedies it may have, it may recover from Guest all damages it may incur by reason of such default, including the cost of recovering the leased Premises, reasonable attorneys’ fees, and including the worth at the time of such termination of the excess, if any, of the amount of rent and charges equivalent to the rent reserved in this Lease for the remainder of the stated term over the then reasonable rental value of the leased Premises for the remainder of the stated term, all of which amounts shall be immediately due and payable from Guest to Host, except as mitigated by any re-renting and adjusted for present value. In case suit shall be brought for recovery of possession of the leased Premises, for the recovery of rent or any other amount due under the provisions of this Lease, or because of the failure by Guest to abide by any other detail, provision, or covenant herein contained, the prevailing party shall be entitled to all expenses incurred therefore, including reasonable attorneys’ fees. Guest and Host hereby waive their rights to jury trial in any litigation that may arise relating to this Lease.

23. Surrender of Premises. Upon the expiration or the termination of the term of this Lease, Guest shall quit and surrender the Premises to Host in good order and condition, ordinary wear, damage by the elements, and damage which is the responsibility of Host excepted; and, except as otherwise provided herein, Guest shall remove all of its property and shall repair any damage to the Premises caused by such removal. Any personal property of Guest or of anyone claiming under Guest which shall remain on the Premises after the expiration or termination of the Lease term shall be deemed to have been abandoned by Guest, and either may be removed by Host as its property or may be disposed of in such manner as Host may see fit, and Host shall not be responsible for the same.

-10-

24. Access to Premises. Host shall have the right to enter upon the Premises at all reasonable hours upon reasonable notice for the purpose of inspecting the same, preventing waste, loss, or destruction, removing obstructions, making such repairs or alterations as it is obligated to make under the terms of this Lease, or to enforce any of Host’s rights or powers under this instrument, and Host shall not be liable nor responsible for any loss that may accrue to Guest’s business by reason thereof provided Host uses reasonable care to ensure that Guests normal use and enjoyment of the Premises is not disturbed. The Host may show the Premises to prospective Guests at any time during the last three (3) months of the term of this Lease, provided it has given 24 hrs written notice.

25. Heirs and Assigns. The covenants, conditions, and agreements contained in this Lease shall bind and inure to the benefit of Host and Guest and their respective heirs, distributees, executors, administrators, successors, and, except as otherwise provided in this Lease, their assigns.

26. Confidentiality. Intentionally deleted.

27. Quiet Enjoyment. So long as Guest pays the rent and performs all of its obligations in this Lease, Guest’s possession of the Premises will not be disturbed by Host, its successors or assigns.

28. Signs. Guest shall not fasten to or paint upon any part of the Premises or Building any sign, advertisement, notice or handbill visible from the exterior of the building without the prior written consent of the Host. Host may, without notice to Guest, remove any such sign, advertisement, notice or handbill painted or affixed in violation of this clause without any liability whatsoever for damages or otherwise to Guest, and Guest shall be responsible for the cost of such removal. Notwithstanding the foregoing, Guest shall have the right to building and monument signage subject to Host’s reasonable approval and compliance with City ordinance.

29. Holding Over. In the event that Guest shall hold over after the term of the Lease, it is agreed that thereafter the tenancy shall be from month to month in the absence of a written agreement to the contrary on the same terms and conditions contained herein, with the exception that the rent shall increase to 125% of the rent in effect at the termination of the term of the Lease.

30. Parking. Per separate arrangement with local governmental entities and not part of this agreement.

31. Notices. Whenever any notice is required hereunder it shall be made in writing and served personally or by certified mail, return receipt requested, at the following addresses (or at such other addresses as the parties may hereafter designate in writing):

Host:	317 Maynard LLC c/o First Martin Corporation 115 Depot Street Ann Arbor, Michigan 48104
Guest:	Barracuda Networks, Inc. ATTN: David Faugno, CFO 3175 S. Winchester Blvd. Campbell, CA 95008

-11-

If served personally, service shall be conclusively deemed made at the time of such service. If served by certified mail, service shall be conclusively deemed made forty-eight (48) hours after the deposit thereof in the United States Mail.

32. Host’s Liability.

(a) Guest shall indemnify, defend and hold harmless Host and Host’s officers, employees, agents and invitees from all losses, damage, claims or liability arising out of any and all injuries to or death of any person or damage to any property arising out of any occurrence in or about the Premises, or arising out of any occurrence in or about the Building arising from the act or neglect of Guest or its agents or invitees. Notwithstanding the foregoing, Guest shall have no obligation to indemnify Host against the negligence or willful misconduct of Host, its agents, representatives, invitees, independent contractors or employees. Except to the extent covered by Host’s insurance and paid or reimbursed to Guest by such insurance, Host shall indemnify, defend and hold Guest harmless from all claims, costs, attorneys fees, expenses and liabilities arising from any willful misconduct or negligence of Host or its agents, representatives, invitees, independent contractors or employees, from Guest’s reliance on any warranty or representation made by Host herein which is not true or accurate; or from Host’s failure to observe any of the terms and conditions of the Lease.

(b) The Host shall not be responsible or liable to the Guest for any loss or damage that may be occasioned by or through the acts or omissions of persons occupying adjoining premises or any part of the premises adjacent to or connected with the Premises hereby leased or any part of the Building of which the leased Premises are a part or for any loss or damage resulting to the Guest or his property from bursting, stoppage or leaking of water, gas, sewer or steam pipes.

(c) Excluding any indemnification obligation hereunder, if Host shall fail to perform any provision of this Lease and if as a consequence of such default Guest shall recover a money judgment against Host, such judgment shall be satisfied only out of the proceeds of sale received upon execution of such judgment and levied against the interest of Host in the Building or the consideration received by Host from the sale of Host’s interest.

33. Rules and Regulations. Guest and its employees and invitees, shall faithfully observe and comply with the Rules and Regulations attached to this Lease, and all reasonable modifications of and additions thereto as may be from time to time put into effect by Host. Host shall not be responsible to Guest for the nonperformance of any of said Rules and Regulations by any other Guest or occupant of the Building. In the event of a conflict between the terms and provisions of this Lease and the referenced Rules and Regulations, this Lease shall control. Prior to the effective date of any intended modifications of or additions to the Rules and Regulations annexed hereto, Host shall furnish Guest with a written copy of same.

34. Environmental Law Compliance. The parties acknowledge that there are certain federal, state and local laws, regulations and guidelines now in effect, and that additional laws,

-12-

regulations and guidelines may hereafter be enacted, concerning the impact on the environment of land use, the maintenance and operation of structures, and the conduct of business. Guest will not cause, or permit to be caused, any act or practice on or about the premises which would adversely affect the environment or violate any of such laws, regulations, or guidelines. In particular, without limiting the generality of the foregoing, Guest will not use the premises to produce, store, process or transport any hazardous waste or hazardous substance, as those terms are defined in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (“CERCLA”), or in the Resource Conservation Recovery Act of 1980, as amended (“RCRA”). Any violation of this covenant shall be an event of default under this Lease. Guest agrees to indemnify and hold Host harmless against all losses, costs, expense and liability whatsoever, including Host’s costs of defending against the foregoing, which will include reasonable attorney’s fees, and against any costs necessary in connection with the cleanup or removal of any hazardous waste or hazardous substance from the premises, caused, or permitted to be caused, by any act, practice or neglect of Guest with respect to the use of the premises. Guest shall have no claim against Host by reason of any changes which Host may be required to make to the premises pursuant to such laws, regulations, or guidelines.

Host represents to the best of Hosts knowledge that as of the Commencement Date, the Premises (and the area underneath the Premises) are free of hazardous materials. Host agrees that Guest shall have no liability or responsibility whatsoever for any hazardous materials or toxic wastes on or about the Premises or the Complex which were not created by Guest. Host shall indemnify, defend and hold Guest harmless against all claims, losses or liabilities arising out of or in connection with the presence, use, storage, disposal, removal or clean-up of any hazardous material or toxic waste in or about the Premises, the common areas, or any other part of the Building, unless caused or created by Guest.

35. Telecommunications. It is understood and agreed that Guest, in coordination with Host, intends to install or have installed communications cabling or other equipment in the Premises, requiring access for installation and maintenance to phone closets, wiring chases, mechanical rooms and the like. Guest shall indemnify and hold Host harmless for all losses, claims, demands, expenses and judgments against Host caused by or arising out of, either directly or indirectly, any acts or omissions by third party providers which operate in the Building at the request of Guest. In addition, Guest in coordination with Host shall have access at no cost to the roof of the building for the purposes of installing and maintaining non-third party communications equipment.

36. Intentionally deleted.

37. Option To Extend.

37.1 Extended Term. In consideration of Guest entering into the Lease, and provided that Guest is not then in default, Host hereby grants to Guest the option to extend the term of the Lease for an additional term of two (2) years from October 1, 2017 through September 30, 2019 (“Extended Term”). Guest shall give written notice to Host of Guest’s intent to exercise its option to extend at least one hundred twenty (120) days prior to expiration of the original term. The Extended Term shall be upon the same covenants, agreements, terms, provisions and conditions as are contained in the Lease, except that the rent payable shall be as provided in Section 4.2 below. If Guest has exercised its option to extend, the phrase “Lease Term” as used in the Lease shall mean the original term of the Lease and the Extended Term.

-13-

37.2 Rent for Extended Term. The Base Rent for the Extended Term shall be at 95% of the then prevailing market rental value. The prevailing market rental value shall be determined as follows:

37.2.1 Host shall deliver to Guest written notice of Host’s determination of prevailing market rental value within ten business (10) days after Host receives notice from Guest that Guest has exercised its option to extend.

37.2.2 If Guest disputes Host’s determination of the prevailing market rental value as contained in Host’s notice, Guest shall notify Host in writing within ten (10) days of its receipt of Host’s determination, which notice shall set forth Guest’s determination of the prevailing market rental value. Should Guest timely notify Host as aforesaid, Host and Guest shall attempt to resolve their differences within ten (10) business days following Host’s receipt of Guest’s notice.

37.2.3 If Host and Guest cannot agree on prevailing market rental value during such ten (10) business day period, Host and Guest shall each appoint as an appraiser a real estate broker experienced in leasing office space in the county in which the Premises are located and give notice of such appointment to the other within ten (10) days after the foregoing ten (10) business day period. If either Host or Guest shall fail timely to appoint an appraiser, then the single appraiser appointed by one party shall proceed to make the determination of prevailing market rental value. Such appraisers shall, within fifteen (15) business days after the appointment of the last of them to be appointed, complete their written determinations of prevailing market rental value and furnish the same to Host and Guest. Each party shall pay the fees and costs of the appraiser appointed by it. If the valuations vary by ten percent (10%) or less of the higher value, the prevailing market rental value shall be the average of the two valuations.

37.2.4 If the valuations vary by more than ten percent (10%) of the higher value, the two appraisers shall, within ten (10) days after submission of the last appraisal report, appoint a third disinterested appraiser who shall be an M.A.I. If the two appraisers shall be unable to agree in a timely manner on the selection of the third appraiser, then either appraiser on behalf of both, may request appointment of such third disinterested M.A.I. appraiser by the presiding judge of the superior court of the county in which the Premises are located. Such third appraiser shall within twenty business days after appointment, make a determination of prevailing market rental value and submit an appraisal report to Host and Guest. The prevailing market rental value of the Premises shall be as determined by the third appraiser, unless is it (A) less than the valuation set forth in the lower prior appraisal, in which case the lower prior appraisal shall be controlling or (B) greater than the valuation set forth in the higher prior appraisal, in which case the valuation set forth in the higher prior appraisal shall be controlling. All fees and costs incurred in connection with the determination of prevailing market rental value by the third appraiser shall be paid one-half by Host and one-half by Guest.

37.2.5 For purposes of this Section 4.2, the prevailing market rental value of the Premises shall mean the rental rate that an unrelated party negotiating at arm’s length would pay

-14-

for leasing the Premises for the period of the extension term with no brokerage commission payable, taking into account all then current market factors, including without limitation the quality, design, and location of the Building and the Premises within the Building, the terms and conditions of the Lease (including the permitted use provided in the Lease) and the value of the existing Guest improvements to such party (but excluding the value of any improvements installed at Guest’s expense) and also excluding any premium based on the size of the Premises.

37.2.6 Upon determination of the prevailing market rental value of the Premises (and the calculation of Base Rent as being 95% of that value) for an extension term, Tenant shall have the right to withdraw its exercise of its option to extend by giving Landlord notice of withdrawal within five (5) days of Tenant’s receipt of notice of the determination. In the event Tenant does withdraw its option exercise, Tenant shall pay all appraisal fees incurred by landlord and Tenant in determining the prevailing market rental value. In the event Tenant does not withdraw its option exercise, then upon determination of the Base Rent for the extension period as described above, the parties shall execute a certificate specifying the Base Rent and Triple Net Expenses for such extension period.

38. Miscellaneous.

(a) The failure of either party to enforce any covenant or condition of this Lease shall not be deemed a waiver thereof or of the right of either party to enforce each and every covenant and condition of this Lease. No provision of this Lease shall be deemed to have been waived unless such waiver be in writing.

(b) This Lease and the Exhibits attached hereto and forming a part hereof, set forth the entire agreements between Host and Guest concerning the leased Premises. Any amendment shall be in writing and signed by each party.

(c) Host acknowledges that Guest is represented by Colliers International in this transaction and is due a 5% commission equal to $176,729.25 payable by Host per the terms of a separate agreement between Host and Colliers International. Aside from the commission due to Colliers International each party represents and warrants that there are no claims for brokerage commissions or finder’s fees in connection with the execution of this Lease, and each party agrees to indemnify the other against, and hold it harmless from, all liability arising from any such claim.

(d) Guest shall not record this Lease without the written consent of Host. Upon the request of either party the other party shall join in the execution of a memorandum of this Lease for recording which shall describe the parties, the leased Premises, the term and any special provisions.

(e) In the event of any transfer of Host’s interest in the Premises, the transferor shall be automatically relieved of all obligations and liabilities on the part of Host accruing from and after the date of such transfer. The release of Host from such obligations and liabilities shall be expressly conditioned upon an assumption by any transferee of all of the unperformed terms, covenants and conditions of this Lease arising after the date of such transfer, including the application of Guest’s security deposit in accordance with the provisions of Paragraph 9 hereof.

-15-

(f) Any amount due from Guest to Host or from Host to Guest which is not paid when due shall bear interest at an annual rate of prime plus three (3%) percent from the date due until paid, unless otherwise specifically provided herein, but the payment of such interest shall not excuse or cure any default by Guest.

(g) No payment by Guest of a lesser amount than the monthly rent shall be deemed to be other than on account of the earliest rent, nor shall any endorsement or statement on any check or any letter accompanying any payment be deemed an accord and satisfaction, and Host shall accept such payment without prejudice to Host’s right to recover the balance of such rent or pursue any other remedy.

(h) This Lease shall be governed by, and construed in accordance with the laws of the State of Michigan. If any provision of this Lease shall, to any extent, be invalid or unenforceable, the remainder of this Lease shall not be affected and each provision shall be valid and enforceable to the fullest extent permitted by law.

39. Depot Lease. Pursuant to a lease between API Properties LLC (as landlord) and Guest (as tenant) the “API Lease”), Guest has leased certain office space at 201 Depot Street, Ann Arbor, Michigan through March 31, 2014. Host hereby agrees to indemnify and hold Guest harmless against any claims asserted by API Properties against Guest for termination fees, rent, utilities or other monetary obligations relating to the API Lease and arising on or after the Commencement Date of the term of this Lease. Guest may vacate the Premises in its “as-is” condition with no obligation to restore, repair, or replace.

Intentional Page Break

-16-

This agreement is hereby signed on behalf of the parties effective as of the date first written above.

Host:
317 MAYNARD LLC,
a Michigan LLC
By:	First Martin Corporation, Manager
By:	/s/ Mike Martin
Its:	Vice President
Guest:
BARRACUDA NETWORKS, INC.
a Delaware Corporation
By:	/s/ David Faugno
Its:	CFO

-17-

ACKNOWLEDGEMENT OF CORPORATE GUEST

STATE OF

ss.

COUNTY OF

The foregoing instrument was acknowledged before me this          day of             , 2012 by              the              of             , a              corporation, on behalf of the corporation.

Notary Public

County

My commission expires:

Revised: 5/1/08

-18-

RULES AND REGULATIONS

1. The sidewalks and grounds of the Building are not for the use of the general public, and Host shall in all cases retain the right to control and prevent access thereto of all persons whose presence in the judgment of Host shall be prejudicial to the safety, character, reputation and interests of the Building and its Guests, provided that nothing herein contained shall be construed to prevent such access to employees or other persons with whom any Guest normally deals in the ordinary course of its business, unless such persons are engaged in illegal activities. No Guests and no employee, agent or invitee of any Guest shall go upon the roof of the Building.

2. No awnings or other projection shall be attached to the outside walls of the Building. No curtains, blinds, shades or screens shall be attached to or hung in, or used in connection with, any window or door of the Premises without prior written consent of Host. All electric ceiling fixtures hung in offices or spaces along the perimeter of the Building must be fluorescent, of a quality, type, design and bulb color approved by Host. Neither the interior nor exterior of any windows shall be coated or otherwise unscreened without the written consent of the Host.

3. No vehicles, birds or animals of any kind shall be brought into or kept in or about the Premises. Any preparation of food or beverages in the Premises shall be done only with equipment approved by Host which does not overload the electrical wiring of the Premises. No Guest shall cause or permit any unusual or objectionable odors to be produced or permeate the Premises.

4. Except with the prior written consent of Host, no Guest shall occupy or permit any portion of his Premises to be occupied as an office for a public stenographer or typist, or for the manufacture or sale of liquor, narcotics or tobacco in any form, or as a barber or manicure shop, in or on the Premises. No Guest shall engage or pay any employees on the Premises, except those actually working for Guest on the Premises, nor advertise for laborers giving an address at the Premises. The Premises shall not be used for lodging or sleeping or for any illegal purposes.

5. No Guest shall make, or permit to be made, any unseemly or disturbing noises or disturb or interfere with occupants of this or neighboring buildings or premises or those having business with them, whether by the use of any musical instrument, radio, phonograph, unusual noise, or any other way. No Guest shall throw anything out of door, windows or skylights or down the passageways.

6. Guest shall provide Host with a key for any exterior doors installed by Guest in the Premises. Each Guest must, upon the termination of its tenancy, restore to the Host all keys of stores, offices, and toilet rooms, either furnished to, or otherwise procured by, such Guest and in the event of the loss of any keys so furnished, such Guest shall pay to the Host the cost of replacing the same lock or locks opened by such lost key if Host shall deem it necessary to make such change.

7. Host shall have the right to prohibit any advertising by any Guest which, in Host’s opinion, tends to impair the reputation of the Building or its desirability as an office/research building and upon written notice from Host any Guest shall refrain from or discontinue such advertising.

-19-

8. Each guest shall see that the doors of its Premises are closed and securely locked and must observe strict care and caution that all water faucets, water apparatus and utilities are shut off before employees leave the Premises, so as to prevent waste or damage, and for any default or carelessness Guest shall make good all injuries sustained by other Guests or occupants of the Building or Host. On multiple-tenancy floors, all Guests shall keep all doors to the Building corridors closed at all times except for ingress and egress.

9. The requirements of Guest will be attended to only upon application to Host. Employees and agents of Host shall not perform any work or do anything outside of their regular duties unless under special instruction from Host.

10. Canvassing, soliciting and peddling in the Building are prohibited and each Guest shall cooperate to prevent the same.

11. Guest shall not cause any noise, odor, vibration or light disturbing or annoying to other Guests of the Building or to Guests of neighboring buildings.

12. No air conditioning unit or other similar apparatus shall be installed or used by any Guest without the written consent of Host, not to be unreasonably withheld.

13. Subject to the provisions of Paragraph 35 of the Lease, no Guest shall install any radio or television antenna, loudspeaker or other device on the roof or exterior walls of the Building.

14. Each Guest shall store all its recycling, trash and garbage within its Premises. No material shall be placed in the trash boxes or receptacles if such materials is of such nature that it may not be disposed of in the ordinary and customary manner of removing and disposing of trash and garbage in the City of Ann Arbor without being in violation of any law or ordinance governing such disposal. All recycling, garbage and refuse disposal shall be made only through entryways provided for such purposes and at such times as Host shall designate. Should the amount of trash generated by Guest exceed the amount typically generated by users of office space, Guest shall be responsible for the cost of disposing of such excess. All boxes shall be broken down before being placed in the Building recycling or trash receptacles.

15. Host may waive any one or more of these Rules and Regulations for the benefit of any particular Guest or Guests, but no such waiver by Host shall be construed as a waiver of such Rules and Regulations in favor of any other Guest or Guests, nor prevent Host from thereafter enforcing any such Rules and Regulations against any or all of the Guests of the Building.

16. These Rules and Regulations are in addition to and shall not be construed to in any way modify, alter or amend, in whole or in part, the terms, covenants, agreements and conditions of any lease of premises in the Building.

-20-

17. Guest shall not operate any equipment that disrupts equipment elsewhere in the building.

18. Smoking is prohibited in the Building restrooms, hallways, lobbies, lunchrooms, stairwells and other common areas and on the Building grounds except in those areas designated by Host. Host shall not be obligated to designate any such areas.

19. [reserved]

20. Notwithstanding the provisions of Paragraph 1 of these Rules and Regulations, Host shall have the right to bar from the Building any moving company or vendor of spring water, soda pop, candy, janitorial, construction or other goods or services which has or may, in Host’s reasonable judgment, (i) cause damage to the Building, (ii) violate these Rules and Regulations (as same may be amended from time to time or (iii) create any nuisance, noise or other disturbance which in any way impairs the peace, quietness, comfort or security of the Building.

21. Guest shall not occupy in any manner, including storage of Guest’s property, any electrical or mechanical rooms in or about the Premises. Host shall have the right to remove and dispose of any property placed by Guest in such electrical or mechanical rooms without notice to Guest.

22. Host reserves the right to make such other and reasonable rules and regulations as in its judgment may from time to time be needed for the safety, care and cleanliness of the Building, and for the preservation of good order therein.

-21-

Exhibit A

page 1 of 3

-22-

Exhibit A

page 2 of 3

-23-

Exhibit A

page 3 of 3

-24-

Exhibit B

page 1 of 4

-25-

Exhibit B

page 2 of 4

-26-

Exhibit B

page 3 of 4

-27-

page 4 of 4

Host shall complete the following at its sole expense:

1. Reconfigure layout per Exhibit B, pages 1-3

2. Any interior walls constructed by Host to be drywall with a painted finish, all new walls will be insulated for sound with fiberglass insulation

3. Paint all painted walls

4. Replace/repair as necessary building standard lighting (mix of 2’x4’ and 2’x2’ T8), on-going bulb replacement is the responsibility of Host

5. Rework light switching in areas changed from private offices to open office

6. Replace all carpeted areas with $25/sq yard material allowance

7. Replace all ceiling tile, existing grid to remain

8. Upgrade/replace main entry doors card access system with a new Key Scan controller

9. Millwork to remain

10. Install fire alarm with pull stations and one smoke detector

11. Separate utilities from “retail” Borders space

12. Construct 8’ insulated block wall demising the Premises from the “retail” Borders space, drywall finish on Barracuda side

13. Separate mechanical systems from “retail” space

14. Replace building cooling tower

15. Repair VAV boxes

16. Replace compressor for pneumatic VAV box controls

17. Repair humidifier

18. Install chemical feed/treatment system to HVAC water

19. Replace dishwashers in break areas

20. Install new Trade Tracer panel and computer to manage and operate building HVAC

21. Modify building electrical equipment to provide 800 amps of power to panel in server room, branch circuit distribution in server room by Guest

22. Server room HVAC, Host’s contribution capped at $70,000

23. Install storefront glass system in the areas fronted Maynard and shown on the floor plan

24. Install 2’ high clerestory windows along east (alley) wall in areas shown on the floor plan, glass to be tinted bronze, non-operable

Guest’s work to be completed by Host at Guest’s sole expense:

1. Electrical wiring for furniture/power poles

2. Data cabling

3. Server room HVAC any cost in excess of $70,000

4. Install refrigerators in break areas as desired

5. Window treatments by Guest

6. Signage by Guest

7. Branch electrical circuit distribution from panel in server room

-28-

EX-10.18

Exhibit 10.18

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (“Agreement”) is made by and between Barracuda Networks, Inc., a Delaware corporation (the “Company”) and the undersigned individual (the “Employee”), effective as of April 13, 2012.

RECITALS

A. Reference is hereby made to the Stand-Alone Restricted Stock Unit Agreement by and between the Company and the Employee, dated as of March 1, 2009 (the “RSU Agreement”).

B. Whereas in connection with the waiver of certain terms in the RSU Agreement, the Employee will become entitled to receive certain payments of shares pursuant to the terms of RSU Agreement (the “Shares”).

C. Whereas, the parties desire to enter into this agreement to provide mutual assurances that the Employee will be free from undue concern for claims for damages arising out of or related to the Employee’s Shares that he received as an officer of the Company and will be indemnified for certain claims or losses relating the Shares, if applicable.

AGREEMENT

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows, and in consideration for the Shares:

1. Indemnification by Company. The Company hereby agrees to indemnify and hold harmless the Employee from and against any and all income, payroll, withholding and other taxes and any and all penalties and interest resulting from a determination by an Internal Revenue Service audit or any court or other applicable governmental entity relating to the taxation or tax reporting of the Shares.

2. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever, (a) the validity, legality and enforceability of the remaining provisions of the Agreement (including without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby, and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

3. Modification and Waiver. No supplement, modification, waiver or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

4. Notice. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (a) if delivered by hand and receipted for by the party addressee or (b) on the third business day after the mailing date. Addresses for notice to either party are as shown on the signature page of this Agreement, or as subsequently modified by written notice.

5. Counterparts; Governing Law. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties that execute such counterparts, and all of which together shall constitute one instrument. This Agreement shall be governed exclusively by and construed according to the laws of the State of California without reference to principles of conflict of laws.

	THE COMPANY:
	BARRACUDA NETWORKS, INC.
Date: April 13, 2013	By:	/s/ Michael Perone
	Name:	Michael Perone
	Title:	CMO & EVP
	Address:
	3175 Winchester Blvd
	Campbell, California 95008
	EMPLOYEE:
Date: April 13, 2013	/s/ David Faugno
	David Faugno
	Address:

-2-

EX-99.1

Exhibit 99.1

August 6, 2013

David Faugno

Chief Financial Officer

Barracuda Networks, Inc.

3175 Winchester Blvd,

Campbell, CA 95008

RE: Consent of Compass Intelligence

Dear Mr. Faugno,

Barracuda Networks, Inc. (“Barracuda” or the “Company”) has requested that Compass Intelligence (“Compass”) execute this consent in connection with a proposed initial public offering by the Company (the “Offering”). In connection with the Offering, Barracuda has prepared a prospectus included in the registration statement on Form S-1, including all amendments thereto (the “Registration Statement”), as filed with the Securities and Exchange Commission.

This consent serves as confirmation by Compass to Barracuda that Compass hereby:

1. consents to the use of, and references to, Compass’ name, in connection with Compass’ research data on enterprises with less than 5,000 employees entitled “Barracuda Networks Number of Firms Demographics, 2013,” dated July, 2013 and “IT Security & Storage TAM for Barracuda Networks, 2013” dated July, 2013 (collectively, the “Research”), in the Registration Statement; and

2. grants the Company permission to include references to the Research, substantially in the form furnished hereto as Exhibit A, as part of the Registration Statement (the “Statement”).

This consent further confirms that the references from the Registration Statement quoted in Exhibit A are an accurate depiction of the Research and that Compass provides its consent to the inclusion of this letter as an exhibit to the Registration Statement. The Company agrees to indemnify Compass against any and all claims arising from the use of the , substantially in the form furnished hereto as Exhibit A.

We understand the need for confidentially with respect to Barracuda’s planned initial public offering, and we agree to not discuss the planned offering with any third parties.

Sincerely,
Compass Intelligence
Name:	/s/ Stephanie Atkinson
Title:	Managing Partner

EXHIBIT A

Statement in Registration Statement

“The market for the above security and storage segments for companies with less than 5,000 employees was $14.8 billion in 2012, according to a study we commissioned from Compass Intelligence. Compass Intelligence further estimates there were 20.8 million companies worldwide with less than 5,000 employees in 2012.”

-2-

COVER

650 Page Mill Road
Palo Alto, CA 94304-1050   PHONE 650.493.9300 FAX 650.493.6811 www.wsgr.com