10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2016

or   

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

For the transition period from __________ to __________.

Commission file number: 001-35671

LifeLock, Inc.

(Exact name of registrant as specified in its charter)

Delaware	56-2508977
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

60 East Rio Salado Parkway, Suite 400

Tempe, Arizona 85281

(Address of principal executive offices and zip code)

(480) 682-5100

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No ¨

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨    No ý

As of August 5, 2016, there were outstanding 92,592,112 shares of the registrant’s common stock, $0.001 par value.

LIFELOCK, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2016

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)	1
Condensed Consolidated Balance Sheets	1
Condensed Consolidated Statements of Operations	2
Condensed Consolidated Statements of Comprehensive Income (Loss)	3
Condensed Consolidated Statements of Cash Flows	4
Notes to Condensed Consolidated Financial Statements	5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3. Quantitative and Qualitative Disclosures About Market Risk	31
Item 4. Controls and Procedures	31
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	33
Item 1A. Risk Factors	35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 5. Other Information	57
Item 6. Exhibits	58
Signatures	59

LifeLock, LifeLock Standard, LifeLock Advantage, LifeLock Ultimate, LifeLock Ultimate Plus, LifeLock Junior, Id Analytics and the LockMan logo are registered trademarks of LifeLock, Inc. or its subsidiaries. All other trademarks are the property of their respective owners.

i

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

LIFELOCK, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

	June 30, 2016			December 31, 2015
Assets
Current assets:
Cash and cash equivalents	$	29,672		$	50,239
Marketable securities	126,265			196,474
Trade and other receivables, net	16,295			13,974
Prepaid expenses and other current assets	12,977			12,303
Total current assets	185,209			272,990
Property and equipment, net	43,882			30,485
Goodwill	172,087			172,087
Intangible assets, net	23,811			30,174
Deferred tax assets, net	89,691			77,363
Other non-current assets	14,119			9,710
Total assets	$	528,799		$	592,809
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	7,672		$	24,747
Accrued expenses and other liabilities	85,712			76,226
Deferred revenue	196,776			166,403
Total current liabilities	290,160			267,376
Other non-current liabilities	18,172			7,367
Total liabilities	308,332			274,743
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value, 300,000,000 authorized at June 30, 2016 and December 31, 2015; 99,220,559 and 95,877,947 shares issued and 91,717,769 and 95,832,238 outstanding at June 30, 2016 and December 31, 2015, respectively	99			96
Preferred stock, $0.001 par value, 10,000,000 shares authorized and no shares issued and outstanding at June 30, 2016 and December 31, 2015	—			—
Treasury stock, at cost; 7,502,790 shares and no shares held at June 30, 2016 and December 31, 2015, respectively	(79,824		)	—
Additional paid-in capital	533,069			532,388
Accumulated other comprehensive loss	(30		)	(361		)
Accumulated deficit	(232,847		)	(214,057		)
Total stockholders’ equity	220,467			318,066
Total liabilities and stockholders’ equity	$	528,799		$	592,809

See accompanying notes to condensed consolidated financial statements.

1

LIFELOCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Revenue:
Consumer revenue	$	156,659		$	138,329		$	308,589		$	266,530
Enterprise revenue	7,784			6,628			15,123			12,835
Total revenue	164,443			144,957			323,712			279,365
Cost of services	43,642			34,926			83,628			69,482
Gross profit	120,801			110,031			240,084			209,883
Costs and expenses:
Sales and marketing	82,372			69,541			172,076			146,620
Technology and development	19,908			16,666			41,130			33,532
General and administrative	27,596			20,876			51,818			39,831
Amortization of acquired intangible assets	3,320			2,083			6,362			4,167
Total costs and expenses	133,196			109,166			271,386			224,150
Income (loss) from operations	(12,395		)	865			(31,302		)	(14,267		)
Other income (expense):
Interest expense	(181		)	(87		)	(292		)	(176		)
Interest income	304			162			603			279
Other, net	(124		)	(103		)	(129		)	(183		)
Total other income (expense)	(1		)	(28		)	182			(80		)
Income (loss) before income taxes	(12,396		)	837			(31,120		)	(14,347		)
Income tax expense (benefit)	(4,830		)	317			(12,328		)	(5,709		)
Net income (loss)	$	(7,566	)	$	520		$	(18,792	)	$	(8,638	)
Net income (loss) per share
Basic	$	(0.08	)	$	0.01		$	(0.20	)	$	(0.09	)
Diluted	$	(0.08	)	$	0.01		$	(0.20	)	$	(0.09	)
Weighted-average common shares outstanding used in computing net income (loss) per share:
Basic	92,385			94,592			93,567			94,314
Diluted	92,385			100,289			93,567			94,314

See accompanying notes to condensed consolidated financial statements.

2

LIFELOCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Net income (loss)	$	(7,566	)	$	520		$	(18,792	)	$	(8,638	)
Other comprehensive gain (loss), net of tax
Unrealized gain (loss) on marketable securities	62			(119		)	332			(78		)
Comprehensive income (loss)	$	(7,504	)	$	401		$	(18,460	)	$	(8,716	)

See accompanying notes to condensed consolidated financial statements.

3

LIFELOCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	For the Six Months Ended June 30,
	2016			2015
Operating activities
Net loss	$	(18,792	)	$	(8,638	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	12,025			8,860
Share-based compensation	16,897			12,424
Provision for doubtful accounts	309			45
Amortization of premiums on marketable securities	1,161			1,498
Deferred income tax benefit	(12,328		)	(5,709		)
Other	213			82
Change in operating assets and liabilities:
Trade and other receivables	(2,818		)	(2,655		)
Prepaid expenses and other current assets	(673		)	(653		)
Other non-current assets	(280		)	304
Accounts payable	(15,629		)	7,229
Accrued expenses and other liabilities	10,117			7,284
Deferred revenue	30,374			34,450
Other non-current liabilities	58			376
Net cash provided by operating activities	20,634			54,897
Investing activities
Acquisition of property and equipment, including capitalization of internal use software	(9,337		)	(4,973		)
Purchases of marketable securities	(38,400		)	(115,274		)
Sales and maturities of marketable securities	107,986			72,345
Premiums paid for company-owned life insurance policies	(4,337		)	(4,337		)
Net cash provided by (used in) investing activities	55,912			(52,239		)
Financing activities
Proceeds from stock-based compensation plans	5,469			8,032
Payments related to the repurchases of common stock	(100,000		)	—
Payments for employee tax withholdings related to restricted stock units and awards	(2,582		)	(1,230		)
Net cash provided by (used in) financing activities	(97,113		)	6,802
Net increase (decrease) in cash and cash equivalents	(20,567		)	9,460
Cash and cash equivalents at beginning of period	50,239			146,569
Cash and cash equivalents at end of period	$	29,672		$	156,029
Supplemental cash flow information:
Non-cash financing and investing activities:
Building in progress - leased facility acquired under financing obligation	$	10,746		$	—

See accompanying notes to condensed consolidated financial statements.

4

LIFELOCK, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP), and applicable Securities and Exchange Commission, or SEC, rules and regulations regarding interim financial reporting. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, or fiscal 2015 Form 10-K.

The condensed consolidated balance sheet as of December 31, 2015 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by U.S. GAAP.

The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the anticipated results of operations for the entire year ending December 31, 2016 or any future period.

Basis of Consolidation

The condensed consolidated financial statements include our accounts and those of our wholly and indirectly owned subsidiaries. We eliminate all intercompany balances and transactions, including intercompany profits, in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make certain estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We continually evaluate our estimates, including those related to the allocation of the purchase price associated with acquisitions; the carrying value of long-lived assets; the amortization period of long-lived assets; the carrying value, capitalization, and amortization of software and website development costs; the carrying value of goodwill and other intangible assets; the amortization period of intangible assets; the provision for income taxes and related deferred tax accounts, and realizability of deferred tax assets; certain accrued expenses; contingencies, litigation, and related legal accruals; and the value attributed to employee stock options and other stock-based awards. We base our estimates on historical experience, current business factors, and various other assumptions that we believe are necessary to consider to form a basis for making judgments. Actual results could be materially different from these estimates.

2. Summary of Significant Accounting Policies

Leases

We lease office space and data centers in various locations under operating leases with original lease periods up to 11 years. Rent expense is recognized on a straight-line basis from the day we take possession of the premises through the end of the lease term. Rent abatements and rent escalation provisions are considered in determining the straight-line rent expense with any difference between rent expense and rent payable recorded as an increase or decrease in deferred rent. Tenant improvement allowances are recorded as leasehold improvements within property and equipment and within deferred rent.

In April 2016, we entered into a lease with MV Campus Owners, LLC to lease approximately 60,000 of office space located in Mountain View, CA. We record assets and liabilities for the present value of estimated constructions costs incurred under build-to-suite lease arrangements to the extent we are involved in the construction of structural improvements or take substantially all of the construction period risk prior to commencement of a lease. Ground rents are imputed and accrued for during the construction period, and are recorded in rent expense. At completion of a construction project, we perform an analysis to determine if the transfer to the owner/lessor meets the requirements for sale-leaseback treatment. If we maintain significant continuing involvement, we will continue to carry the construction costs and corresponding financing obligation on our balance sheet until the involvement or the term of the lease ends. If it is determined that we will not maintain significant continuing involvement, we record a sale of the premises back to the owner/lessor, and remove the construction costs and financing obligation from our consolidated balance sheet.

There have been no other material changes to our significant accounting policies from those disclosed in our fiscal 2015 Form 10-K.

5

Recently Issued Accounting Standards

In February 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update (ASU) 2016-02, Leases, which requires lessees to recognize the assets and liabilities on their balance sheet for the rights and obligations created by operating leases and will also require disclosures designed to give users of financial statements information on the amount, timing, and uncertainty of cash flows arising from leases. The guidance provided by ASU 2016-02 is effective for annual periods beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the effect of ASU 2016-06 on our consolidated financial statements and do not plan to early adopt this guidance.

In May 2014, the FASB, issued ASU 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which defers the effective date of ASU 2014-09 for all entities for one year. Consequently, the guidance provided in ASU 2014-09 will be effective for us in the first quarter of our fiscal year ending December 31, 2018. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The guidance permits the use of either the retrospective or cumulative effect transition method. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations. ASU 2016-08 is effective the same date as ASU 2014-09, Revenue from Contracts with Customers. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies the guidance related to identifying performance obligations and licensing implementation guidance. ASU 2016-10 reduces the cost and complexity of applying certain aspects of the guidance both at implementation and on an ongoing basis. The effective date for ASU 2016-10 is the same as ASU 2014-09. We are currently in the process of evaluating the impact of the adoption of this guidance on our consolidated financial statements and have not yet selected a transition method.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting, which require all income tax effects of awards to be recognized in the income statement when the awards vest or are settled, as well as revising guidance around classification of awards as either equity or liabilities, forfeitures and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the effect of ASU 2016-09 on our consolidated financial statements and do not plan to early adopt this guidance.

6

3. Marketable Securities

The following is a summary of marketable securities designated as available-for-sale as of June 30, 2016 and December 31, 2015:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
June 30, 2016
Corporate bonds	$	87,638	$	13	$	(45	)	$	87,606
Municipal bonds	9,964		—		(2		)	9,962
Government securities	9,694		19		—			9,713
Commercial paper	10,472		—		—			10,472
Agency securities	7,261		3		—			7,264
Certificates of deposit	1,248		—		—			1,248
Total marketable securities	$	126,277	$	35	$	(47	)	$	126,265
December 31, 2015
Corporate bonds	$	125,132	$	1	$	(304	)	$	124,829
Commercial paper	37,236		—		—			37,236
Municipal bonds	16,228		2		(6		)	16,224
Government securities	8,704		1		(17		)	8,688
Agency securities	7,273		—		(20		)	7,253
Certificates of deposit	2,244		—		—			2,244
Total marketable securities	$	196,817	$	4	$	(347	)	$	196,474

We classify all marketable securities as current regardless of contractual maturity dates because we consider such investments to represent cash available for current operations.

As of June 30, 2016 and December 31, 2015, we did not consider any of our marketable securities to be other-than-temporarily impaired.  When evaluating our investments for other-than-temporary impairment, we review factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer, our ability and intent to hold the security, and whether it is more likely than not that we will be required to sell the investment before recovery of its cost basis.

The following is a summary of amortized cost and estimated fair value of marketable securities as of June 30, 2016 and December 31, 2015, by maturity:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
June 30, 2016
Due in one year or less	$	116,006	$	18	$	(40	)	$	115,984
Due after one year	10,271		17		(7		)	10,281
Total marketable securities	$	126,277	$	35	$	(47	)	$	126,265
December 31, 2015
Due in one year or less	$	164,147	$	2	$	(221	)	$	163,928
Due after one year	32,670		2		(126		)	32,546
Total marketable securities	$	196,817	$	4	$	(347	)	$	196,474

7

4. Fair Value Measurements

As of June 30, 2016 and December 31, 2015, the fair value of our financial assets was as follows:

	Level 1		Level 2		Level 3		Total
	(in thousands)
June 30, 2016
Assets:
Money market funds (1)	$	9,296	$	—	$	—	$	9,296
Corporate bonds (2)	—		87,606		—		87,606
Municipal bonds (2)	—		9,962		—		9,962
Government securities (2)	—		9,713		—		9,713
Commercial paper (2)	—		10,472		—		10,472
Agency securities (2)	—		7,264		—		7,264
Certificates of deposit (2)	—		1,248		—		1,248
Total assets measured at fair value	$	9,296	$	126,265	$	—	$	135,561
December 31, 2015
Assets:
Money market funds (1)	$	18,114	$	—	$	—	$	18,114
Corporate bonds (2)	—		124,829		—		124,829
Municipal bonds (2)	—		16,223		—		16,223
Commercial paper (3)	—		47,294		—		47,294
Government securities (2)	—		8,688		—		8,688
Agency securities (2)	—		7,253		—		7,253
Certificates of deposit (2)	—		2,244		—		2,244
Total assets measured at fair value	$	18,114	$	206,531	$	—	$	224,645

⁽¹⁾  Classified in cash and cash equivalents

⁽²⁾  Classified in marketable securities.

⁽³⁾  Includes commercial paper with maturities of three months or less at time of purchase of $10.1 million classified in cash and cash equivalents and commercial paper with maturities of greater than three months of $37.2 million classified in marketable securities.

5. Financing Arrangements

There have been no changes in our Credit Agreement and related documents with Bank of America, which we refer to as our Senior Credit Facility, from the disclosure in our fiscal 2015 Form 10-K. At June 30, 2016 and December 31, 2015 we were in compliance with all the covenants of the Senior Credit Facility.

As of June 30, 2016, we had outstanding letters of credit in the amount of $1.3 million.

6. Leases

In April 2016, we entered into a lease agreement for approximately 60,000 rentable square feet of office space located in Mountain View, CA. The office space rented is for the total office space available in the building, which is currently under construction. As a result of our involvement during the construction period, we're deemed to be the owner of the construction project for accounting purposes. Accordingly, we recorded a $10.7 million construction in process asset in property and equipment, net, representing the total fair value of the building paid by the lessor including estimated construction period costs to date and a corresponding noncurrent financing obligation liability in our condensed consolidated balance sheet. Upon completion of the construction period, we will analyze our continuing involvement in the premises and determine if the transfer to the landlord meets the requirements for sale-leaseback treatment. If we do meet the requirements for sale-leaseback treatment, we will record the sale of the premises back to the owner/lessor and remove the construction in process asset and corresponding noncurrent financing obligation liability from our consolidated balance and the lease will be accounted for as an operating lease where we expect to recognize rent expense of approximately $4.0 million per year during the term of the lease. If we are unable to meet the requirements for sale-leaseback treatment, the lease will be treated as a financing obligation and we will continue to carry the value of the building and construction costs on our balance sheet. Rent payments will be treated as principal and interest payments on the financing obligation, with an amount recorded as estimated ground lease expense each period. The capitalized costs of the building will be depreciated over an estimated useful life of 30 years.

8

The following summarizes the future minimum lease payments for all outstanding lease agreements as of June 30, 2016:

				Financing
				Obligation,
				Building in
	Operating			Progress -
	Leases			Leased Facility
Remaining 2016	$	3,915		$	—
2017	7,429			1,717
2018	6,751			4,222
2019	6,355			4,349
2020	4,773			4,480
Thereafter	14,151			27,605
Gross future minimum lease payments	43,374			42,373
Less: expected proceeds from sublease rentals	(858		)
Net future minimum lease payments	$	42,516		$	42,373

Rent expense for the three- and six-months ended June 30, 2016 was $1.9 million and $4.0 million, respectively, net of sublease income. Rent expense for the three- and six-months ended June 30, 2015 was $1.6 million and $2.9 million, respectively.

7. Stockholders’ Equity

Stock Repurchases

In November 2015, we announced that our Board of Directors approved the repurchase of up to $100 million of our common stock, representing approximately 7% of our outstanding common stock. The repurchase program was completed in the second quarter of 2016, with the final settlement of shares completed in the third quarter 2016. Repurchases under the program were made through open market and privately negotiated transactions as described below.

In February 2016, we entered into an issuer forward repurchase transaction confirmation (the ASR Agreement) with Bank of America, N.A. to repurchase common stock as part of the approved $100 million share repurchase program. Under the ASR Agreement, we paid Bank of America, N.A. $50 million and received an initial delivery of 4.2 million shares of common stock. The total number of shares purchased was determined based on the volume weighted average price of our common stock during the term of the ASR Agreement. In the second quarter 2016, Bank of America, N.A. delivered approximately 76,000 shares for the final settlement of the ASR Agreement.

We accounted for the ASR Agreement as two separate transactions (i) approximately 4.2 million shares of common stock initially delivered which represented approximately $42.5 million was accounted for as a treasury stock transaction and (ii) the remaining $7.5 million unsettled portion of the ASR Agreement was determined to be a forward contract indexed to our common stock. The initial repurchase of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted net income (loss) per share on the delivery date. We determined that the forward contract indexed to our common stock met all of the applicable criteria for equity classification, and therefore the contract was not accounted for as a derivative. We recorded the $7.5 million unsettled portion of the ASR Agreement, which represents the implied value of the forward contract, in additional paid-in capital on the condensed consolidated balance sheet upon execution of the ASR Agreement. Upon the final delivery of shares of the ASR Agreement, the forward contract was reclassified from additional paid-in capital to treasury stock for the value of the additional shares received, which amounted to approximately $1.0 million.

In May 2016, we entered into a second issuer forward repurchase transaction confirmation (the Second ASR Agreement) with Bank of America, N.A. to repurchase common stock as the final part of our approved $100 million share repurchase program. Under the Second ASR Agreement, we paid Bank of America, N.A. approximately $48.1 million and received and initial delivery of 3.5 million shares of common stock. The total number of shares purchased was determined based on the volume weighted average price of our common stock during the term of the Second ASR Agreement (the Valuation Period). In July 2016, we returned approximately 0.3 million shares to Merill Lynch, Pierce, Fenner & Smith pursuant to the Second ASR Agreement as a result of the increase in our stock price during the Valuation Period.

9

We accounted for the Second ASR Agreement as two separate transactions (i) approximately 3.5 million shares of common stock initially delivered which represented approximately $40.9 million was accounted for as a treasury stock transaction and (ii) the remaining $7.2 million unsettled portion of the Second ASR Agreement was determined to be a forward contract indexed to our common stock. The initial repurchase of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted net income (loss) per share on the delivery date. We determined that the forward contract indexed to our common stock met all of the applicable criteria for equity classification, and therefore the contract was not accounted for as a derivative. We recorded the $7.2 million unsettled portion of the Second ASR Agreement, which represents the implied value of the forward contract, in additional paid-in capital on the condensed consolidated balance sheet as of June 30, 2016. Upon final settlement of the Second ASR Agreement in August 2016, the value of the shares delivered to Merill Lynch, Pierce, Fenner & Smith was reclassified to additional paid-in capital from treasury stock for approximately $4.8 million.

We were authorized pursuant to the $100 million share repurchase program to repurchase shares of common stock in the open market pursuant to trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934. During the six-month period endedJune 30, 2016, we repurchased 0.2 million shares of common stock at an average price of $10.49 per share under such trading plans. In connection with the Second ASR Agreement, we terminated our trading plans.

Share-Based Compensation

We issue share-based awards to our employees in the form of stock options, restricted stock units, and restricted stock. We also have an Employee Stock Purchase Plan, or ESPP. The following table summarizes the components of share-based compensation expense included in our condensed consolidated statements of operations:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016		2015
	(in thousands)
Cost of services	$	462	$	465	$	959	$	837
Sales and marketing	1,503		1,215		3,121		2,147
Technology and development	2,526		2,003		5,319		3,712
General and administrative	3,754		3,371		7,498		5,728
Total share-based compensation	$	8,245	$	7,054	$	16,897	$	12,424

Unrecognized share-based compensation expenses totaled $78.5 million as of June 30, 2016, which we expect to recognize over a weighted-average time period of 3.0 years.

Stock Warrants

During the six-month period endedJune 30, 2016, warrants to purchase common shares of 2,334,044 were net exercised for a total of 2,210,335 shares. There are no warrants outstanding as of June 30, 2016.

10

8. Net Income (Loss) Per Share

We compute basic net income (loss) per share by dividing net income (loss) by the weighted-average number of common shares outstanding for the period. We compute diluted net income (loss) per share giving effect to all potential dilutive common stock, including awards granted under our equity compensation plans and warrants to acquire common stock.

The following table sets forth the computation of basic and diluted net income (loss):

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2016			2015		2016			2015
	(in thousands, except share and per share data)
Net income (loss)	$	(7,566	)	$	520	(18,792		)	(8,638		)
Denominator (basic):
Weighted average common shares outstanding	92,385,195			94,592,297		93,566,920			94,314,192
Denominator (diluted):
Weighted average common shares outstanding	92,385,195			94,592,297		93,566,920			94,314,192
Dilutive stock options outstanding	—			3,050,106		—			—
Dilutive restricted stock units and awards	—			411,066		—			—
Dilutive shares purchased under ESPP	—			7,017		—			—
Weighted average common shares from warrants	—			2,228,386		—			—
Net weighted average common shares outstanding	92,385,195			100,288,872		93,566,920			94,314,192
Net income (loss) per share
Basic	$	(0.08	)	$	0.01	$	(0.20	)	$	(0.09	)
Diluted	$	(0.08	)	$	0.01	$	(0.20	)	$	(0.09	)

Potentially dilutive securities, including common equivalent shares in which the exercise price together with other assumed proceeds exceed the average market price of common stock for the applicable period, were not included in the calculation of diluted net income (loss) per share as their impact would be anti-dilutive. The following weighted-average number of outstanding employee stock options, restricted stock units and restricted stock awards, warrants to purchase common stock, and shares purchased under our ESPP were excluded from the computation of diluted net income (loss) per share:

	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2016	2015	2016	2015
Stock options outstanding	9,648,039	4,651,910	9,379,323	7,436,319
Restricted stock units and restricted stock awards	2,546,119	327,405	2,656,439	718,507
Common equivalent shares from stock warrants	—	—	462,480	2,224,271
Shares purchased under ESPP	—	—	5,806	9,443
	12,194,158	4,979,315	12,504,048	10,388,540

9. Income Taxes

Income taxes for the interim periods presented have been included in the accompanying condensed consolidated financial statements on the basis of an estimated annual effective tax rate. Based on an estimated annual effective tax rate and discrete items, the estimated income tax benefit for the three-month period ended June 30, 2016 was $4.8 million and the estimated income tax expense for the three-month period ended June 30, 2015 was $0.3 million. For the six-month periods ended June 30, 2016 and 2015, the estimated income tax benefit was $12.3 million and $5.7 million, respectively. The determination of the interim period income tax provision utilizes the effective tax rate method, which requires us to estimate certain annualized components of the calculation of the income tax provision, including the annual effective tax rate by entity and jurisdiction.

11

We continually evaluate all positive and negative information to determine if our deferred tax assets are realizable in accordance with ASC 740-10-30, which states that "all available evidence shall be considered in determining whether a valuation allowance for deferred tax assets is needed". In December 2015, the proposed comprehensive settlement agreements resolving outstanding litigation relating to our past marketing representations and information security programs were approved by the Federal Trade Commission, (FTC), the representatives of the Ebarle class action (as described in more detail in Note 11), and were preliminarily approved by the court presiding over such class action. As a result of these settlements, we paid $100 million in December 2015, resulting in a remaining cumulative accrual of $16 million. Based on the reserves of $96 million and $20 million recorded in the years ended December 31, 2015 and 2014, respectively, we have three years of cumulative pretax net losses. We reviewed the cumulative settlement of $116 million and determined that it was non-recurring in nature, not indicative of future performance, and, as such, would not materially affect our ability to generate taxable income in the future. In addition to excluding the impact of the non-recurring settlement amounts, we have seen improving pre-tax book income over the past 5 years and we are forecasting to continue generating pre-tax book income. As a result of the consideration of the factors discussed above, we believe that it is more likely than not that we will be able to realize our net deferred tax assets not currently subject to a valuation allowance.

10. Segment Reporting

We operate our business and our Chief Operating Decision Maker, or CODM, who is our Chief Executive Officer and President, reviews and assesses our operating performance using two reportable segments: our consumer segment and our enterprise segment. In our consumer segment, we offer proactive identity theft protection services to consumers on an annual or monthly subscription basis. In our enterprise segment, we offer consumer risk management services to our enterprise customers.

Revenue and loss from operations by operating segment for the three-month period ended June 30, 2016 and goodwill and total assets by operating segment as of June 30, 2016 was as follows:

	Consumer			Enterprise			Eliminations			Total
	(in thousands)
Revenue
External customers	$	156,659		$	7,784		$	—		$	164,443
Intersegment revenue	—			(2,326		)	2,326			—
Loss from operations	(8,279		)	(4,116		)	—			(12,395		)
Goodwill	112,550			59,537			—			172,087
Total assets	436,359			93,229			(789		)	528,799

Revenue and loss from operations by operating segment for the six-month period ended June 30, 2016 was as follows:

	Consumer			Enterprise			Eliminations		Total
	(in thousands)
Revenue
External customers	$	308,589		$	15,123		$	—	$	323,712
Intersegment revenue	—			(4,612		)	4,612		—
Loss from operations	(21,756		)	(9,546		)	—		(31,302		)

Revenue and loss from operations by operating segment for the three-month period ended June 30, 2015 and goodwill and total assets by operating segment as of December 31, 2015 was as follows:

	Consumer		Enterprise			Eliminations			Total
	(in thousands)
Revenue
External customers	$	138,329	$	6,628		$	—		$	144,957
Intersegment revenue	—		2,109			(2,109		)	—
Income (loss) from operations	4,548		(3,683		)	—			865
Goodwill	112,550		59,537			—			172,087
Total assets	492,796		100,753			(740		)	592,809

12

Revenue and loss from operations by operating segment for the six-month period ended June 30, 2015 was as follows:

	Consumer			Enterprise			Eliminations			Total
	(in thousands)
Revenue
External customers	$	266,530		$	12,835		$	—		$	279,365
Intersegment revenue	—			4,164			(4,164		)	—
Loss from operations	(6,208		)	(8,059		)	—			(14,267		)

We derive all of our revenue from sales in the United States, and substantially all of our long-lived assets are located in the United States.

11. Contingencies

As part of our consumer services, we offer comprehensive member service support. If a member’s identity has been compromised, our member service team and remediation specialists will assist the member with its resolution. This includes our $1 million service guarantee, which is backed by an identity theft insurance policy, under which we will spend up to $1 million to cover certain third-party costs and expenses incurred in connection with the remediation, such as legal and investigatory fees, subject to certain terms and conditions. This insurance also covers certain out-of-pocket expenses, such as loss of income, replacement of fraudulent withdrawals, and costs associated with child and elderly care, travel, stolen purse/wallet, and replacement of documents, subject to certain terms and conditions. While we have reimbursed members for claims under this guarantee, the amounts in aggregate for the six-month periods ended June 30, 2016 and 2015 were not material.

On July 21, 2015 the FTC lodged, under seal, in the United States District Court for the District of Arizona, a motion seeking to hold us in contempt of the consent decree we entered into with the FTC in 2010 (the FTC Order). On December 17, 2015, we entered into a comprehensive settlement agreement with the FTC, pursuant to which we resolved all matters related to the FTC Contempt Action and provided a mechanism to fund a settlement of the Ebarle Class Action described below. Under the terms of the settlement, $100 million was placed into the registry of the court overseeing the FTC Contempt Action, $68 million of which was authorized to be distributed to fund the consumer redress contemplated by the Ebarle Class Action settlement. Those funds have been transferred to the supervision of the court overseeing the Ebarle Class Action Settlement and are awaiting final approval of the settlement and distribution to the class members. The remaining $32 million of the settlement remains in the registry of the Arizona court.

On January 19, 2015, plaintiffs Napoleon Ebarle and Jeanne Stamm filed a nationwide putative consumer class action lawsuit against us in the United States District Court for the Northern District of California. The plaintiffs alleged that we engaged in deceptive marketing and sales practices in connection with our membership plans in violation of the Arizona Consumer Fraud Act and seek declaratory judgment under the Federal Declaratory Judgment Act. On January 20, 2016, the court overseeing the Ebarle Class Action granted the plaintiffs’ motion for preliminary approval conditionally approving the parties’ proposed settlement agreement. On February 11, 2016, the court overseeing the FTC Action entered an order allowing the $68 million to be transferred from the court's registry to the court-ordered settlement administrator in the Ebarle Class Action to fund the settlement. Notice has been sent to the class members. The deadline for class members to object was April 14, 2016, and the deadline for class members to submit claims was April 29, 2016. A hearing on final approval was held on June 23, 2016, and we are awaiting the court's final ruling. As of June 30, 2016 we have $13.0 million accrued for settlement of this claim, which was not included within the $100 million settlement paid to the court registry in connection with the settlement of the FTC Contempt Action and nationwide class action claims. In addition, we have $3.0 million accrued for a potential settlement with states attorneys general for related claims.

On August 1, 2014, our subsidiaries Lemon and Lemon Argentina, S.R.L. (Lemon Argentina, and together, the Lemon Entities) filed a lawsuit in Santa Clara Superior Court in San Jose, California, against Wenceslao Casares, former General Manager of Lemon, Cynthia McAdam, former General Counsel of Lemon, and Federico Murrone, Martin Apesteguia and Fabian Cuesta, each a former employee and former member of the Board of Directors of Lemon Argentina (the Argentine Executives). The complaint alleges breaches of employment-related contracts and breaches of fiduciary duties involving each named individual’s work for third-party Xapo, Inc. and/or Xapo, Ltd. during their employment by the applicable Lemon Entity.  On January 30, 2015, the Lemon Entities filed a second amended complaint alleging breaches of employment-related contracts, breaches of fiduciary duties, and fraud, and seeking declaratory relief against Mr. Casares, Ms. McAdam, and the Argentine Executives.  The Argentine Executives entered their appearances in the litigation on July 24, 2015 and filed a motion to dismiss for inconvenient forum on September 8, 2015. That motion was heard on December 4, 2015 and granted on January 4, 2016, with an order staying the action in its entirety. The Lemon Entities filed a notice of appeal on March 1, 2016.

13

Mr. Casares filed a cross-claim against us and Lemon, Inc. (now Lemon, LLC) on July 24, 2015, for breach of contract, breach of the implied covenant of good faith and fair dealing, conversion, unjust enrichment, and declaratory relief, all arising from the termination of his employment.  Because of the January 4, 2016 order staying the case in its entirety, the court did not rule on the motion to dismiss. Mr. Casares filed a separate complaint against us, Lemon, LLC, and Shareholder Representative Services LLC (SRS) in Delaware Chancery Court on October 7, 2015 for breach of contract and seeking a declaratory judgment.  The action concerns a December 12, 2014 settlement agreement that resolved certain disputes against other former shareholders of Lemon, Inc. arising out of our December 11, 2013 Lemon acquisition.  We, along with Lemon, LLC, moved to dismiss the complaint on October 28, 2015.  Mr. Casares responded by filing an amended complaint on January 8, 2016. LifeLock, Inc. and Lemon, LLC moved to dismiss the amended complaint. Briefing is complete and the matter is set for argument on September 27, 2016.

On July 22, 2015, Miguel Avila, representing himself and seeking to represent a class of persons who acquired our securities from July 30, 2014 to July 20, 2015, inclusive, filed a class action complaint in the United States District Court for the District of Arizona. His complaint alleges that Todd Davis, Christopher Power, and we violated Sections 10(b) and 20(a) of the Securities Exchange Act by making materially false or misleading statements, or failing to disclose material facts about our business, operations, and prospects, including with regard to our information security program, advertising, recordkeeping, and our compliance with the FTC Order. The complaint seeks certification as a class action, compensatory damages, and attorney’s fees and costs. On September 21, 2015, four other Company stockholders, Oklahoma Police Pension and Retirement System, Oklahoma Firefighters Pension and Retirement System, Larisa Gassel, and Donna Thompson, and their respective attorneys all filed motions seeking to be appointed the lead plaintiff and lead counsel in this class action. Lead plaintiffs moved to lift the discovery stay imposed by the Private Securities Litigation Reform Act on January 21, 2016. We, along with Mr. Davis and Mr. Power, opposed that motion on February 8, 2016. On April 22, 2016, the Court denied lead plaintiffs’ motion. We, along with Mr. Davis and Mr. Power, moved to dismiss the amended complaint on January 29, 2016. On August 3, 2016 the Court granted our motion to dismiss and granted lead plaintiffs twenty-one days to seek leave to amend their complaint.

On March 3, 2014, and March 10, 2014, two securities class action complaints were filed in the United States District Court for the District of Arizona, against us, Mr. Davis, and Mr. Power. On June 16, 2014, the court consolidated the complaints into a single action captioned In re LifeLock, Inc. Securities Litigation and appointed a lead plaintiff and lead counsel. On August 15, 2014, the lead plaintiff filed the Consolidated Amended Class Action Complaint (the Consolidated Amended Complaint), seeking to represent a class of persons who acquired our securities from February 26, 2013 to May 16, 2014, inclusive (the Class Period). The Consolidated Amended Complaint alleged that we, along with Mr. Davis, Mr. Power, and Ms. Schneider, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, by making materially false or misleading statements, or failing to disclose material facts regarding certain of our business, operational, and compliance policies, including with regard to certain of our services, our data security program, and Mr. Davis’ compliance with the FTC Order. The Consolidated Amended Complaint alleged that, as a result, certain of our financial statements issued during the Class Period and certain public statements made by Ms. Schneider, Mr. Davis, and Mr. Power during the Class Period, were false and misleading. The Consolidated Amended Complaint sought certification as a class action, compensatory damages, and attorneys’ fees and costs. On September 15, 2014, we, along with Ms. Schneider, Mr. Davis, and Mr. Power, filed a motion to dismiss the Consolidated Amended Complaint. On December 17, 2014, the court dismissed the Consolidated Amended Complaint and gave the lead plaintiff 21 days to seek leave to amend. On January 16, 2015, lead plaintiff filed his Second Consolidated Amended Complaint which contained similar allegations, but no longer named Ms. Schneider as a defendant. On January 30, 2015, we, along with Mr. Davis and Mr. Power, filed a motion to dismiss the Second Consolidated Amended Complaint. On July 21, 2015, the court granted the motion to dismiss, without leave to amend, and entered judgment in our favor. On August 18, 2015, the lead plaintiff along with another shareholder, City of Hallandale Beach Police and Firefighters’ Personnel Retirement Fund, moved to vacate the judgment on the grounds that the FTC’s July 21, 2015 motion seeking to hold us in contempt of the FTC Order constituted surprise and newly discovered evidence. Plaintiffs also sought permission to file a Third Consolidated Amended Complaint. We, Mr. Davis, and Mr. Power opposed plaintiffs’ motion. On September 18, 2015, the court denied plaintiffs’ motion to vacate the July 21, 2015 judgment and plaintiffs’ request to file another complaint. On September 21, 2015, plaintiffs filed a notice of appeal with the Ninth Circuit Court of Appeals. Plaintiffs appeal from the lower court’s July 21, 2015 order dismissing the Second Consolidated Amended Complaint and entering judgment in our favor, and the court’s September 18, 2015 order denying plaintiffs’ motion to vacate that judgment. Briefing of the appeal has been completed, but oral argument on the appeal has not been set by the Ninth Circuit.

On September 23, 2015, LifeLock stockholder Sridhar Manthangodu, filed a derivative complaint captioned Manthangodu v. Davis, et al., in the Superior Court of the State of Arizona, Maricopa County (Arizona Superior Court). The complaint alleged that certain of our directors (the Director Defendants) violated their fiduciary duties to LifeLock stockholders by, among other things, failing to ensure that we complied with the FTC Order. The complaint seeks unspecified monetary damages, a return to the company of all personal compensation received by the Director Defendants, unspecified corporate governance reforms, and attorney’s fees.  On December 24, 2015, the Arizona Superior Court issued an Order appointing plaintiff Manthangodu lead plaintiff and his counsel lead counsel.   

14

Following the filing of the Manthangodu action, additional substantively similar stockholder derivative actions were purportedly filed on our behalf against certain of our current and former directors and officers, seeking similar relief as the Manthangodu complaint.  Specifically, on October 28, 2015, a stockholder derivative complaint captioned Gassel v. Davis, et al., was filed in the United States District Court for the District Arizona (the “Arizona Federal District Court”); on November 19, 2015 and November 25, 2015, two stockholders derivative complaints captioned Stein v. Davis, et al. and John L. Munson Revocable Trust v. Davis, et al., respectively, were filed in the Delaware Court of Chancery; and on January 22, 2016, January 26, 2016, and February 1, 2016, three stockholders derivative complaints captioned, City of Pontiac General Employees’ Retirement Sys. v. Guthrie, et al.; Jiawei v. Davis, et al.; and Sprouse v. Davis, et al., respectively, were filed in the Arizona Superior Court. The plaintiffs in the Stein and Munson actions later voluntarily dismissed their actions, and on March 23, 2016, jointly filed a derivative complaint captioned, Stein and Munson v. Davis et al., in the Arizona Superior Court.  In the Arizona Superior Court actions, from February to April 2016, the Court issued separate orders consolidating the Sprouse, City of Pontiac, Jiawei, and the Stein and the Munson actions with the Manthangodu action.  The consolidated action is captioned In re: LifeLock, Inc. Derivative Litigation, with plaintiff Manthangodu as the lead plaintiff in the consolidated action.  In the Gassel action, on April 13, 2016, on our motion, the Arizona Federal District Court granted a non-indefinite stay of that action and directed us to file a status update on the Manthangodu action, which we and the individual defendants filed on July 12, 2016. 

On June 30, 2016, we and the Director Defendants entered into a proposed settlement stipulation with lead plaintiff Manthangodu.  In the proposed settlement stipulation, the lead plaintiff agreed to the dismissal, with prejudice, of the Manthangodu action as well as a release of any and all related stockholder claims against LifeLock and its current and former directors, officers, employees, and agents.  In exchange, we and the Director Defendants agreed to continue and/or implement certain corporate governance measures and to pay attorney’s fees in the amount of $6 million. On July 1, 2016, lead plaintiff filed an unopposed motion for preliminary approval of the proposed settlement stipulation. On July 8, 2016, the Court preliminarily approved the proposed settlement stipulation and set a final approval hearing for August 30, 2016, at which hearing the Court will determine whether to finally approve the proposed settlement stipulation and all of its terms.  The Court also set August 16, 2016, as the deadline for stockholders to object to the terms of the proposed settlement stipulation. If the Court approves the proposed settlement stipulation, we anticipate filing motions, as necessary, to effectuate the release of any pending related stockholder claims against LifeLock and its current and former directors or officers.  However, there is no assurance that the proposed settlement stipulation and all of its terms will be approved by the Court.

We are subject to other legal proceedings and claims that have arisen in the ordinary course of business. Although there can be no assurance as to the ultimate disposition of these matters, we believe, based upon the information available at this time, that, except as disclosed above, a material adverse outcome related to the matters is neither probable nor estimable.

15

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of our financial condition and results of operations in conjunction with the condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for fiscal year 2015, or the fiscal 2015 Form 10-K. This Quarterly Report on Form 10-Q contains “forward-looking statements” that involve substantial risks and uncertainties. The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Exchange Act, including, but not limited to, statements regarding our expectations, beliefs, including beliefs in our services and in the identity theft protection services industry, intentions, strategies, investments and expenditures for new member acquisitions and to grow our business, including investments in sales and marketing and in technology and development, future operations, future financial position, fluctuations in our financial performance from period to period, future revenue, projected expenses, our ability to fund continuing operations and plans and objectives of management. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “will,” “would,” “should,” “could,” “can,” “predict,” “potential,” “continue,” “objective,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words.

These forward-looking statements reflect our current views about future events and involve known risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievement to be materially different from those expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in this Quarterly Report on Form 10-Q and the other filings we make with the Securities and Exchange Commission, or SEC. Furthermore, such forward-looking statements speak only as of the date on which they are made. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Overview

We are a leading provider of proactive identity theft protection services for consumers and consumer risk management services for enterprises. In our consumer business, we protect our members by monitoring identity-related events, such as new account openings, credit-related applications and other non-credit related information. If we detect that someone is using a member’s personally identifiable information, we offer notifications and alerts, including actionable alerts for certain new account openings and applications, and allow our members to confirm valid or unauthorized identity use. If a member confirms that the use of his or her identity is unauthorized, we can take actions designed to help protect the member’s identity and help determine whether there has been an identity theft. In the event that an identity theft has actually occurred, we can take actions designed to help rectify the impact of the theft of the member’s identity through our remediation services. Our remediation service team works directly with government agencies, merchants, and creditors to help remediate the impact of the identity theft event utilizing our remediation expertise on behalf of our members. In our enterprise business, we protect our enterprise customers by delivering on-demand identity risk, identity-authentication, and credit information about consumers. Our enterprise customers utilize this information to make decisions about opening or modifying accounts and providing products, services, or credit to consumers to reduce financial losses from identity fraud.

The foundation of our identity theft protection services is the LifeLock ecosystem. This ecosystem combines large data repositories of personally identifiable information and consumer transactions, proprietary predictive analytics, and a scalable technology platform. Our members and enterprise customers enhance our ecosystem by continually contributing to the identity and transaction data in our repositories. We apply predictive analytics to the data in our repositories to provide our members and enterprise customers actionable intelligence that helps protect against identity theft and identity fraud.

We derive the substantial majority of our revenue from member subscription fees from our consumer business. We currently offer our identity theft protection services to consumer subscribers under our LifeLock Standard, LifeLock Advantage, LifeLock Ultimate Plus, and LifeLock Junior Services. In 2015 we announced LifeLock Benefit Elite, identity theft protection, created specifically for employers and brokers to offer as a benefit for employees. We also continue to offer, on a limited basis and for a limited time in connection with certain of our partnerships, our basic LifeLock, LifeLock Command Center, and premium LifeLock Ultimate services and continue to provide services to our existing members currently enrolled in our basic LifeLock, LifeLock Command Center, and premium LifeLock Ultimate services. Our consumer services are offered on a monthly or annual subscription basis. Our average revenue per member is lower than our retail list prices due to wholesale or bulk pricing that we offer to strategic partners in our embedded product, employee benefits, and breach distribution channels to drive our membership growth. In our embedded product channel, our strategic partners embed our consumer services into their products and services and pay us on behalf of their customers; in our employee benefit channel, employers primarily offer our consumer services as a voluntary benefit as part of their employee benefit enrollment process; and in our breach channel,

16

enterprises that have experienced a data breach pay us a fee to provide our services to the victims of the data breach. We also offer special discounts and promotions from time to time as incentives to prospective members to enroll in one of our consumer services. Our members pay us the full subscription fee at the beginning of each subscription period, in most cases by authorizing us to directly charge their credit or debit cards. We initially record the subscription fee as deferred revenue and then recognize it ratably on a daily basis over the subscription period. The prepaid subscription fees enhance our visibility of revenue and allow us to collect cash prior to paying our fulfillment partners.

We also derive revenue from transaction fees from our enterprise customers. Our enterprise customers pay us based on their monthly volume of transactions with us, with approximately 30% of our enterprise customers committed to monthly transaction minimums. We recognize revenue at the end of each month based on transaction volume for that month and bill our enterprise customers at the conclusion of each month.

We have historically invested significantly in new member acquisition and expect to continue to do so for the foreseeable future. Our largest operating expense is advertising for member acquisition, which we record as a sales and marketing expense. This is comprised of radio, television, and print advertisements; direct mail campaigns; online display advertising; paid search and search-engine optimization; third-party endorsements; and education programs. We also pay internal and external sales commissions, which we record as a sales and marketing expense. In general, increases in revenue and cumulative ending members occur during and after periods of significant and effective direct retail marketing efforts.

Our Business Model

We operate our business and our Chief Operating Decision Maker, or CODM, who is our CEO and President, reviews and assesses our operating performance using two reportable segments: our consumer segment and our enterprise segment. We review and assess our operating performance primarily using segment revenue, income (loss) from operations, and total assets. These performance measures include the allocation of operating expenses to our reportable segments based on management’s specific identification of costs associated to those segments.

Consumer Services

We evaluate the lifetime value of a member relationshipover its anticipated lifecycle. While we generally incur member acquisition costs in advance of or at the time we acquire the member, we recognize revenue ratably over the subscription period. As a result, a member relationship is not profitable at the beginning of the subscription period even though it is likely to have value to us over the lifetime of the member relationship.

When a member’s subscription automatically renews in each successive period, the relative value of that member increases because we do not incur significant incremental acquisition costs. We also benefit from decreasing fulfillment and member support costs related to that member, as well as economies of scale in our capital and operating and other support expenditures.

Enterprise Services

In our enterprise business, the majority of our costs relate to personnel primarily responsible for data analytics, data management, software development, sales and operations, and various support functions. Our enterprise customers typically provide us with their customer transaction data as part of our service, allowing us to build and refine our models without incurring significant third-party data expenses. We continually evaluate third-party data sources and acquire data from such sources when we believe such data will enhance the performance of our models. New customer acquisition is often a lengthy process. We make a significant investment in the sales team, including costs related to detailed retrospective data analysis to help demonstrate the return on investment to prospective customers had our services been deployed over a specific period of time. Because most of our enterprise business expenses are fixed, we typically incur modest incremental costs when we add new enterprise customers, resulting in additional economies of scale.

Key Metrics

We regularly review a number of operating and financial metrics to evaluate our business, determine the allocation of our resources, measure the effectiveness of our sales and marketing efforts, make corporate strategy decisions, and assess operational efficiencies.

17

Key Operating Metrics

The following table summarizes our key operating metrics:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
	(in thousands, except percentages and per member data) (Unaudited)
Cumulative ending members	4,383			4,011			4,383			4,011
Gross new members	304			317			649			738
Member retention rate	85.6		%	87.1		%	85.6		%	87.1		%
Average cost of acquisition per member	$	260		$	210		$	254		$	191
Monthly average revenue per member	$	11.97		$	11.68		$	11.94		$	11.55
Enterprise transactions	93,184			72,509			169,264			134,044

Cumulative ending members. We calculate cumulative ending members as the total number of members at the end of the relevant period. The majority of our members are paying subscribers who have enrolled in our consumer services directly with us on a monthly or annual basis. Other members receive our consumer services through third-party entities that pay us directly, because of a breach within the entity. Entities also embed our service within a broader third- party offering, or as an employee benefit paid for by the member's employer, which adds to our member total. We monitor cumulative ending members because it provides an indication of the revenue and expenses that we expect to recognize in the future.

As of June 30, 2016, our cumulative ending member base increased 9% year over year. Several factors drove this increase, including the success of our marketing campaigns, increased awareness of data breaches, media coverage of identity theft, and our member retention rate. The year over year increase as of June 30, 2016 is lower than the year over year increase of 18% as of June 30, 2015, primarily as a result of an increase in members during the six-month period ended June 30, 2015 as a result of a breach at a large health insurance company in the first quarter of 2015, which resulted in our most successful gross new member quarter in our history. In addition, as a result of the FTC litigation which commenced in the quarter ended September 30, 2015, we reduced marketing expenses with our strategic partners and certain other campaigns resulting in reduced enrollments. While we have seen improved performance through the direct to consumer channel through the first six months of 2016, the strategic partner channel is not expected to return to previous levels for several quarters. We have also experienced an increase in cancellations through the first six months of 2016 due to the expiration of a large number of breach contracts and a higher number of cancellations from our online affiliates.

18

Gross new members. We calculate gross new members as the total number of new members who enroll in one of our consumer services during the relevant period. Many factors may affect the volume of gross new members in each period, including the effectiveness of our marketing campaigns, the timing of our marketing programs, the effectiveness of our strategic partnerships, and the general level of identity theft coverage in the media, including the occurrence of material breach events. In addition, enrollments from our employee benefit channel are expected to be heavily weighted to the fourth fiscal quarter when the majority of employers have open enrollment periods. We monitor gross new members because it provides an indication of the revenue and expenses that we expect to recognize in the future. Gross new members decreased 4% and 12% for the three- and six-month periods ended June 30, 2016 compared to the same periods last year. The decrease in our gross new members for the three- and six-month periods ended June 30, 2016 was primarily due to the media attention related to the large breach at a health insurance company in the first quarter of 2015, which resulted in our most successful gross new member quarter in our history. In addition, we continue to develop the strategic partner channel which was significantly impacted by the FTC litigation which commenced in the quarter ended September 30, 2015. Due to the impact of the FTC litigation and a shift to focus on larger partners, the strategic partner channel is not expected to have a material impact in the current year, but we expect the channel to have a positive impact in future years.

Member retention rate. We define member retention rate as the percentage of members on the last day of the prior year who remain members on the last day of the current year. Similarly, for quarterly presentations, we use the percentage of members on the last day of the comparable quarterly period in the prior year who remain members on the last day of the current quarterly period. A number of factors may increase our member retention rate, including increases in the proportion of members enrolled on an annual subscription, increases in the number of alerts a member receives, and increases in the proportion of members enrolled through strategic partners with whom the member has a strong association. Conversely, factors that may reduce our member retention rate include increases in the number of members enrolled on a monthly subscription and the end of enrollment programs in our embedded product and breach channels. In addition, the length of time a member has been enrolled in one of our services will affect our member retention rate with longer-term members having a positive impact. Historically, the member retention rate for our premium services has been lower than the member retention rate for our basic-level services, which we believe is driven primarily by the price difference of those services.

Our member retention rate as of June 30, 2016 was significantly impacted by the high number of cancellations of members who enrolled during the first quarter of 2015 as a result of the breach at a large health insurance company who failed to renew on their first anniversary during the first six months of 2016. Historically the first renewal date for our members is when we experience our lowest member retention. In addition, there was a large number of cancellations in the six-month period ended June 30, 2016 from oil and gas employers within our employee benefit channel as a result of a downturn in the oil and gas industry we also saw a number of cancellations which resulted from the expiration of some breach contracts. We also experienced an increase in cancellations in the last six months of fiscal 2015 associated with the announcement of the FTC litigation. As our retention rate is determined on an annual basis these factors will continue to impact the annual retention rate

19

for several quarters. We also continue to see an on-going shift of our enrollments to premium products and monthly billing plans. Both of these cohorts tend to have slightly higher cancellation rates than our standard product and annual payment plans, so we expect this trend to continue. We also expect that our retention rates may be affected in 2016 by payments to members related to our FTC litigation that are expected to occur later this year.

Average cost of acquisition per member. We calculate average cost of acquisition per member as our sales and marketing expense for our consumer segment during the relevant period divided by our gross new members for the period. A number of factors may influence this metric, including shifts in the mix of our media spend. For example, when we engage in marketing efforts to build our brand, our short-term cost of acquisition per member increases with the expectation that it will decrease over the long term. In addition, when we introduce new partnerships, such as partnerships in our embedded product channel, our average cost of acquisition per member may decrease due to the volume of members that enroll in our consumer services in a relatively short period of time. The average cost of acquisition per member is typically lowered by enrollments in the employee benefit channel which typically have a very low cost of acquisition and are expected to occur predominately in the fourth fiscal quarter when the majority of employers hold open enrollment. We monitor average cost of acquisition per member to evaluate the efficiency of our marketing programs in acquiring new members. Our average cost of acquisition per member increased for the three- and six-month periods ended June 30, 2016 when compared with the same periods in the prior year as a result of our continued investment in our sales and marketing efforts and a decrease in gross new members period over period due in part to the impact of the breach at a large health insurance company in the first quarter of 2015. As a result of the high level of impacted people and the media coverage related to this breach, we were able to acquire a high number of gross new members at a lower cost of acquisition in the first half of 2015 as compared to our typical cost of acquisition, including in the first six months of 2016. In addition, we believe that as a result of the FTC matter, enrollments through relationships with strategic partners were lower in the first six months of 2016 than in prior periods. Typically, enrollments through relationships with strategic partners are at a lower average cost of acquisition per member.

Our member retention rate and the increasing monthly average revenue per member, primarily from the continued penetration of our premium service offerings, results in a higher lifetime value of a member relationship. This enables us to absorb a higher average cost of acquisition per member and still recognize value over the lifetime of our member relationships.

Monthly average revenue per member. We calculate monthly average revenue per member as our consumer revenue during the relevant period divided by the average number of cumulative ending members during the relevant period (determined by taking the average of the cumulative ending members at the beginning of the relevant period and the cumulative ending members at the end of each month in the relevant period), divided by the number of months in the relevant period. A number of factors may influence this metric, including whether a member enrolls in one of our premium services; whether we offer the member any promotional discounts upon enrollment; the distribution channel through which we acquire the member, as we offer wholesale pricing in our embedded product, employee benefit, and breach channels; and whether a new member subscribes on a monthly or annual basis, as members enrolling on an annual subscription receive a discount for paying for a year in advance. While our retail list prices have historically remained unchanged, we have seen our monthly average revenue per member increase primarily due to increased adoption of our higher-priced premium services by a greater percentage of our members, a trend we expect to continue. We monitor monthly average revenue per member because it is a strong indicator of revenue in our consumer business and of the performance of our premium services.

20

Our monthly average revenue per member increased approximately 2% and 3% for the three- and six-month periods ended June 30, 2016, respectively, compared to the same periods last year. The increases resulted primarily from the continued success of our premium service offerings, which accounted for more than 40% of our gross new members for the three- and six-month periods ended June 30, 2016. Monthly average revenue per member growth has been negatively impacted by the slow-down in the strategic partner channel which typically has a higher premium mix of members.

Enterprise transactions. Our enterprise transactions are processed by ID Analytics, our wholly owned subsidiary, and are calculated as the total number of enterprise transactions processed for either an identity risk or credit risk score during the relevant period. Enterprise transactions have historically been higher in the fourth quarter as the level of credit applications and general consumer spending increases. We monitor the volume of enterprise transactions because it is a strong indicator of revenue in our enterprise business.

Enterprise transactions increased 29% and 26% for the three- and six-month periods ended June 30, 2016, respectively, compared to the same periods last year. Enterprise transactions increased as we continued to add net new customers and to expand our offerings with our existing customer base.

Key Financial Metrics

The following table summarizes our key financial metrics:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016		2015
	(in thousands)
Consumer revenue	$	156,659	$	138,329	$	308,589	$	266,530
Enterprise revenue	7,784		6,628		15,123		12,835
Total revenue	164,443		144,957		323,712		279,365
Adjusted net income	6,279		9,974		1,511		4,744
Adjusted EBITDA	9,207		12,484		6,992		9,517
Free cash flow	7,594		32,210		18,170		49,924

Please see descriptions and reconciliations of non-GAAP financial measures below.

21

Adjusted Net Income (Loss)

Adjusted net income (loss) is a non-U.S. GAAP financial measure that we calculate as net income (loss) excluding amortization of acquired intangible assets, share-based compensation, income tax benefits and expenses resulting from changes in our deferred tax assets, and acquisition related expenses. For the three- and six-month periods ended June 30, 2016, we excluded the expenses for the FTC and related litigation and the impact of a legal reserve for the settlement of a derivative lawsuit. For the six-month period ended June 30, 2015, we excluded the impact of the legal reserve for a settlement of a class action lawsuit recorded in the first quarter of 2015. We included adjusted net income (loss) in this Quarterly Report on Form 10-Q because it is a key measure we use to understand and evaluate our operating performance and trends. In particular, the exclusion of certain expenses in calculating adjusted net income (loss) can provide a useful measure for period-to-period comparisons of our core business, and reflects a metric that management reviews in the evaluation of our business.

Accordingly, we believe that adjusted net income (loss) provides useful information to investors and others in understanding and evaluating our operating results in the same manner as we do. We believe that the exclusion of certain items of income and expense from net income (loss) in calculating adjusted net income (loss) is useful because (i) the amount of such income and expense in any specific period may not directly correlate to the underlying operational performance of our business, and/or (ii) such income and expense can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired intangible assets. 

Our use of adjusted net income (loss) has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under U.S. GAAP. Some of these limitations include the following:

• although amortization of intangible assets is a non-cash charge, additional intangible assets may be acquired in the future and adjusted net income (loss) does not reflect cash capital expenditure requirements for new acquisitions;

• adjusted net income (loss) does not reflect the cash requirements for new acquisitions;

• adjusted net income (loss) does not reflect changes in, or cash requirements for, our working capital needs;

• adjusted net income (loss) does not consider the potentially dilutive impact of share-based compensation;

• adjusted net income (loss) does not reflect the deferred income tax benefit from the release of the valuation allowance or income tax expenses which reduce our deferred tax asset for net operating losses or other net changes in deferred tax assets;

• adjusted net income (loss) does not reflect the expenses incurred for new acquisitions; and

• other companies, including companies in our industry, may calculate adjusted net income (loss) or similarly titled measures differently, limiting their usefulness as a comparative measure.

Because of these limitations, you should consider adjusted net income (loss) alongside other financial performance measures, including various cash flow metrics, net income (loss), and our other U.S. GAAP results. The following table presents a reconciliation of net income (loss) to adjusted net income (loss) for applicable items of income and expense that impacted each of the periods indicated:

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2016			2015		2016			2015
Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss):	(in thousands)
Net income (loss)	$	(7,566	)	$	520	$	(18,792	)	$	(8,638	)
Amortization of acquired intangible assets	3,320			2,083		6,362			4,167
Share-based compensation	8,245			7,054		16,897			12,424
Deferred income tax expense (benefit)	(4,830		)	317		(12,328		)	(5,709		)
Legal reserves and settlements	6,000			—		6,000			2,500
Expenses related to the FTC litigation	1,110			—		3,372			—
Adjusted net income	$	6,279		$	9,974	$	1,511		$	4,744

22

Adjusted EBITDA

Adjusted EBITDA is a non-U.S. GAAP financial measure that we calculate as net income (loss) excluding depreciation and amortization, share-based compensation, interest expense, interest income, other income (expense), income tax (benefit) expense, and acquisition related expenses. For the three- and six-month periods ended June 30, 2016, we excluded the expenses for the FTC and related litigation and the impact of a legal reserve for the settlement of a derivative lawsuit. For the six-month period ended June 30, 2015, we excluded the impact of the legal reserve for a settlement with a class action lawsuit recorded in the first quarter of 2015. We have included adjusted EBITDA in this Quarterly Report on Form 10-Q because it is a key measure we use to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business, and reflects a metric that management reviews in the evaluation of our business. Additionally, adjusted EBITDA is a key financial measure used in determining management’s incentive compensation.

Accordingly,we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as we do. We believe that the exclusion of certain items of income and expense from net income (loss) in calculating adjusted EBITDA is useful because (i) the amount of such income and expense in any specific period may not directly correlate to the underlying operational performance of our business, and/or (ii) such income and expense can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired intangible assets.

Our use of adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under U.S. GAAP. Some of these limitations include the following:

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

• adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

• adjusted EBITDA does not consider the potentially dilutive impact of share-based compensation;

• adjusted EBITDA does not reflect cash interest income or expense;

• adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;

• adjusted EBITDA does not reflect the expenses incurred for new acquisitions; and

• other companies, including companies in our industry, may calculate adjusted EBITDA or similarly titled measures differently, limiting their usefulness as a comparative measure.

Because of these limitations, you should consider adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss), and our other U.S. GAAP results. The following table presents a reconciliation of net income (loss) to adjusted EBITDA for applicable items of income and expense that impacted each of the periods indicated:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Reconciliation of Net Income (Loss) to Adjusted EBITDA:	(in thousands)
Net income (loss)	$	(7,566	)	$	520		$	(18,792	)	$	(8,638	)
Depreciation and amortization	6,247			4,565			12,025			8,860
Share-based compensation	8,245			7,054			16,897			12,424
Interest expense	181			87			292			176
Interest income	(304		)	(162		)	(603		)	(279		)
Other expense	124			103			129			183
Income tax expense (benefit)	(4,830		)	317			(12,328		)	(5,709		)
Legal reserves and settlements	6,000			—			6,000			2,500
Expenses related to the FTC litigation	1,110			—			3,372			—
Adjusted EBITDA	$	9,207		$	12,484		$	6,992		$	9,517

23

Free Cash Flow

Free cash flow is a non-U.S. GAAP financial measure that we calculate as net cash provided by operating activities less net cash used in investing activities for acquisitions of property and equipment. Additionally, we will add or deduct legal settlements received or paid, and we also excluded expenses paid for the FTC matters and related litigation. We use free cash flow as a measure of our operating performance; for planning purposes, including the preparation of our annual operating budget; to allocate resources to enhance the financial performance of our business; to evaluate the effectiveness of our business strategies; to provide consistency and comparability with past financial performance; to determine capital requirements; to facilitate a comparison of our results with those of other companies; and in communications with our board of directors concerning our financial performance.

We use free cash flow to evaluate our business because, although it is similar to net cash provided by (used in) operating activities, we believe it typically presents a more conservative measure of cash flow as purchases of property and equipment are necessary components of ongoing operations. We believe that this non-U.S. GAAP financial measure is useful in evaluating our business because free cash flow reflects the cash surplus available to fund the expansion of our business after payment of capital expenditures relating to the necessary components of ongoing operations. We also believe that the use of free cash flow provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations, and also facilitates comparisons with other companies, many of which use similar non-U.S. GAAP financial measures to supplement their U.S. GAAP results.

Although free cash flow is frequently used by investors in their evaluations of companies, free cash flow has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under U.S. GAAP. Some of these limitations include the following:

• free cash flow does not reflect our future requirements for contractual commitments to third- party providers;

• free cash flow does not reflect the non-cash component of employee compensation or depreciation and amortization of property and equipment; and

• other companies, including companies in our industry, may calculate free cash flow or similarly titled measures differently, limiting their usefulness as comparative measures.

Free cash flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash requirements. Because of these limitations, you should consider free cash flow alongside other financial performance measures, including net cash provided by operating activities, net income (loss), and our other U.S. GAAP results. The following table presents a reconciliation of net cash provided by operating activities to free cash flow for each of the periods indicated:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Reconciliation of Net Cash Provided By Operating Activities to Free Cash Flow:	(in thousands)
Net cash provided by operating activities	$	9,769		$	34,367		$	20,634		$	54,897
Acquisitions of property and equipment	(4,507		)	(2,157		)	(9,337		)	(4,973		)
Legal settlements paid (received)	—			—			2,500			—
Expenses paid for the FTC litigation	2,332			—			4,373			—
Free cash flow	$	7,594		$	32,210		$	18,170		$	49,924

Factors Affecting Our Performance

Customer cost of acquisition. We expect to continue to make significant expenditures to grow our member and enterprise customer bases. Our average cost of acquisition per member and the number of new members we generate depends on a number of factors, including the effectiveness of our marketing campaigns, changes in cost of media, the competitive environment in our markets, the prevalence of identity theft issues in the media, publicity about our company, and the level of differentiation of our services. Shifts in the mix of our media spend also influence our member acquisition costs. For example, when we engage in marketing efforts to build our brand, our member acquisition costs increase in the short term with the expectation that they will decrease over the long term. We also continually test new media outlets, marketing campaigns, and call center scripting, each of which impacts our average cost of acquisition per member. In addition, given the past success of our premium services, we expect to be able to absorb a higher average cost of acquisition per member and still recognize value over the lifetime of our member relationships.

24

Mix of members by services, billing cycle, and distribution channel. Our performance is affected by the mix of members subscribing to our various consumer services, by billing cycle (annual versus monthly), and by the distribution channel through which we acquire the member. Our adjusted EBITDA, adjusted net income, free cash flow, and average cost of acquisition per member are all affected by this mix. We have seen a recent shift to more monthly members, in large part due to the increase in the number of members enrolling through our embedded product and employee benefits channels in which our members enroll on a monthly basis. Since releasing our Ultimate Plus and Advantage products in the third quarter 2014 we have continued to see over 40% of our new enrollments purchase these two premium products, and have seen an increase in these premium members electing to take the product on a monthly subscription.

Customer retention. Our ability to maintain our current member retention rate may be affected by a number of factors, including the effectiveness of our services, the performance of our member services organization, external media coverage of identity theft, the continued evolution of our service offerings, the competitive environment, the effectiveness of our media spend, the timing of employee benefit and breach service enrollments, and other developments.

Our enterprise business relies on the retention of enterprise customers to maintain the effectiveness of our services because our enterprise customers typically provide us with their customer transaction data as part of our service. Losing a significant number of these customers would reduce the breadth and effectiveness of our services. In addition, less than 1% of our overall revenue for the three- and six-month periods ended June 30, 2016 was derived from direct competitors to our consumer business. As we have given notice of non-renewal to competitors in our consumer segment, we have allowed such contracts to lapse, and accordingly, this may continue to decline over time.

Investments to grow our business. We expect to continue to invest to grow our business. These investments include the development and marketing of new services, including investments in our technology and development team primarily in Northern and Southern California, and the continued enhancement of our existing services. These investments will increase our operating expenses in the near term and thus may negatively impact our operating results in the short term, although we anticipate that these investments will grow and improve our business over the long term.

Regulatory developments. Our business is subject to regulation by federal, state, local, and foreign authorities. Any changes to the existing applicable laws, regulations, or rules; any determination that other laws, regulations, or rules are applicable to us; or any determination that we have violated any of these laws, regulations, or rules could adversely affect our operating results. As previously disclosed in 2010 we entered into the FTC Order with the FTC. In 2010, at the same time we entered into the FTC Order, we entered into companion orders with 35 states' attorneys general that imposed on us injunctive provisions similar to the FTC Order relating to our advertising and marketing of our identity theft protection services. On July 21 2015, the FTC initiated a contempt action alleging that we violated the FTC Order, which we refer to as the FTC Contempt Action. On December 17, 2015, the FTC approved a comprehensive settlement agreement, pursuant to which we resolved all matters related to the FTC Contempt Action and provided a mechanism to fund a settlement in the Ebarle Class Action (as described in more detail in Part II, Item 1 - Legal Proceedings). Under the terms of the settlement, $100 million was placed into the registry of the court overseeing the FTC Contempt Action, $68 million of which was distributed to the court overseeing the Ebarle Class Action to fund the consumer redress contemplated by that settlement subject to final approval of the court, and the remaining $32 million of the settlement remains in the registry of the Arizona court. At this stage, we are not aware of proceedings initiated against us by any states’ attorneys general, alleging that we violated the companion orders from 2010. As of June 30, 2016, we have accrued $3 million for a potential settlement with states’ attorneys general. The ultimate resolution of the matter with the states’ attorneys general is uncertain and may involve a materially higher settlement than $3 million.

We collect and remit sales tax in several states related to the sale of our consumer services. Other states or one or more countries or other jurisdictions could seek to impose sales or other tax collection obligations on us in the future. A successful assertion by any state, country, or other jurisdiction that we should be collecting sales or other taxes on the sale of our services could, among other things, increase the cost of our services, create significant administrative burdens for us, result in substantial tax liabilities, discourage current members and other consumers from purchasing our services, or otherwise substantially harm our business and operating results.

For a discussion of additional factors and risks facing our business, see “Risk Factors” in Part II Item 1A. of this Form 10-Q, in our fiscal 2015 Form 10-K, and in our other filings with the SEC.

Basis of Presentation and Key Components of Our Results of Operations

We operate our business and our CODM reviews and assesses our operating performance using two reportable segments: our consumer segment and our enterprise segment. We review and assess our operating performance using segment revenue, income (loss) from operations, and total assets. These performance measures include the allocation of operating expenses to our reportable segments based on management’s specific identification of costs associated to those segments.

25

Revenue

We derive revenue in our consumer segment primarily from fees paid by our members for identity theft protection services offered on a subscription basis. Our members subscribe to our consumer services on a monthly or annual, automatically renewing basis and pay us the full subscription fee at the beginning of each subscription period, in most cases by authorizing us to directly charge their credit or debit cards. In some cases, we offer members a free trial period, which is typically 30 days. Our members may cancel their membership with us at any time without penalty and, when they do, we issue a refund for the unused portion of the canceled membership. We recognize revenue for member subscriptions ratably on a daily basis from the latter of cash receipt, activation of a member’s account, or expiration of free trial periods to the end of the subscription period.

We also provide consumer services for which the primary customer is an enterprise purchasing identity theft protection services on behalf of its employees or customers. In such cases, we defer revenue for each member until the member’s account has been activated. We then recognize revenue ratably on a daily basis over the term of the subscription period.

We derive revenue in our enterprise segment from fees paid by our enterprise customers for fraud and risk solutions, which we generally provide under multi-year contracts, many of which renew automatically. Our enterprise customers pay us based on their monthly volume of transactions with us, and approximately 30% of them are committed to paying monthly minimum fees. We recognize revenue based on a negotiated fee per transaction. Transaction fees in excess of any of the monthly minimum fees are billed and recorded as revenue in addition to the monthly minimum fees. In some instances, we receive up-front non-refundable payments against which the monthly minimum fees are applied. The up-front non-refundable payments are recorded as deferred revenue and recognized as revenue monthly over the usage period. If an enterprise customer does not meet its monthly minimum fee, we bill the negotiated monthly minimum fee and recognize revenue for that amount. We derive a small portion of our enterprise revenue from special projects in which we are engaged to deliver a report at the end of the analysis, which we record upon delivery and acceptance of the report.

Cost of Services

Cost of services in our consumer segment consists primarily of costs associated with our member services organization and fulfillment partners. Our member support operations include wages and benefits for personnel performing these functions and facility costs directly associated with our sales and service delivery functions. We also pay fees to third-party service providers related to the fulfillment of our consumer services, including the premiums associated with the identity theft insurance that we provide to our members, and merchant credit card fees.

Costs of services in our enterprise segment primarily includes wages and benefits of personnel, and the facility costs that are directly associated with the data analytics and data management.

We expect our cost of services to increase to the extent we continue to increase the number of our members and enterprise customers. Our cost of services is heavily affected by prevailing salary levels, which affect our internal direct costs and fees paid to third-party service providers. Accordingly, increases in the market rate for wages would increase our cost of services.

Gross Margin

Gross profit as a percentage of total revenue, or gross margin, has been and will continue to be affected by a variety of factors. Increases in personnel and facility costs directly associated with the provision of our services can negatively affect our gross margin. Our gross margin can also be affected by higher fulfillment costs due to enhancements in our services or the introduction of new services, such as the addition of insurance coverage in our consumer services. A significant increase in the number of members we enroll through our strategic partner distribution channels can also negatively affect our gross margin because we offer wholesale pricing to our strategic partners. In prior periods, sales taxes we paid on behalf of our members, and settlements with state tax authorities, also negatively affected our gross margin. Conversely, operating efficiencies in our member services organization can improve our gross margin. We expect our gross margin to fluctuate from period to period depending on all of these factors.

Sales and Marketing

Sales and marketing expenses consist primarily of direct response advertising and online search costs, commissions paid on a per-member basis to our online affiliates and on a percentage of revenue basis to our co-marketing partners, and wages and benefits for sales and marketing personnel. Direct response marketing costs include television, radio, and print advertisements as well as costs to create and produce these advertisements. Online search costs consist primarily of pay-per-click payments to search engines and other online advertising media, such as banner ads. We expense advertising costs as incurred, and historically, they have occurred unevenly across periods. Our sales and marketing expenses also include payments related to our sponsorship and promotional partners. In order to continue to grow our business and the awareness of our services, we plan to continue to commit substantial resources to our sales and marketing efforts. As a result, for the near term, we expect our

26

sales and marketing expenses will continue to increase in absolute dollars and vary as a percentage of revenue, depending on the timing of those expenses and our revenue.

Technology and Development

Technology and development expenses consist primarily of personnel costs incurred in product development, maintenance and testing of our websites, enhancing our existing services and developing new services, internal information systems and infrastructure, data privacy and security systems, third-party development, and other internal-use software systems. Our development costs are primarily incurred in the United States and are directed at enhancing our existing service offerings and developing new service offerings. In order to continue to grow our business and enhance our services, we plan to continue to commit resources to technology and development. In addition, ID Analytics has historically spent a higher portion of its revenue on technology and development. As a result, we expect our technology and development expenses will continue to increase in absolute dollars for the foreseeable future.

General and Administrative

General and administrative expenses consist primarily of personnel costs, professional fees, and facility-related expenses associated with our internal support functions. Our professional fees principally consist of outside legal, auditing, accounting, and other consulting fees. Legal costs included within our general and administrative expenses also include costs incurred to litigate and settle various legal matters. We expect our general and administrative expenses will increase in absolute dollars for the foreseeable future as we hire additional personnel and expand our office facilities to support our overall growth and incur additional costs associated with our public company and regulatory compliance.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets is the amortization expense associated with core technology, customer relationships, trade names and trademarks, and assembled workforce resulting from business acquisitions. As of June 30, 2016, we had $23.8 million in intangible assets, net of amortization, as a result of our acquisitions. The acquired intangible assets have useful lives of between one and ten years and we expect to recognize approximately $10.3 million of amortization expense in the year ending December 31, 2016.

Provision for Income Taxes

We are subject to federal income tax as well as state income tax in various states in which we conduct business. Our effective tax rate for the six-month periods ended June 30, 2016 and 2015, approximated the U.S. federal statutory tax rate plus the impact of state taxes and permanent and other temporary differences.

Results of Operations

Comparison of the Three- and Six-Month Periods Ended June 30, 2016 and 2015

Total Revenue

	For the Three Months Ended						For The Six Months Ended
	June 30,						June 30,
	2016		2015		% Change		2016		2015		% Change
	(in thousands)
Consumer revenue	$	156,659	$	138,329	13.3	%	$	308,589	$	266,530	15.8	%
Enterprise revenue	7,784		6,628		17.4	%	15,123		12,835		17.8	%
Total revenue	$	164,443	$	144,957	13.4	%	$	323,712	$	279,365	15.9	%

Consumer revenue increased by $18.3 million and $42.1 million for the three- and six-month periods ended June 30, 2016, respectively, compared to the same periods last year. The increases resulted primarily from the increase in the number of our members, which grew 9% to approximately 4.4 million as of June 30, 2016 as compared to June 30, 2015. In addition, our monthly average revenue per member increased 2% and 3% for the three- and six-month periods ended June 30, 2016, compared to the same period last year. The increase in members and monthly average revenue per member resulted from the continued success of our premium service offerings, including our LifeLock Advantage and LifeLock Ultimate Plus services, and our advertising and marketing campaigns designed to increase the overall awareness of our services and identity theft. However the increase in members and monthly average revenue per member were slowed primarily due to the weakness in our strategic partner channel as a result of the FTC litigation in the third fiscal quarter of 2015 and a focus on larger partners, as a result we do not expect this channel to provide significant new members in 2016.

27

Enterprise revenue increased by $1.2 million and $2.3 million for the three- and six-month periods ended June 30, 2016, respectively, compared to the same periods last year. The increase is attributable to the growth of our enterprise customer base and expansion of our offerings to our current customer base.

Cost of Services and Gross Profit

	For the Three Months Ended								For The Six Months Ended
	June 30,								June 30,
	2016			2015			% Change		2016			2015			% Change
	(in thousands)
Cost of services	$	43,642		$	34,926		25.0	%	$	83,628		$	69,482		20.4	%
Percentage of revenue	26.5		%	24.1		%			25.8		%	24.9		%
Gross profit	120,801			110,031			9.8	%	240,084			209,883			14.4	%
Percentage of revenue	73.5		%	75.9		%			74.2		%	75.1		%

Gross profit increased by $10.8 million and $30.2 million for the three- and six-month periods ended June 30, 2016, respectively, compared to the same periods last year. The increase in absolute dollars resulted primarily from increased revenue associated with the growth in the number of our members and increased monthly average revenue per member. The decrease in our gross profit percentage is primarily attributable to costs incurred in the second quarter with respect to the migration of credit services for premium members to our new data platform, which resulted in additional expense of approximately $6.0 million for the quarter that would have been spread out over the remainder of our fiscal year under our previous data platform.  

Sales and Marketing

	For the Three Months Ended								For The Six Months Ended
	June 30,								June 30,
	2016			2015			% Change		2016			2015			% Change
	(in thousands)
Sales and marketing	$	82,372		$	69,541		18.5	%	$	172,076		$	146,620		17.4	%
Percentage of revenue	50.1		%	48.0		%			53.2		%	52.5		%

Sales and marketing expenses increased by $12.8 million and $25.5 million for the three- and six-month periods ended June 30, 2016, respectively, compared to the same periods last year. The increase resulted from increased advertising expenses, external sales commissions, and personnel costs, including increased non-cash share-based compensation. The increase in our sales and marketing expenses reflected our investment to drive new membership growth, our continued advertising of our premium service offerings, and our efforts to highlight the growing identity theft issue and to educate consumers.

Technology and Development

	For the Three Months Ended								For The Six Months Ended
	June 30,								June 30,
	2016			2015			% Change		2016			2015			% Change
	(in thousands)
Technology and development	$	19,908		$	16,666		19.5	%	$	41,130		$	33,532		22.7	%
Percentage of revenue	12.1		%	11.5		%			12.7		%	12.0		%

Technology and development expenses increased by $3.2 million and $7.6 million for the three- and six-month periods ended June 30, 2016, respectively, compared to the same periods last year. The increase resulted primarily from increased personnel costs, including non-cash share-based compensation, which were primarily the result of continuing to expand our product and technology team, primarily in Silicon Valley in Northern California. In addition, we also made investments in product enhancements, security, infrastructure, and market research.

28

General and Administrative

	For the Three Months Ended								For The Six Months Ended
	June 30,								June 30,
	2016			2015			% Change		2016			2015			% Change
	(in thousands)
General and administrative	$	27,596		$	20,876		32.2	%	$	51,818		$	39,831		30.1	%
Percentage of revenue	16.8		%	14.4		%			16.0		%	14.3		%

General and administrative expenses increased by $6.7 million and $12.0 million for the three- and six-month periods ended June 30, 2016, respectively, compared to the same periods last year. The increase relates primarily to the accrual of $6.0 million for the settlement of shareholder derivative lawsuits discussed furtherer in Part II, Item 1, Legal Proceedings, as well as an increase in personnel costs, including non-cash share based compensation, legal fees including costs associated with litigation related to the FTC Order and related matters, and additional costs associated with our regulatory compliance and information security programs. In the first quarter of 2015, we accrued $2.5 million for two of the California consumer class action lawsuits previously filed against us, which were approved by the court and paid in the first quarter of 2016.

Amortization of Acquired Intangible Assets

	For the Three Months Ended								For The Six Months Ended
	June 30,								June 30,
	2016			2015			% Change		2016			2015			% Change
	(in thousands)
Amortization of acquired intangible assets	$	3,320		$	2,083		59.4	%	$	6,362		$	4,167		52.7	%
Percentage of revenue	2.0		%	1.4		%			2.0		%	1.5		%

Amortization of acquired intangible assets increased by $1.2 million and $2.2 million for the three- and six-month periods ended June 30, 2016, respectively, compared to the same periods last year, due to the acceleration of amortization of our technology intangible asset acquired in the Lemon acquisition and an assembled workforce intangible asset acquired in 2015, and also as a result of amortization expense recognized on additional intangibles acquired during the year ended December 31, 2015.   

Other Income (Expense)

	For the Three Months Ended								For The Six Months Ended
	June 30,								June 30,
	2016			2015			% Change		2016			2015			% Change
	(in thousands)
Interest expense	$	(181	)	$	(87	)	108.0	%	$	(292	)	$	(176	)	65.9	%
Interest income	304			162			87.7	%	603			279			116.1	%
Other	(124		)	(103		)	20.4	%	(129		)	(183		)	(29.5	)%
Total other income (expense)	$	(1	)	$	(28	)	(96.4	)%	$	182		$	(80	)	(327.5	)%

Other income remained flat for the three-month period ended June 30, 2016 compared to the second quarter 2015, and increased $0.3 million for the six-month period ended June 30, 2016 compared to the same period last year. The increase in the six month period was primarily due to the increase in interest income on our marketable securities.

29

Income Tax Expense (Benefit)

	For the Three Months Ended								For The Six Months Ended
	June 30,								June 30,
	2016			2015			% Change		2016			2015			% Change
	(in thousands)
Income tax benefit	$	(4,830	)	$	317		(1,623.7	)%	$	(12,328	)	$	(5,709	)	115.9	%
Effective tax rate	39.0		%	37.9		%			39.6		%	39.8		%

Our effective tax rate for the three- and six-month periods ended June 30, 2016 and 2015, approximated the U.S. federal statutory tax rate plus the impact of state taxes.

Liquidity and Capital Resources

As of June 30, 2016, we had $29.7 million in cash and cash equivalents, which consisted of cash and money market funds, and $126.3 million in marketable securities, which consisted of corporate bonds, municipal bonds, government securities, agency securities, commercial paper, and certificates of deposit.  We classify our marketable securities as short-term regardless of contractual maturity based on our ability to liquidate those investments for use in current operations. Additionally, we have a revolving line of credit, described below. We did not draw on the line of credit during the six-month period ended June 30, 2016.  As of June 30, 2016, we had no outstanding debt.  We believe that our existing cash and cash equivalents and marketable securities together with cash generated from operations will be sufficient to fund our operations for at least the next 12 months, including amounts reserved for potential legal settlements. However, our future liquidity and capital requirements may vary materially from our expectations depending on many factors, including, but not limited to our revenues and gross margins, our cash flows from operations, the timing of payments with respect to the settlements, expenses and judgments related to our litigation matters, future disputes or litigation, and the availability of our revolving line of credit. We may need to seek additional capital and such capital may not be available on terms acceptable to us or at all.

Operating Activities

For the six-month period ended June 30, 2016, operating activities generated $20.6 million in cash as a result of a net loss of $18.8 million, adjusted by non-cash items such as depreciation and amortization of $12.0 million, share-based compensation of $16.9 million, and an income tax benefit of $12.3 million. We also had an increase in deferred revenue related to the overall growth of our business which provided operating cash of $30.4 million and we had a decrease in operating cash as a result of changes in other operating assets and liabilities of $9.2 million.

For the six-month period ended June 30, 2015, operating activities generated $54.9 million in cash as a result of a net loss of $8.6 million, adjusted by non-cash items such as depreciation and amortization of $8.9 million, share-based compensation of $12.4 million, and an income tax benefit of $5.7 million. An increase in deferred revenue related to the overall growth of our business provided operating cash of $34.5 million and positive net operating cash flows of $11.9 million from other operating assets and liabilities.

Investing Activities

For the six-month period ended June 30, 2016, we used $9.3 million of cash to acquire property and equipment, primarily computer equipment and software, including personnel and third-party costs related to internally developed software, as we continue to expand our team and enhance our service. In addition, we had net cash inflows of $69.6 million attributable to the maturities and coupon payments of our marketable securities.

For the six-month period ended June 30, 2015, we used $5.0 million of cash to acquire property and equipment primarily attributable to the expansion of our office locations, we invested a net $42.9 million of cash in marketable securities, and we paid $4.3 million of premiums for company-owned life insurance policies.

Financing Activities

For the six-month period ended June 30, 2016, net cash used in financing activities was $97.1 million as a result of cash paid related to the repurchase of our common stock of $100.0 million, primarily under our accelerated share repurchase programs, and $2.6 million paid for employee withholding tax related to net distributions of restricted stock units and restricted stock, offset by cash received from the exercise of stock options of $5.5 million.

For the six-month period ended June 30, 2015, financing activities generated net cash of $6.8 million as a result of cash received from the exercise of stock options $8.0 million, offset by $1.2 million paid for employee withholding tax related to net distributions of restricted stock units and restricted stock.

30

Debt Obligations  

Senior Credit Facility

There have been no changes in our Credit Agreement and related documents with Bank of America, which we refer to as our Senior Credit Facility, from the disclosure in our fiscal 2015 Form 10-K. At June 30, 2016 we were in compliance with all the covenants of the Senior Credit Facility.

As of June 30, 2016, we had outstanding letters of credit in the amount of $1.3 million in connection with certain leases for office space, and no other amounts were outstanding.

Contractual Obligations

In April, 2016, we entered into a lease for an office building in Mountain View, CA. The term of the lease is nine years with the expected delivery date of the premises to occur on or around November 1, 2016. Under the terms of the lease, we will incur additional rent expense of approximately $4.2 million per year. There were no other material changes in our commitments under contractual obligations to those disclosed in our fiscal 2015 Form 10-K.

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet financing activities, nor do we have any interest in entities referred to as variable interest entities.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

We believe that the assumptions and estimates associated with revenue recognition for payments and other fees, income taxes, and share-based compensation have the greatest potential impact on our condensed consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our fiscal 2015 Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our primary market risk exposures or how we manage those exposures from the information disclosed in Part II, Item 7A of our fiscal 2015 Form 10-K. For further discussion of quantitative and qualitative disclosures about market risk, reference is made to our fiscal 2015 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management, together with our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. The purpose of this evaluation is to determine if, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures are effective such that the information required to be disclosed in the reports we file or submit under the Exchange Act (i) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2016.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to material affect, our internal control over financial reporting.

31

Limitations on Effectiveness of Controls and Procedures

Management, including our CEO and CFO, does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are 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, misstatements, errors, and instances of fraud, if any, within our company have been or will be prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls also can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks that internal controls may become inadequate as a result of changes in conditions, or through the deterioration of the degree of compliance with policies or procedures.

32

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

On July 21, 2015 the FTC lodged, under seal, in the United States District Court for the District of Arizona, a motion seeking to hold us in contempt of the consent decree we entered into with the FTC in 2010 (the FTC Order). On December 17, 2015, we entered into a comprehensive settlement agreement with the FTC, pursuant to which we resolved all matters related to the FTC Contempt Action and provided a mechanism to fund a settlement of the Ebarle Class Action described below. Under the terms of the settlement, $100 million was placed into the registry of the court overseeing the FTC Contempt Action, $68 million of which was authorized to be distributed to fund the consumer redress contemplated by the Ebarle Class Action settlement. Those funds have been transferred to the supervision of the court overseeing the Ebarle Class Action Settlement and are awaiting final approval of the settlement and distribution to the class members. The remaining $32 million of the settlement remains in the registry of the Arizona court.

On January 19, 2015, plaintiffs Napoleon Ebarle and Jeanne Stamm filed a nationwide putative consumer class action lawsuit against us in the United States District Court for the Northern District of California. The plaintiffs alleged that we engaged in deceptive marketing and sales practices in connection with our membership plans in violation of the Arizona Consumer Fraud Act and seek declaratory judgment under the Federal Declaratory Judgment Act. On January 20, 2016, the court overseeing the Ebarle Class Action granted the plaintiffs’ motion for preliminary approval conditionally approving the parties’ proposed settlement agreement. On February 11, 2016, the court overseeing the FTC Action entered an order allowing the $68 million to be transferred from the court's registry to the court-ordered settlement administrator in the Ebarle Class Action to fund the settlement. Notice has been sent to the class members. The deadline for class members to object was April 14, 2016, and the deadline for class members to submit claims was April 29, 2016. A hearing on final approval was held on June 23, 2016, and we are awaiting the court’s final ruling. As of June 30, 2016 we have $13.0 million accrued for settlement of this claim, which was not included within the $100 million settlement paid to the court registry in connection with the settlement of the FTC Contempt Action and nationwide class action claims. In addition, we have $3.0 million accrued for a potential settlement with states attorneys general for related claims.

On August 1, 2014, our subsidiaries Lemon and Lemon Argentina, S.R.L. (Lemon Argentina, and together, the Lemon Entities) filed a lawsuit in Santa Clara Superior Court in San Jose, California, against Wenceslao Casares, former General Manager of Lemon, Cynthia McAdam, former General Counsel of Lemon, and Federico Murrone, Martin Apesteguia and Fabian Cuesta, each a former employee and former member of the Board of Directors of Lemon Argentina (the Argentine Executives). The complaint alleges breaches of employment-related contracts and breaches of fiduciary duties involving each named individual’s work for third-party Xapo, Inc. and/or Xapo, Ltd. during their employment by the applicable Lemon Entity.  On January 30, 2015, the Lemon Entities filed a second amended complaint alleging breaches of employment-related contracts, breaches of fiduciary duties, and fraud, and seeking declaratory relief against Mr. Casares, Ms. McAdam, and the Argentine Executives.  The Argentine Executives entered their appearances in the litigation on July 24, 2015 and filed a motion to dismiss for inconvenient forum on September 8, 2015. That motion was heard on December 4, 2015 and granted on January 4, 2016, with an order staying the action in its entirety. The Lemon Entities filed a notice of appeal on March 1, 2016.

Mr. Casares filed a cross-claim against us and Lemon, Inc. (now Lemon, LLC) on July 24, 2015, for breach of contract, breach of the implied covenant of good faith and fair dealing, conversion, unjust enrichment, and declaratory relief, all arising from the termination of his employment.  Because of the January 4, 2016 order staying the case in its entirety, the court did not rule on the motion to dismiss. Mr. Casares filed a separate complaint against us, Lemon, LLC, and Shareholder Representative Services LLC (SRS) in Delaware Chancery Court on October 7, 2015 for breach of contract and seeking a declaratory judgment.  The action concerns a December 12, 2014 settlement agreement that resolved certain disputes against other former shareholders of Lemon, Inc. arising out of our December 11, 2013 Lemon acquisition.  We, along with Lemon, LLC, moved to dismiss the complaint on October 28, 2015.  Mr. Casares responded by filing an amended complaint on January 8, 2016. LifeLock, Inc. and Lemon, LLC moved to dismiss the amended complaint. Briefing is complete and the matter is set for argument on September 27, 2016.

On July 22, 2015, Miguel Avila, representing himself and seeking to represent a class of persons who acquired our securities from July 30, 2014 to July 20, 2015, inclusive, filed a class action complaint in the United States District Court for the District of Arizona. His complaint alleges that Todd Davis, Christopher Power, and we violated Sections 10(b) and 20(a) of the Securities Exchange Act by making materially false or misleading statements, or failing to disclose material facts about our business, operations, and prospects, including with regard to our information security program, advertising, recordkeeping, and our compliance with the FTC Order. The complaint seeks certification as a class action, compensatory damages, and attorney’s fees and costs. On September 21, 2015, four other Company stockholders, Oklahoma Police Pension and Retirement System, Oklahoma Firefighters Pension and Retirement System, Larisa Gassel, and Donna Thompson, and their respective attorneys all filed motions seeking to be appointed the lead plaintiff and lead counsel in this class action. Lead plaintiffs moved to lift the discovery stay imposed by the Private Securities Litigation Reform Act on January 21, 2016. We, along with Mr. Davis and Mr. Power, opposed that motion on February 8, 2016. On April 22, 2016, the Court denied lead plaintiffs’ motion. We, along with

33

Mr. Davis and Mr. Power, moved to dismiss the amended complaint on January 29, 2016. On August 3, 2016 the Court granted our motion to dismiss and granted lead plaintiffs twenty-one days to seek leave to amend their complaint.

On March 3, 2014, and March 10, 2014, two securities class action complaints were filed in the United States District Court for the District of Arizona, against us, Mr. Davis, and Mr. Power. On June 16, 2014, the court consolidated the complaints into a single action captioned In re LifeLock, Inc. Securities Litigation and appointed a lead plaintiff and lead counsel. On August 15, 2014, the lead plaintiff filed the Consolidated Amended Class Action Complaint (the Consolidated Amended Complaint), seeking to represent a class of persons who acquired our securities from February 26, 2013 to May 16, 2014, inclusive (the Class Period). The Consolidated Amended Complaint alleged that we, along with Mr. Davis, Mr. Power, and Ms. Schneider, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, by making materially false or misleading statements, or failing to disclose material facts regarding certain of our business, operational, and compliance policies, including with regard to certain of our services, our data security program, and Mr. Davis’ compliance with the FTC Order. The Consolidated Amended Complaint alleged that, as a result, certain of our financial statements issued during the Class Period and certain public statements made by Ms. Schneider, Mr. Davis, and Mr. Power during the Class Period, were false and misleading. The Consolidated Amended Complaint sought certification as a class action, compensatory damages, and attorneys’ fees and costs. On September 15, 2014, we, along with Ms. Schneider, Mr. Davis, and Mr. Power, filed a motion to dismiss the Consolidated Amended Complaint. On December 17, 2014, the court dismissed the Consolidated Amended Complaint and gave the lead plaintiff 21 days to seek leave to amend. On January 16, 2015, lead plaintiff filed his Second Consolidated Amended Complaint which contained similar allegations, but no longer named Ms. Schneider as a defendant. On January 30, 2015, we, along with Mr. Davis and Mr. Power, filed a motion to dismiss the Second Consolidated Amended Complaint. On July 21, 2015, the court granted the motion to dismiss, without leave to amend, and entered judgment in our favor. On August 18, 2015, the lead plaintiff along with another shareholder, City of Hallandale Beach Police and Firefighters’ Personnel Retirement Fund, moved to vacate the judgment on the grounds that the FTC’s July 21, 2015 motion seeking to hold us in contempt of the FTC Order constituted surprise and newly discovered evidence. Plaintiffs also sought permission to file a Third Consolidated Amended Complaint. We, Mr. Davis, and Mr. Power opposed plaintiffs’ motion. On September 18, 2015, the court denied plaintiffs’ motion to vacate the July 21, 2015 judgment and plaintiffs’ request to file another complaint. On September 21, 2015, plaintiffs filed a notice of appeal with the Ninth Circuit Court of Appeals. Plaintiffs appeal from the lower court’s July 21, 2015 order dismissing the Second Consolidated Amended Complaint and entering judgment in our favor, and the court’s September 18, 2015 order denying plaintiffs’ motion to vacate that judgment. Briefing of the appeal has been completed, but oral argument on the appeal has not been set by the Ninth Circuit.

On September 23, 2015, LifeLock stockholder Sridhar Manthangodu, filed a derivative complaint captioned Manthangodu v. Davis, et al., in the Superior Court of the State of Arizona, Maricopa County (Arizona Superior Court). The complaint alleged that certain of our directors (the Director Defendants) violated their fiduciary duties to LifeLock stockholders by, among other things, failing to ensure that we complied with the FTC Order. The complaint seeks unspecified monetary damages, a return to the company of all personal compensation received by the Director Defendants, unspecified corporate governance reforms, and attorney’s fees. On December 24, 2015, the Arizona Superior Court issued an Order appointing plaintiff Manthangodu lead plaintiff and his counsel lead counsel.

Following the filing of the Manthangodu action, additional substantively similar stockholder derivative actions were purportedly filed on our behalf against certain of our current and former directors and officers, seeking similar relief as the Manthangodu complaint. Specifically, on October 28, 2015, a stockholder derivative complaint captioned Gassel v. Davis, et al., was filed in the United States District Court for the District Arizona (the “Arizona Federal District Court”); on November 19, 2015 and November 25, 2015, two stockholders derivative complaints captioned Stein v. Davis, et al. and John L. Munson Revocable Trust v. Davis, et al., respectively, were filed in the Delaware Court of Chancery; and on January 22, 2016, January 26, 2016, and February 1, 2016, three stockholders derivative complaints captioned, City of Pontiac General Employees’ Retirement Sys. v. Guthrie, et al.; Jiawei v. Davis, et al.; and Sprouse v. Davis, et al., respectively, were filed in the Arizona Superior Court. The plaintiffs in the Stein and Munson actions later voluntarily dismissed their actions, and on March 23, 2016, jointly filed a derivative complaint captioned, Stein and Munson v. Davis et al., in the Arizona Superior Court. In the Arizona Superior Court actions, from February to April 2016, the Court issued separate orders consolidating the Sprouse, City of Pontiac, Jiawei, and the Stein and the Munson actions with the Manthangodu action. The consolidated action is captioned In re: LifeLock, Inc. Derivative Litigation, with plaintiff Manthangodu as the lead plaintiff in the consolidated action. In the Gassel action, on April 13, 2016, on our motion, the Arizona Federal District Court granted a non-indefinite stay of that action and directed us to file a status update on the Manthangodu action, which we and the individual defendants filed on July 12, 2016.

34

On June 30, 2016, we and the Director Defendants entered into a proposed settlement stipulation with lead plaintiff Manthangodu. In the proposed settlement stipulation, the lead plaintiff agreed to the dismissal, with prejudice, of the Manthangodu action as well as a release of any and all related stockholder claims against LifeLock and its current and former directors, officers, employees, and agents.  In exchange, we and the Director Defendants agreed to continue and/or implement certain corporate governance measures and to pay attorney’s fees in the amount of $6 million. On July 1, 2016, lead plaintiff filed an unopposed motion for preliminary approval of the proposed settlement stipulation. On July 8, 2016, the Court preliminarily approved the proposed settlement stipulation and set a final approval hearing for August 30, 2016, at which hearing the Court will determine whether to finally approve the proposed settlement stipulation and all of its terms. The Court also set August 16, 2016, as the deadline for stockholders to object to the terms of the proposed settlement stipulation. If the Court approves the proposed settlement stipulation, we anticipate filing motions, as necessary, to effectuate the release of any pending related stockholder claims against LifeLock and its current and former directors or officers. However, there is no assurance that the proposed settlement stipulation and all of its terms will be approved by the Court.

On December 23, 2015, we filed an insurance coverage action in Arizona state court against our 2013-2014 primary and excess directors' and officers' (D&O) liability insurance carriers.  LifeLock’s complaint alleges that the primary and excess D&O insurers breached their insurance policies by wrongfully denying LifeLock defense and indemnity coverage for the various securities class action and shareholder derivative lawsuits filed against us.  LifeLock’s insurance coverage action also alleges that the primary D&O insurer breached its covenant of good faith and fair dealing, violated Arizona's consumer fraud statute and committed unfair insurance practices.  The insurers have filed responsive pleadings to LifeLock’s complaint and discovery is scheduled to take place through August of 2017.

Item 1A. Risk Factors

Investing in our common stock involves a high degree of risk. Before deciding to invest in our common stock, you should carefully consider each of the risk factors described in “Part I – Item 1A. Risk Factors” in our fiscal 2015 Form 10-K, and all information set forth in this Quarterly Report on Form 10-Q, and in our other filings with the Securities and Exchange Commission, or SEC. Those risks and the risks described in this Quarterly Report on Form 10-Q, including in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, could materially harm our business, financial condition, operating results, cash flow, and prospects. If that occurs, the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Related to Our Business and Industry

Excluding the settlement with the FTC and the nationwide consumer class action in fiscal year 2015, which we believe are non-recurring expenses, we have been continuously profitable on an annual basis from 2012 through 2015 after incurring significant net losses from our inception through fiscal 2011, but we may not be able to maintain profitability on an annual basis in the future.

Excluding the settlement with the FTC and the nationwide consumer class action in fiscal 2015, we have been continuously profitable year over year after incurring significant net losses from our inception through 2011, but we cannot predict whether we will be able to maintain profitability on an annual basis in the future.

Our recent growth, including our growth in revenue and customer base, may not be sustainable or our growth rate may decline, and we may not generate sufficient revenue to maintain annual profitability. Moreover, we expect to continue to make significant expenditures to maintain and expand our business and to operate as a consolidated entity with ID Analytics and our other subsidiaries. We also may incur additional costs associated with our regulatory compliance as we are subject to a wide variety of federal, state and local laws and regulations. These expenditures may make it more difficult for us to maintain future annual profitability. Our ability to maintain annual profitability depends on a number of factors, including our ability to attract and service customers on a profitable basis. If we are unable to maintain annual profitability, we may not be able to execute our business plan, our prospects may be harmed, and our stock price could be materially and adversely affected.

If the security of confidential information used in connection with our services is breached or otherwise subject to unauthorized access, our reputation and business may be materially harmed.

Our services require us to collect, store, use, and transmit significant amounts of confidential information, including personally identifiable information, credit card information, and other critical data. We employ a range of information technology solutions, controls, procedures, and processes designed to protect the confidentiality, integrity, and availability of our critical assets, including our data and information technology systems. While we engage in a number of measures aimed to protect against security breaches and to minimize problems if a data breach were to occur, our information technology systems and infrastructure may be vulnerable to damage, compromise, disruption, and shutdown due to attacks or breaches by hackers or due to other circumstances, such as error or malfeasance by employees or third party service providers or technology malfunction. The occurrence of any of these events, as well as a failure to promptly remedy these events should they occur,

35

could compromise our systems, and the information stored in our systems could be accessed, publicly disclosed, lost, stolen, or damaged. Any such circumstance could adversely affect our ability to attract and maintain customers as well as strategic partners, cause us to suffer negative publicity, and subject us to legal claims and liabilities or regulatory penalties. In addition, unauthorized parties might alter information in our databases, which could adversely affect both the reliability of that information and our ability to market and perform our services. Techniques used to obtain unauthorized access or to sabotage systems change frequently, are constantly evolving and generally are difficult to recognize and react to effectively. We may be unable to anticipate these techniques or to implement adequate preventive or reactive measures. Several recent, highly publicized data security breaches at other companies have heightened consumer awareness of this issue and may embolden individuals or groups to target our systems or those of our strategic partners or enterprise customers.

Security technologies and information, including encryption and authentication technology licensed from third parties, are a key aspect of our security measures designed to secure our critical assets. While we routinely seek to update these technologies and information, advances in computer capabilities, new discoveries in the field of cryptography, or other developments may result in the technology we use becoming obsolete, breached, or compromised and cause us to incur additional expenses associated with upgrading our security systems. In addition, security information provided to us by third parties may be inaccurate, incomplete, or outdated, which could cause us to make misinformed security decisions and could materially and adversely affect our business.

Under payment card rules and our contracts with our card processors, we could be liable to the payment card issuing banks for their cost of issuing new cards and related expenses if there is a breach of payment card information that we store. In addition, if we fail to follow payment card industry security standards, even if there is no compromise of customer information, we could incur significant fines or lose our ability to give customers the option of using payment cards to fund their payments or pay their fees. If we were unable to accept payment cards, our business would be materially harmed.

Many states have enacted laws requiring companies to notify individuals of data security breaches involving their personal data. In the United States, federal and state laws provide for over 45 laws and notification regimes, all of which we are subject to, and additional requirements may be instituted in the future. In the event of a data security breach, these mandatory disclosures often lead to widespread negative publicity. In addition, complying with such numerous and complex regulations in the event of a data security breach is often expensive, difficult, and time consuming, and the failure to comply with these regulations could subject us to regulatory scrutiny and additional liability and harm our reputation.

Any actual or perceived security breach, whether successful or not and whether or not attributable to the failure of our services or our information technology systems, as well as our failure to promptly and appropriately react to a breach, would likely harm our reputation, adversely affect market perception of our services, and cause the loss of customers and strategic partners. Our property and business interruption insurance may not be adequate to compensate us for losses or failures that may occur. Our third-party insurance coverage will vary from time to time in both type and amount depending on availability, cost, and our decisions with respect to risk retention.

Our business is highly dependent upon our brand recognition and reputation, and the failure to maintain or enhance our brand recognition or reputation would likely have a material adverse effect on our business.

Our brand recognition and reputation are critical aspects of our business. We believe that maintaining and further enhancing our LifeLock and ID Analytics brands as well as our reputation will be critical to retaining existing customers and attracting new customers. We also believe that the importance of our brand recognition and reputation will continue to increase as competition in our markets continues to develop. Our success in this area will be dependent on a wide range of factors, some of which are out of our control, including the following:

• the efficacy of our marketing efforts;

• our ability to retain existing and obtain new customers and strategic partners;

• the quality and perceived value of our services;

• actions of our competitors, our strategic partners, and other third parties;

• positive or negative publicity, including material on the Internet;

• regulatory and other governmental related developments; and

• litigation related developments.

Sales and marketing expenses have historically been our largest operating expense, and we anticipate these expenses will continue to increase in the foreseeable future as we continue to seek to grow our business and customer base and enhance our brand. These brand promotion activities may not yield increased revenue and the efficacy of these activities will depend on a number of factors, including our ability to do the following:

36

• determine the appropriate creative message and media mix for advertising, marketing, and promotional expenditures;

• select the right markets, media, and specific media vehicles in which to advertise;

• identify the most effective and efficient level of spending in each market, media, and specific media vehicle; and

• effectively manage marketing costs, including creative and media expenses, in order to maintain acceptable customer acquisition costs.

Increases in the pricing of one or more of our marketing and advertising channels could increase our marketing and advertising expenses or cause us to choose less expensive but possibly less effective marketing and advertising channels. If we implement new marketing and advertising strategies, we may utilize marketing and advertising channels with significantly higher costs than our current channels, which in turn could adversely affect our operating results. Implementing new marketing and advertising strategies also would increase the risk of devoting significant capital and other resources to endeavors that do not prove to be cost effective. Further, we may over time become disproportionately reliant on one channel or strategic partner, which could limit our marketing and advertising flexibility and increase our operating expenses. We also may incur marketing and advertising expenses significantly in advance of the time we anticipate recognizing revenue associated with such expenses, and our marketing and advertising expenditures may not generate sufficient levels of brand awareness or result in increased revenue. Even if our marketing and advertising expenses result in increased revenue, the increase might not offset our related expenditures. If we are unable to maintain our marketing and advertising channels on cost-effective terms or replace or supplement existing marketing and advertising channels with similarly or more effective channels, our marketing and advertising expenses could increase substantially, our customer base could be adversely affected, and our business, operating results, financial condition, and reputation could suffer.

Furthermore, negative publicity, whether or not justified, relating to events or activities attributed to us, our employees, our strategic partners, our affiliates, or others associated with any of these parties, may tarnish our reputation and reduce the value of our brands. Damage to our reputation and loss of brand equity may reduce demand for our services and have an adverse effect on our business, operating results, and financial condition. Moreover, any attempts to rebuild our reputation and restore the value of our brands may be costly and time consuming, and such efforts may not ultimately be successful.

We face intense competition, and we may not be able to compete effectively, which could reduce demand for our services and adversely affect our business, growth, reputation, revenue, and market share.

We operate in a highly competitive business environment in both our consumer and enterprise business. Our primary competitors are credit bureaus including Experian PLC, Equifax Inc., and TransUnion, as well as other entities, such as Affinion Group, EWS (Early Warning Services), Intersections Inc., CSID, LexisNexis Group and Credit Karma and other free credit monitoring services. We are also facing competition from large enterprises in the consumer, insurance and other industries offering similar products to ours powered by our competitors and at prices lower than we offer. Many of our competitors have substantially greater financial, technical, marketing, distribution, and other resources than we possess that afford them competitive advantages. As a result, they may be able to devote greater resources to the development, promotion, and sale of services, to deliver competitive services at lower prices or for free, and to introduce new solutions and respond to market developments and customer requirements more quickly than we can. Some of our competitors may also be our vendors and may be in a position to impair our ability to compete with them as a result of such relationship. Consolidation of such competitors who are also vendors may adversely impact our ability to compete, the quality of service we receive from them or our ability to access data that was available to us prior to such consolidation. In addition, some of our competitors may have data that we do not have or cannot obtain without difficulty. Any of these factors could reduce our growth, revenue, access to valuable data, or market share.

Our ability to compete successfully in our markets depends on a number of factors, both within and outside our control, and our inability to compete successfully in our markets may reduce the demand for our services which could adversely affect our business and prospects.

Some of the factors affecting our ability to compete include the following:

• access to a breadth of identity and consumer transaction data;

• breadth and effectiveness of service offerings, including designing and introducing new services;

• brand recognition;

• technology;

• effectiveness and cost-efficiency of customer acquisition;

• customer satisfaction;

37

• price;

• quality and reliability of customer service; and

• accurate identification of appropriate target markets for our business.

Any failure by us to compete successfully in any one of these or similar areas may reduce the demand for our services and the robustness of the LifeLock ecosystem, as well as adversely affect our business, growth, reputation, revenue, and market share. Moreover, new competitors, alliances among our competitors, or new service introductions by our competitors may emerge and potentially adversely affect our business and prospects.

We could lose our access to data sources or rely on sources that prove to be ineffective or inaccurate, which could cause us competitive harm and have a material adverse effect on our business, operating results, and financial condition.

Our services depend extensively upon continued access to and receipt of credible, timely and complete data from external sources, including data received from customers, vendors who are also competitors and fulfillment partners. Our data providers could stop providing data, provide untimely data, provide inaccurate or incomplete data or increase the costs for their data for a variety of reasons, including competitive considerations impacting willingness to share the data, lack of verification of the accuracy of the data, a perception that our systems are insecure as a result of a data security breach, budgetary constraints, a desire to generate additional revenue, or a contractual dispute. In addition, upon the termination of the contracts we have with certain of our enterprise customers, we are required to remove from our repositories the data contributed by and through those customers. We could also become subject to legislative, regulatory, or judicial restrictions or mandates on the collection, disclosure, or use of such data, in particular if such data is not collected by our providers in a way that allows us to legally use the data or if the data delivered to us is inaccurate or incomplete. If we were to lose access to a substantial number of data sources or certain key data sources or certain data already in the LifeLock ecosystem, or if our access or use were restricted or became less economical or desirable, our ability to provide our services and the efficacy and attractiveness of the LifeLock ecosystem could be negatively affected, and this would adversely affect us from a competitive standpoint. This would also adversely affect our business, operating results, and financial condition. We may not be successful in maintaining our relationships with these external data source providers and may not be able to continue to obtain data from them on acceptable terms or at all. Furthermore, we cannot provide assurance that we will be able to obtain data from alternative or additional sources if our current sources become unavailable.

We may lose customers and significant revenue and fail to attract new customers if our existing services become less desirable or obsolete, or if we fail to develop and introduce new services with broad appeal or fail to do so in a timely or cost-effective manner.

The introduction of new services by competitors, the emergence of new industry standards, or the development of new technologies could render our existing or future services less desirable or obsolete. In addition, professional thieves continue to develop more sophisticated and creative methods to steal personal and financial information as consumers and enterprises today become increasingly interconnected and engage in a large number of daily activities that involve personal or financial information. Consequently, our financial performance and growth depends upon our ability to enhance and improve our existing services, develop and successfully introduce new services that generate customer interest, and sell our services in new markets. As our existing services mature, encouraging customers to purchase enhancements or upgrades becomes more challenging unless new service offerings provide features and functionality that have meaningful incremental value. To achieve market acceptance for our services, we must effectively anticipate and offer services that meet changing customer demands in a timely manner. Customers may require features and capabilities that our current services lack. In addition, any new markets in which we attempt to sell our services, including new industries, countries, or regions, may not be receptive to our service offerings. If we fail to enhance our existing services in a timely and cost-effective manner, successfully develop and introduce new services, or sell our services in new markets, our ability to retain our existing or attract new customers and our ability to create or increase demand for our services could be harmed, which could have an adverse effect on our business, operating results, and financial condition.

We will be required to make significant investments in developing new services and we may be unable to complete the development of new offerings and services in the anticipated time frame or cost. We also will be subject to all of the risks inherent in the development of new services, including unanticipated technical or other development problems, which could result in material delays in the launch and acceptance of the services or significantly increased costs. In some cases, we may expend a significant amount of resources and management attention on service offerings that do not ultimately succeed in their markets. Because new service offerings are inherently risky, they may not be successful and may harm our operating results and financial condition.

38

Our inability to develop and offer services that are attractive to the growing number of consumers who utilize mobile devices other than personal computers to access online services could adversely affect our business.

The number of people who access services through devices other than personal computers, including mobile phones, smart phones, handheld computers, tablets, and other mobile devices, has increased dramatically in recent years and is projected to continue to increase.  The services we develop for users of mobile devices may not be attractive for users.  

We launched a new mobile application in the second quarter of 2016. The success of our mobile application is unproven, and we have prioritized the quality of user experience with our mobile application over short-term monetization.  Despite the expected growth in mobile devices, there is no guarantee that we will be able to effectively monetize our mobile application and generate meaningful revenue in the future.  If our mobile application is not widely adopted or sufficiently profitable, or if we fail to continue to innovate and introduce enhanced mobile applications and other services for users of these alternative devices, our business could be adversely affected.

As new devices, platforms, and technologies are continually being adopted and released, it is difficult to predict the problems we may encounter in developing versions of our services for use with those devices, platforms, and technologies, and we may need to devote significant resources to the creation, support, and maintenance of such offerings.  We are dependent on the interoperability of our mobile application with popular mobile operating systems that we do not control, such as Android and iOS, and any changes in such systems that degrade our application’s functionality or give preferential treatment to competitive products could adversely affect usage of our mobile application.  Additionally, if we are slow to develop new services and technologies that are compatible with these devices, platforms, and technologies, or if our competitors are able to achieve those results more quickly than us, we will fail to capture a significant share of an increasingly important portion of the market for online services, which could adversely affect our business.

Our revenue and operating results depend significantly on our ability to retain our existing customers, and add new customers, and any decline in our retention rates or failure to add new customers will harm our future revenue and operating results.

Our revenue and operating results depend significantly on our ability to retain our existing customers and add new customers. In our consumer business from which we derive a significant portion of our revenue, we sell our services to our members on a monthly or annual subscription basis. Our members may cancel their membership with us at any time without penalty. In our enterprise business, our customers have no obligation to renew their agreements with us after the contractual term expires, and a substantial portion of our direct enterprise customers do not have monthly transaction minimums and, accordingly, may reduce their utilization of our services during the contractual term. We therefore may be unable to retain our existing members and enterprise customers on the same or on more profitable terms, if at all, and may generate lower revenue as a result of less utilization of our services by our enterprise customers. In addition, we may not be able to predict or anticipate accurately future trends in customer retention or enterprise customer utilization or effectively respond to such trends. Our customer retention rates and enterprise customer utilization may decline or fluctuate due to a variety of factors, including the following:

• our customers’ levels of satisfaction or dissatisfaction with our services;

• the quality, breadth, and prices of our services;

• our general reputation and events impacting that reputation;

• the services and related pricing offered by our competitors;

• our customer service and responsiveness to any customer complaints;

• customer dissatisfaction if they do not receive the full benefit of our services due to their failure to provide all relevant data;

• customer dissatisfaction with the methods or extent of our remediation services;

• our guarantee may not meet our customers’ expectations; and

• changes in our target customers’ spending levels as a result of general economic conditions or other factors.

In addition, we experienced a higher level of cancellations in the second half of 2015, which we believe was driven by the announcement of the FTC litigation during the third quarter of 2015, which had a negative impact on our member retention rate. Our membership retention rate also was significantly impacted in the first six months of 2016 by the high number of cancellations of members who enrolled during the first quarter of 2015 as a result of the breach at a large health insurance company during the first quarter of 2015. We also experienced increased cancellations in the first half of 2016, coming from our Employee Benefit, oil and gas vertical, due to a downturn in the oil and gas industry.

39

If we do not retain our existing customers and continue to add new customers at the same rate we have historically, our revenue may grow more slowly than expected or decline, and our operating results and gross margins will be harmed. In addition, our business and operating results may be harmed if we are unable to maintain our retention rates.

We also must continually add new customers both to replace customers who cancel or elect not to renew their agreements with us and to grow our business beyond our current customer base. If we are unable to attract new customers in numbers greater than the percentage of customers who cancel or elect not to renew their agreements with us, which we call “churn,” our customer base will decrease, and our business, operating results, and financial condition will be adversely affected. Churn negatively impacts the predictability of our subscription revenue model and the efficacy and attractiveness of the LifeLock ecosystem by decreasing the amount of data being added to our data repositories.The FTC litigation has negatively impacted our member growth from the strategic partner channel as the pipeline of new partnerships slowed as a result of the FTC litigation. In addition we have focused our future growth on larger partners which has increased the time of the sales cycle. While we expect the business to recover from the impact of the FTC litigation, there is no guarantee that member growth derived from the partner channel will resume to its prior growth levels.

We depend on strategic partners in our consumer business, and our inability to maintain our existing and secure new relationships with strategic partners could harm our revenue and operating results.

We have derived, and intend to continue to derive, a significant portion of our revenue from members who subscribe to our consumer services through one of our strategic partners. In 2015, we derived just under half of our gross new members from our partner distribution channels. These distribution channels involve various risks, including the following:

• we may be unable to maintain or secure favorable relationships with strategic partners;

• our strategic partners may not be successful in expanding our membership base;

• our strategic partners may seek to renegotiate the economic terms of our relationships;

• our strategic partners may terminate their relationships with us;

• bad publicity and other issues faced by us or our strategic partners could negatively impact our relationships; and

• our strategic partners, some of which already compete with us, may present increased competition for us in the future and may elect to terminate their contracts with us or to violate their contractual obligations.

Our inability to maintain our existing and secure new relationships with strategic partners could harm our revenue and operating results.

Many of our key strategic partnerships are governed by agreements that may be terminated without cause and without penalty by our strategic partners upon notice of as few as 30 days. Under many of our agreements with strategic partners, our partners may cease or reduce their marketing of our services at their discretion, which may cause us to lose access to prospective members and significantly reduce our revenue and operating results.

Some of our strategic partners possess significant resources and advanced technical abilities. Some offer services that are competitive with our services and more may do so in the future, either alone or in collaboration with other competitors. Those strategic partners could give a higher priority to competing services or decide not to continue to offer our services at all. If any of our strategic partners discontinue or reduce the sale or marketing of our services, promote competitive services, or, either independently or jointly with others, develop and market services that compete with our services, our business and operating results may be harmed. In addition, some of our strategic partners may experience financial or other difficulties, causing our revenue through those strategic partners to decline, which could adversely affect our operating results. Some of our strategic partners may also experience a security breach that could impact our members or systems if they are not identified early and addressed successfully or can otherwise impact our business if we have to suspend or terminate those relationships as a result.

In order for us to implement our business strategy and grow our revenue, we must effectively manage and expand our relationships with qualified strategic partners. We expend significant time and resources in attracting qualified strategic partners, training those partners in our technology and service offerings, and then maintaining relationships with those partners. In order to continue to develop and expand our distribution channels, we must continue to scale and improve our processes and procedures that support our strategic partnerships. Those processes and procedures could become increasingly complex and difficult to manage. Our competitors also use arrangements with strategic partners, and it could be more difficult for us to maintain and expand our distribution channels if they are more successful in attracting strategic partners or enter into exclusive relationships with strategic partners. If we fail to maintain our existing or secure new relationships with strategic partners, our business will be harmed.

40

We are subject to extensive government regulation, which could impede our ability to market and provide our services and could have a material adverse effect on our business.

Our business and the information we use in our business is subject to a wide variety of federal, state, and local laws and regulations, including the Fair Credit Reporting Act, or FCRA, the Gramm-Leach-Bliley Act, the FTC Act and comparable state laws that are patterned after the FTC Act. In addition, laws governing credit information, consumer privacy and marketing, servicing of consumer products and services, and insurance products and services, govern our business information. Moreover, we are bound by the terms of the FTC Order, the companion orders with 35 states’ attorneys general that we entered into in March 2010, and the settlement we reached with the FTC in 2015. These laws, regulations, and orders cover, among other things, advertising, automatic subscription renewal, broadband residential Internet access, consumer protection, content, copyrights, credit card processing procedures, data protection, distribution, electronic contracts, member privacy, pricing, sales and other procedures, tariffs, and taxation. In addition, it is unclear how existing laws and regulations governing issues such as property ownership, sales and other taxes, and personal privacy apply to the Internet. We incur significant costs to operate our business and monitor our compliance with these laws, regulations, and orders. Any of these laws and regulations are subject to revision and changed interpretation, and we cannot predict the impact of such changes on our business. Complying with these varying requirements, the evolving nature of all of these laws and regulations, the evolving nature of various governmental bodies’ enforcement efforts, and the possibility of new laws or changed interpretation in this area, could increase our costs or impede our ability to provide our services to our customers. The occurrence of any of these could have a material adverse effect on our business, operating results, financial condition, and future prospect.

As disclosed, on July 21 2015, the FTC initiated the FTC Contempt Action alleging that LifeLock had violated the FTC Order. On December 17, 2015, we entered into a comprehensive settlement agreement with the FTC, pursuant to which we resolved all matters related to the FTC Contempt Action, and with representatives of a national class of consumers, which we refer to as the Consumer Class Action or the Ebarle Class Action. Under the terms of the settlement, $100 million was placed into the registry of the court overseeing the FTC Contempt Action, $68 million of which is to be distributed to the court overseeing Consumer Class Action to fund the consumer redress contemplated by the Consumer Class Action settlement, and the remaining $32 million of the settlement remains in the registry of the Arizona court.

As of the date of this filing, no states’ attorneys general have initiated proceedings against us alleging that we violated the companion orders from 2010. As of June 30, 2016, we have accrued $3 million for a potential settlement with states’ attorneys general. The ultimate resolution of the matter with the states’ attorneys general is uncertain and may involve a materially higher settlement than $3 million. Engaging in settlement discussions and defending ourselves in any litigation that arises against states’ attorneys general related to this matter, and other actions that could arise, would be costly and time-consuming and would divert management’s, key personnel’s, and members of our board of directors' attention from our business operations. Any of these occurrences could have a material adverse effect on our business, reputation, product sales, financial condition, results of operation, and future prospects.

It is possible that other federal or local governmental agencies, at any time, will commence additional inquiries or investigations of our business practices or our compliance with the FTC Order. Moreover, there can be no assurance that, despite our best efforts to comply with the FTC Order, the other federal or local government agencies will interpret their orders in the same way. We believe the increased governmental and regulatory scrutiny will continue for the foreseeable future and could lead to additional meetings, inquiries, or investigations by governmental and regulatory agencies that regulate our business, including the FTC, the Department of Justice, the SEC, and the New York Stock Exchange. Responding to these inquiries, investigations, and actions may cause us to incur significant expenses and could divert the attention of our management, key personnel, and members of our board of directors from our business operations. Any determination that we violated any laws, regulations, or consent decrees could result in our liability for fines, damages, or other penalties, could require us to make changes to our services and business practices, and could cause us to lose customers, any of which could have a material adverse effect on our business, operating results, financial condition, and future prospects. In addition, recently, the media have been increasingly covering perceived noncompliance with consumer protection regulations and violations of notions of fair dealing with customers. Accordingly, we may be susceptible to unfounded claims by the media and others of regulatory noncompliance and unfair dealing.

Further, with the growing public concern regarding privacy and the collection, distribution, and use of consumer personal information, we believe we are in an environment in which there is increased regulatory scrutiny concerning data collection and use practices and the provision and marketing of services, like ours, that seek to protect that information. We expect that kind of scrutiny to continue as the marketplace for services like ours continues to develop.

Compliance with these federal, state and foreign regulations is generally our responsibility, and we could be subject to a variety of investigations, enforcement actions and/or private actions for any failure or perceived failure to comply with such regulations. Consumer complaints with respect to our industry have resulted in, and may in the future result in, state, federal and foreign regulatory and other investigations. In addition, we believe there has been a recent increase in whistleblower claims made to regulatory agencies, including whistleblower claims made by former employees or other third parties, including

41

competitors. We believe these claims, will likely continue, in part because of the provisions enacted by the Dodd-Frank Act that provide for cash awards to persons who report alleged wrongdoing to the SEC, and because competitors may use it as a method to weaken their competitors, and others, like personnel or former personnel or vendors, may use it as means to extract payment or retaliate against the company.

Any changes to applicable regulations or new regulations could materially increase our compliance costs or impede our ability to provide our services to our customers. In addition, various governmental agencies have the authority to commence investigations and enforcement actions under these laws, regulations, and consent decrees, and private citizens as well as other third parties, such as competitors, may bring actions, including class action litigation and whistleblower claims, under some of these laws and regulations. The risk of our noncompliance with any rules and regulations interpreted differently by or otherwise enforced by a federal or state consumer protection authority or an enforcement agency in a foreign jurisdiction may subject us (and in some cases our management) to fines, consumer restitution, or various forms of civil or criminal prosecution, any of which could impede our ability to market our programs and services and reduce our revenue and profitability. While we have invested and expect to continue to invest significant resources to continuously improving our compliance practices and security measures, there is no assurance that such efforts will be sufficient when reviewed by an enforcement authority. Even an inadvertent failure to comply with these laws and regulations, as well as rapidly evolving expected standards, could adversely affect our business or our reputation. Certain types of noncompliance may also give our partners the right to terminate certain of our contracts or assert claims under our contracts. Also, the media often publicizes perceived noncompliance with consumer protection regulations and violations of notions of fair dealing with customers, and our industry is susceptible to peremptory charges by the media and others of regulatory noncompliance and unfair dealing. Any failure or perceived failure by us to comply with regulatory requirements could have a material adverse effect on our business and results of operations. Similarly, disclosure of confidential information by regulatory agencies or other third parties may harm our business or reputation.

Marketing laws and regulations may materially limit our ability to offer our services to members.

We market our consumer services through a variety of marketing channels, including mass media, direct mail campaigns, online display advertising, paid search and search-engine optimization, and inbound customer service and account activation calls. These channels are subject to both federal and state laws and regulations. Over the past several years, there has been proposed legislation in several states that may interfere with our marketing practices. For example, over the past several years many states have proposed legislation that would allow customers to limit the amount of unsolicited direct mail they receive. Additionally, several bills have been proposed in Congress that could restrict the collection and dissemination of personal information for marketing purposes. If such legislation is passed in one or more states or by Congress, it could limit our ability to market to new members or offer additional services to existing members, which may have a material adverse effect on our ability to sell our services.

The Dodd-Frank Wall Street Reform and Consumer Protection Act authorizes the newly created Bureau of Consumer Financial Protection to adopt rules and take actions that could have a material adverse effect on our business.

In 2010, the Dodd-Frank Act was enacted to reform the practices in the financial services industry. Title X of the Dodd-Frank Act established the Bureau of Consumer Financial Protection, or the CFPB, to protect consumers from abusive financial services practices. Among other things, the CFPB has broad authority to write rules affecting the business of credit reporting companies as well as to supervise, conduct examinations of, and enforce compliance as to federal consumer financial protection laws and regulations with respect to certain “non-depository covered persons” determined by the CFPB to be “larger participants” that offer consumer financial products and services.

The CFPB has broad regulatory, supervisory, and enforcement powers and may exercise authority with respect to our services, or the marketing and servicing of those services, by overseeing our financial institution or credit reporting agency customers and suppliers, or by otherwise exercising its supervisory, regulatory, or enforcement authority over consumer financial products and services. Certain of our credit reporting agency customers and suppliers that meet the definition of a “larger participant” are included under the CFPB nonbank supervision program. The CFPB also created a section of its consumer complaint database for credit reporting complaints. Further, we believe that the CFPB has commenced review of certain of our financial institution customers and vendors, including their offering of some or all fee-based products. These or other actions by the CFPB could cause our credit agency customers and suppliers and financial institution customers to limit or change their business activities or condition their engagement with us on us changing our own practices, which could have a material adverse effect on our operating results. It is not certain whether the CFPB has, or will seek to exercise, supervisory or other authority directly over us or our services. Supervision and regulation of us or our enterprise customers by the CFPB could have a material adverse impact on our business and operating results, including the costs to make changes that may be required by us, our enterprise customers, or our strategic partners, and the costs of responding to examinations by the CFPB. In addition, the costs of responding to or defending against any enforcement action that may be brought by the CFPB, and any liability that we may incur, may have a material adverse impact on our business, results of operations, and financial condition. In the future, the CFPB may choose to enact new rules or amend currently existing rules which could further extend the scope of its

42

jurisdiction with respect to our business activities or those of our customers and suppliers.

Changes in legislation or regulations governing consumer privacy and other consumer protection aspects may affect our ability to collect, distribute, and use personally identifiable information.

There has been increasing public concern about the use of personally identifiable information and vulnerability of security practices intended to protect it. As a result, many federal, state, and foreign government bodies and agencies have adopted or are considering adopting laws and regulations regarding the collection, disclosure, protection and use of personally identifiable information. In addition to government regulation, privacy advocates and industry groups may propose new and different self-regulatory standards that apply to us. Because the interpretation and application of privacy, data protection and other consumer protection laws are still uncertain, it is possible that these laws may be interpreted and applied in a manner that is inconsistent with our existing data management practices or the features of our services. If this is the case, 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 service offerings, which could have a material adverse effect on our business and our ability to retain our customers and partners. Any inability to adequately address privacy concerns, even if unfounded, or comply with applicable privacy, data protection or other consumer protection laws, regulations, and policies, could result in additional cost and liability to us, damage our reputation, affect our ability to attract new customers and maintain relationships with our existing customers, and adversely affect 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 enterprise customers and strategic partners may limit the use and adoption of, and reduce the overall demand for, our services. Privacy concerns, whether valid or not, may inhibit market adoption of our services.

Laws requiring the free issuance of credit reports by credit reporting agencies, and other services that must be provided by credit reporting agencies, or that otherwise impose restrictions or requirements related to such services, could impede our ability to obtain new members or retain existing members and could have a material adverse effect on our business.

The FCRA provides consumers the ability to receive one free consumer credit report per year from each major consumer credit reporting agency and requires each major consumer credit reporting agency to provide the consumer a credit score along with the consumer’s credit report for a reasonable fee as determined by the FTC. In addition, the FCRA and state laws give consumers other rights with respect to the protection of their credit files at the credit reporting agencies. For example, the Fair Credit Reporting Act gives consumers the right to place “fraud alerts” at the credit reporting agencies, and the laws in approximately 40 states give consumers the right to place “freezes” to block access to their credit files. The rights of consumers to obtain free annual credit reports and credit scores from consumer reporting agencies, and to place fraud alerts and credit freezes directly with them, could cause consumers to perceive that the value of our services is reduced or replaced by those benefits, which could have a material adverse effect on our business. Similarly, other laws, rules and regulations may impose restrictions or additional requirements on providing credit related services and the failure to comply with those requirements may impact our ability to enroll or retain our members, to otherwise provide services to our members.

The FTC Order, as well as the companion orders with 35 states’ attorneys general and the FTC Contempt Action imposes on us injunctive provisions that could subject us to additional injunctive and monetary remedies.

In March 2010, we and Todd Davis, our Executive Vice Chairman and former CEO, entered into the FTC Order. The FTC Order was the result of a settlement of allegations that certain of our advertising and marketing practices constituted deceptive acts or practices in violation of the FTC Act. We did not admit to those allegations. Under the FTC Order, we are enjoined from making any misrepresentation of the means, methods, procedures, effects, effectiveness, coverage, or scope of our identity theft protection services. The FTC investigation of our advertising and marketing activities occurred during the time that we relied significantly on the receipt of fraud alerts from the credit reporting agencies for our members. The FTC believed that such alerts had inherent limitations in terms of coverage, scope, and timeliness. Many of the allegations in the FTC complaint, which accompanied the FTC Order, related to the inherent limitations of using credit report fraud alerts as the foundation for identity theft protection. The FTC Order also includes injunctive provisions relating to our data security for members’ personally identifiable information. At the same time, we entered into companion orders with 35 states’ attorneys general that imposed injunctive provisions similar to those in the FTC Order.

The FTC Order provided for a consumer redress payment of $11 million, which we made in 2010 to the FTC for distribution to our members. The FTC Order also provided for an additional consumer redress payment of $24 million, which the FTC suspended based on our then-current financial condition. The FTC Order specifies that in the event the FTC were to find that the financial materials we submitted were not truthful, accurate, and complete, the court order entering the settlement could be re-opened, and the suspended judgment in the amount of the additional $24 million would become immediately due in full.

43

As previously disclosed, on July 21, 2015, the FTC initiated the FTC Contempt Action alleging that LifeLock had violated the FTC Order. On December 17, 2015, we entered into a comprehensive settlement agreement with the FTC, pursuant to which we resolved all matters related to the FTC Contempt Action and the Consumer Class Action. Under the terms of the settlement, $100 million was placed into the registry of the court overseeing the FTC Contempt Action, $68 million of which is to be distributed to the court overseeing Consumer Class Action to fund the consumer redress contemplated by the Consumer Class Action settlement, and the remaining $32 million of the settlement remains in the registry of the Arizona court. In addition, as of December 31, 2015 we also have $13 million accrued for payment of plaintiff legal and administrative fees related to the nationwide consumer class action.

As of the date of this filing, no states’ attorneys general have initiated proceedings against us alleging that we violated the companion orders from 2010. However, because the companion orders we entered into with 35 states’ attorneys general imposed injunctive provisions similar to those in the FTC Order, we initiated preliminary settlement discussions with certain states’ attorneys general. As of December 31, 2015, we have accrued $3 million for a potential settlement with states’ attorneys general. The ultimate resolution of the matter with the states’ attorneys general is uncertain and may involve a materially higher settlement than $3 million. Engaging in settlement discussions and defending ourselves in any litigation that arises against states’ attorneys general related to this matter, and other actions that could arise, would be costly and time-consuming and would divert the attention of our management, key personnel, and members of our board of directors from our business operations. The outcome of the settlement discussions with the states’ attorneys general and potential related actions could result in liability for damages, fines, penalties, and injunctive relief. Any of these occurrences could have a material adverse effect on our business, operating results, financial condition, and prospects.

The outcome of litigation or regulatory proceedings could subject us to significant monetary damages, restrict our ability to conduct our business, harm our reputation, and otherwise negatively impact our business.

As previously disclosed, on July 21 2015, the FTC initiated the FTC Contempt Action alleging that LifeLock had violated the FTC Order. On December 17, 2015, we entered into a comprehensive settlement agreement with the FTC, pursuant to which we resolved all matters related to the FTC Contempt Action and the Consumer Class Action. Under the terms of the settlement, $100 million was placed into the registry of the court overseeing the FTC Contempt Action, $68 million of which is to be distributed to the court overseeing Consumer Class Action to fund the consumer redress contemplated by the Consumer Class Action settlement, and the remaining $32 million of the settlement remains in the registry of the Arizona court.

As of the date of this filing, no states’ attorneys general have initiated proceedings against us alleging that we violated the companion orders from 2010. However, because the companion orders we entered into with 35 states’ attorneys general imposed injunctive provisions similar to those in the FTC Order, we initiated preliminary settlement discussions with certain states’ attorneys general. The ultimate resolution of the matter with the states’ attorneys general is uncertain and may involve a settlement outside the FTC Contempt Action remaining $32 million settlement funds.

Engaging in settlement discussions and defending ourselves in any litigation that arises against states’ attorneys general related to this matter or otherwise with any other regulatory agencies, and other actions that could arise, would be costly and time-consuming. We may be unable to reach settlement on terms acceptable to us or at all and costly litigation would likely result. Further, as a result of these matters, including the settlement agreements themselves, we could face negative publicity, our reputation could be harmed, we could lose customers, including enterprise customers, and our ability to win new customers could be impeded any of which could have a material adverse effect on our business, operating results, financial condition and our future prospects.

We are also presently subject to various securities, consumer class action, and shareholder derivative complaints as described in more detail in this Form 10-Q and in our Form 10-K for the year ended December 31, 2015. The FTC settlement and the recent volatility in the trading price of our stock may result in our stockholders filing additional securities class actions and shareholder derivative complaints against us, our officers, and directors.

We cannot predict the outcome of these actions or proceedings, or any other actions or proceedings filed against us in the future, and the cost of defending such actions or proceedings could be material. Furthermore, defending such actions or proceedings could divert the attention of our management, key personnel, and members of our board of directors from our business operations. If we are found liable in any actions or proceedings, we may have to pay substantial damages, penalties, or fines, change the way we conduct our business, or lose customers, any of which may have a material adverse effect on our business, operating results, financial condition, and prospects. In addition, we are engaged in a dispute regarding insurance coverage for certain matters. If coverage is unavailable, we will be required to pay for any costs related to these matters out of pocket, which amounts may be material. There may also be negative publicity associated with litigation or regulatory proceedings that could harm our reputation or decrease acceptance of our services.

44

Moreover, we utilize contractors and third parties for various services, including certain advertising and promotions, which may result in misrepresentations made by such third parties being attributed to us or in additional claims or litigation against us. For example, a former service provider claimed that we misclassified her as an independent contractor, and we may be subject to other claims of this nature from time to time. These claims may be costly to defend and may result in our liability for damages, adverse tax consequences, and harm to our reputation, any of which could have a material adverse effect on our business, operating results, financial conditions, and future prospects.

We believe there has been a recent increase in whistleblower claims across our industry, including whistleblower claims arising after employee or vendor terminations or by competitors to impair competition, which will likely continue, in part because of the provisions enacted by the Dodd-Frank Act that may entitle persons who report alleged wrongdoing to the SEC to cash rewards. We anticipate that these provisions will result in a significant increase in whistleblower claims, and dealing with such claims could generate significant expenses and take up significant management and board time, even for frivolous and non-meritorious claims. Any investigations of whistleblower claims may impose additional expense on us, may divert the attention of our management, other key personnel, and members of our board of director, and may result in fines and/or reputational damage whether or not we are deemed to have violated any regulations. We believe there also has been a recent increase in claims made to regulatory agencies by former employees. Often the allegations underlying such claims to regulatory agencies lead to meetings, inquiries, or investigations by the regulatory agencies about such claims, inquiries, or investigations by the agencies that regulate our business, including the FTC. Inquiries or investigation by regulatory agencies about such claims could generate significant expense and take up significant management and board time.

Our business could be negatively affected as a result of actions of stockholders.

The actions of stockholderscould adversely affect our business. Specifically, certain actions of certain types of stockholders, including without limitation public proposals, requests to pursue a strategic combination or other transaction or special demands or requests, could disrupt our operations, be costly and time-consuming or divert the attention of our management and employees. In addition, perceived uncertainties as to our future direction in relation to the actions of our stockholders may result in the loss of potential business opportunities or the perception that we are unstable and need to make changes, which may be exploited by our competitors and make it more difficult to attract and retain personnel as well as customers, service providers and partners. Actions by our stockholders may also cause fluctuations in our stock price based on speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

A limited number of enterprise customers provide a significant portion of our enterprise revenue, and our inability to retain these customers or attract new customers could harm our revenue and operating results and the efficacy and attractiveness of the LifeLock ecosystem.

ID Analytics has historically derived, and continues to derive, a significant portion of its revenue from a limited number of enterprise customers. For example, in 2015, 2014, and 2013, sales derived through ID Analytics’ top ten customers accounted for approximately 63%, 71%, and 65%, respectively, of ID Analytics’ revenue for those periods. Some of these customers also provide services that compete with our consumer services and, accordingly, may seek alternative services in the future. The loss of several of our enterprise customers, or of any of our large enterprise customers, could have a material adverse effect on our revenue and results of operations, as well as the efficacy and attractiveness of the LifeLock ecosystem.

In addition, new customer acquisition in our enterprise business is often a lengthy process requiring significant up-front investment. Accordingly, we may devote substantial resources in an effort to attract new enterprise customers that may not result in customer engagements or lead to an increase in revenue, which could have a material adverse effect on our business.

If we experience system failures or interruptions in our telecommunications or information technology infrastructure, it may impair the availability of our services, our revenue could decrease, and our reputation could be harmed.

Our operations depend upon our ability to protect the telecommunications and information technology systems utilized in our services against damage or system interruptions from natural disasters, technical failures, human error, and other events. We send and receive credit and other data, as well as key communications to and from our members, electronically, and this delivery method is susceptible to damage, delay, or inaccuracy. A portion of our business involves telephonic customer service and online enrollments, which depends upon the data generated from our computer systems. Unanticipated problems with our telecommunications and information technology systems may result in data loss, which could interrupt our operations. Our telecommunications or information technology infrastructure upon which we rely also may be vulnerable to computer viruses, hackers, or other disruptions.

45

We rely on our network and data center infrastructure and internal technology systems for many of our development, operational, support, sales, accounting, and financial reporting activities, the failure of which could disrupt our business operations and result in a loss of revenue and damage to our reputation.

We rely on our network and data center infrastructure and internal technology systems for many of our development, operational, support, sales, accounting, and financial reporting activities. We routinely invest resources to update and improve these systems and environments with the goal of better meeting the existing, as well as the growing and changing requirements of our customers. If we experience prolonged delays or unforeseen difficulties in updating and upgrading our systems and architecture, we may experience outages and may not be able to deliver certain service offerings and develop new service offerings and enhancements that we need to remain competitive. Such improvements and upgrades often are complex, costly, and time consuming. In addition, such improvements can be challenging to integrate with our existing technology systems or may result in problems with our existing technology systems. Unsuccessful implementation of hardware or software updates and improvements could result in outages, disruption in our business operations, loss of revenue, or damage to our reputation. Our systems and data are hosted by third-party data centers, and certain applications are hosted by other third-party cloud providers. If one or more of these third-party data centers or cloud providers experience any disruptions, outages, or catastrophes, it could disrupt our business and result in a loss of customers, loss of revenue, or damage to our reputation.

Natural or man-made disasters and other similar events may significantly disrupt our and our strategic partners’ or service providers’ businesses, and negatively impact our results of operations and financial condition.

Our enterprise business headquarters and the back-up data centers and cloud providers for our enterprise business are located in Southern California, which is situated on or near earthquake fault lines. Our primary data center for our enterprise business is located in Nevada. In our consumer business, we have data centers in Northern California and Arizona. Any of our or our strategic partners’ or service providers’ facilities may be harmed or rendered inoperable by natural or man-made disasters, including earthquakes, tornadoes, hurricanes, wildfires, floods, nuclear disasters, acts of terrorism or other criminal activities, infectious disease outbreaks, and power outages, which may render it difficult or impossible for us or our strategic partners or service providers to operate our respective businesses for some period of time. Our and our strategic partners’ or service providers’ facilities would likely be costly to repair or replace, and any such efforts would likely require substantial time. Any disruptions in our or our strategic partners’ or service providers’ operations could negatively impact our business and results of operations and harm our reputation. In addition, we and our strategic partners or service providers may not carry business insurance or may not carry sufficient business insurance to compensate for losses that may occur. Any such losses or damages could have a material adverse effect on our business, results of operations, and financial condition.

Changes in the economy may significantly affect our business, operating results, and financial condition.

Our business may be affected by changes in the economic environment. Our services, particularly our consumer services, are discretionary purchases, and members may reduce or eliminate their discretionary spending on our services during a difficult economic environment. Although we have not yet experienced a material increase in membership cancellations or a material reduction in our member retention rate, we may experience such an increase or reduction in the future, especially in the event of a prolonged recessionary period or a worsening of current conditions. In addition, during an economic downturn, consumers may experience a decline in their credit, which may result in less demand for our services. Conversely, consumers may spend more time using the Internet during an economic downturn and may have less time for our services in a period of economic growth. In addition, media prices may increase in a period of economic growth, which could significantly increase our marketing and advertising expenses. As a result, our business, operating results, and financial condition may be significantly affected by changes in the economic environment.

Our rapid development and growth in an evolving industry make evaluating our business and future prospects difficult and may increase the risk of an investment in our company.

Our business, prospects, and growth potential must be considered in light of the risks, expenses, delays, difficulties, uncertainties, and other challenges encountered by companies that are rapidly developing and are experiencing rapid growth in evolving industries. We may be unsuccessful in addressing the various challenges we may encounter. Our failure to do so could have a material adverse effect on our business, prospects, reputation, and growth potential as well as the value of an investment in our company.

As a result of our rapid development and growth in an evolving industry, it is difficult to accurately forecast our revenue and plan our operating expenses, and we have limited insight into trends that may emerge and affect our business. In the event that our actual results differ from our forecasts or we adjust our forecasts in future periods, our operating results and financial position could be materially and adversely affected and our stock price could decline.

These risks are increased by our acquisitions of ID Analytics and Lemon, and will be further increased by any acquisitions we may make in the future.

46

We restated certain prior consolidated financial statements, which may lead to additional risks and uncertainties, including shareholder litigation, loss of investor confidence, and negative impacts on our stock price.

In November 2014, we restated our audited consolidated financial statements for the year ended December 31, 2013, our unaudited condensed consolidated financial statements for the quarters ended March 31, 2013, June 30, 2013, and September 30, 2013, and our unaudited condensed consolidated financial statements for the quarters ended March 31, 2014 and June 30, 2014. The determination to restate these financial statements was made by our Audit Committee, after discussion with management and Ernst & Young LLP, following the identification of an error related to our calculation of the volatility assumption within the Black-Scholes option pricing model used to compute our share-based compensation expense since our initial public offering in October 2012, which resulted in a higher volatility and, accordingly, we materially overstated share-based compensation expense for the impacted periods. As a result of these events, we have become subject to a number of additional risks and uncertainties, including potential shareholder litigation. If litigation did occur, we would incur substantial defense costs regardless of the outcome of such litigation. Likewise, such events may cause a diversion of our management’s time and attention. If we do not prevail in any such litigation, we could be required to pay substantial damages or settlement costs. In addition, the fact that we have completed a restatement may lead to a loss of investor confidence and have negative impacts on the trading price of our common stock.

If we are unable to maintain effective internal control over financial reporting in the future, the accuracy and timeliness of our financial reporting may be adversely affected.

Pursuant to Section 404 of the Sarbanes-Oxley Act, we are required to furnish a report by our management on our internal control over financial reporting. The report contains, among other matters, an assessment of the effectiveness of our internal control over financial reporting as of the end of our fiscal year, including a statement as to whether or not our internal control over financial reporting is effective. This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management.

Although we remediated the material weakness we had as a result of our prior restatement, and while we determined that our internal control over financial reporting was effective as of December 31, 2015, as indicated in Management's Annual Report on Internal Control over Financial Reporting included in our Annual Report on Form 10-K for fiscal 2015, if we are otherwise unable to maintain adequate internal controls for financial reporting, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls as required pursuant to the Sarbanes-Oxley Act, it could result in another material misstatement of our financial statements that would require a restatement, investor confidence in the accuracy and timeliness of our financial reports may be impacted, or the market price of our common stock could be negatively impacted.

The failure to manage our growth may damage our brand recognition and reputation and harm our business and operating results.

We have experienced rapid growth in a relatively short period of time. Our revenue grew from $18.9 million in 2007 to $587.5 million in 2015, and our members increased from approximately 30,000 on December 31, 2006 to approximately 4.2 million on December 31, 2015. In addition, our acquisitions of ID Analytics in March 2012 and Lemon in December 2013 increased our revenue, facilities and number of employees, and we will continue to hire additional employees in the future. We must successfully manage our growth to achieve our objectives. Our ability to effectively manage any significant growth of our business will depend on a number of factors, including our ability to do the following:

• introduce new service offerings that are attractive to our customers and enhance our gross margins;

• develop and pursue cost-effective marketing and advertising campaigns that attract new customers;

• satisfy existing and attract new customers;

• hire, train, retain, and motivate additional employees;

• enhance our operational, financial, and management systems;

• enhance our intellectual property rights;

• effectively manage and maintain our corporate culture; and

• make sound business decisions in light of the scrutiny associated with operating as a public company.

These enhancements and improvements will require significant expenditures and allocation of valuable management and employee resources, and our growth will continue to place a strain on our operational, financial, and management infrastructure. Our future financial performance and our ability to execute on our business plan will depend, in part, on our ability to effectively manage any future growth. There are no guarantees we will be able to do so in an efficient or timely manner, or at all. Our failure to effectively manage growth could have a material adverse effect on our business, reputation,

47

operating results, financial condition, and prospects.

Any future acquisitions that we undertake could disrupt our business, fail to achieve the anticipated results, harm our operating results, and dilute stockholder value.

From time to time, we may review opportunities to acquire other businesses or other assets that would expand the breadth of services that we offer, strengthen our distribution channels, enhance our intellectual property and technological know-how, augment the LifeLock ecosystem and our data repositories, or otherwise offer potential growth opportunities. For example, in March 2012, we completed our acquisition of ID Analytics, in December 2013, we completed our acquisition of Lemon, and in August 2015 we completed our acquisition of BitYota. We may in the future be unable to identify suitable acquisition candidates or to complete the acquisition of candidates that we identify. Increased competition for acquisition candidates or increased asking prices by acquisition candidates may increase purchase prices for acquisitions to levels beyond our financial capability or to levels that would not result in the returns required by our acquisition criteria. Acquisitions also may become more difficult in the future as we or others, including our competitors, acquire the most attractive candidates. Unforeseen expenses, difficulties, and delays that we may encounter in connection with rapid expansion through acquisitions could inhibit our growth and negatively impact our operating results.

Our ability to grow through acquisitions will depend upon various factors, including the following:

• the availability of suitable acquisition candidates at attractive purchase prices;

• the ability to compete effectively for available acquisition opportunities;

• the availability of cash resources, borrowing capacity, or stock at favorable price levels to provide required purchase prices in acquisitions;

• diversion of management’s attention to acquisition efforts; and

• the ability to obtain any requisite governmental or other approvals.

As a part of our acquisition strategy, we frequently engage in acquisition discussions. In connection with these discussions, we and potential acquisition candidates often exchange confidential operational and financial information, conduct due diligence inquiries, and consider the structure, terms, and conditions of the potential acquisition. Potential acquisition discussions frequently take place over a long period of time and involve difficult business integration and other issues, including, in some cases, management succession and related matters. As a result of these and other factors, a number of potential acquisitions that from time to time appear likely to occur do not result in binding legal agreements and are not consummated, despite the expenditure of time and resources, which may affect our results.

Any borrowings made to finance future acquisitions could make us more vulnerable to a downturn in our operating results, a downturn in economic conditions, or increases in interest rates on borrowings. If our cash flow from operating activities is insufficient to meet our debt service requirements, we could be required to sell additional equity securities, refinance our obligations, or dispose of assets in order to meet our debt service requirements. If we finance any future acquisitions in whole or in part through the issuance of common stock or securities convertible into or exercisable for common stock, existing stockholders will experience dilution in the voting power of their common stock and earnings per share could be negatively impacted. The extent to which we will be able or willing to use our common stock for acquisitions will depend on the market price of our common stock from time to time and the willingness of potential sellers to accept our common stock as full or partial consideration for the sale of their businesses. Our inability to use our common stock as consideration, to generate cash from operations, or to obtain additional funding through debt or equity financings in order to pursue an acquisition program could materially limit our growth.

Any acquisitions that we undertake could be difficult to integrate, which could disrupt and harm our business.

In order to pursue a successful acquisition strategy, we will need to integrate the operations of any acquired businesses into our operations, including centralizing certain functions and pursuing programs and processes aimed at leveraging our revenue and growth opportunities. The integration of the management, operations, and facilities of acquired businesses with our own could involve difficulties, which could adversely affect our growth rate and operating results.

We may not realize all of the benefits anticipated with any acquisitions and may experience unanticipated detriments as a result of such acquisitions. As with any acquisition, we may be unable to complete effectively an integration of the management, operations, facilities, and accounting and information systems of the acquired business with our own; to manage efficiently the combined operations of the acquired business with our operations; to achieve our operating, growth, and performance goals for the acquired business; to achieve additional revenue as a result of our expanded operations; or to achieve operating efficiencies or otherwise realize cost savings as a result of anticipated acquisition synergies.

48

For example, we have an ongoing lawsuit and other claims against certain former executives and shareholders of Lemon, including its former General Manager, alleging breaches of employment related contracts, breaches of fiduciary duty, and fraud involving work for third party Xapo, Inc. and/or Xapo, Ltd. during their employment with Lemon. The outcome of this matter is unclear and although no counterclaims have been asserted against us, it is possible that they will be asserted in the future. In addition, in December 2014, we settled certain indemnification claims that we previously made with respect to our acquisition of Lemon, which resulted in a $5.0 million payment to us out of the escrow account established in connection with that acquisition.

The integration of acquired businesses, involves numerous risks, including the following integrating the different businesses, operations, locations, and technologies;

• communicating to customers our perceived benefits of the acquisition and addressing any related concerns they might have;

• the potential disruption of our core businesses;

• risks associated with entering markets and businesses in which we have little or no prior experience;

• diversion of management’s attention from our core businesses;

• adverse effects on existing business relationships with suppliers and customers;

• failure to retain key customers, suppliers, or personnel of acquired businesses;

• adjusting to changes in key personnel post-combination;

• adjusting to increased governmental scrutiny;

• in connection with the acquisition of companies with foreign operations, integrating operations across different cultures and languages and addressing the particular economic, currency, political, and regulatory risks associated with specific countries;

• managing the varying intellectual property protection strategies and other activities of the acquired company;

• the potential strain on our financial and managerial controls and reporting systems and procedures;

• greater than anticipated costs and expenses related to the integration of the acquired business with our business;

• potential unknown liabilities associated with the acquired company for which we are not indemnified;

• potential post-closing claims against or litigation with sellers of the acquired company;

• challenges inherent in effectively managing an increased number of employees in diverse locations;

• failure of acquired businesses to achieve expected results;

• the risk of impairment charges related to potential write-downs of acquired assets in future acquisitions; and

• difficulty of establishing uniform standards, controls, procedures, policies, and information systems.

We may not succeed in addressing these or other risks or any other problems encountered in connection with the integration of any acquired business. The inability to integrate successfully the operations, technology, and personnel of any acquired business, or any significant delay in achieving integration, could have a material adverse effect on our business, results of operations, reputation, and prospects, and on the market price of our common stock.

We depend on key personnel, and if we fail to retain and attract skilled management and other key personnel, our business may be harmed.

Our success depends to a significant extent upon the continued services of our current management team, including Hilary Schneider, our President and Chief Executive Officer and Todd Davis, our founder and Executive Vice Chairman. The loss of Ms. Schneider or Mr. Davis or one or more of our other key executives or employees could have a material adverse effect on our business. Other than Mr. Davis, we do not maintain "key person" policies on the lives of our executive officers or any of our other employees. We employ all of our executive officers and key employees on an at-will basis, and their employment can be terminated by us or them at any time, for any reason and without notice, subject, in certain cases, to severance payment rights. In order to retain valuable employees, in addition to salary and cash incentives, we provide stock options or other share-based compensation that vests over time. The value to employees of share-based compensation that vests over time will be significantly affected by movements in our stock price that are beyond our control and may at any time be insufficient to counteract offers from other companies.

49

Our success also depends on our ability to attract, retain, and motivate additional skilled management and technical personnel. We plan to continue to expand our work force to continue to enhance our business and operating results. We believe that there is significant competition for qualified personnel with the skills and knowledge that we require. Many of the other companies with which we compete for qualified personnel have greater financial and other resources than we do. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high-quality candidates than those which we have to offer. If we are not able to attract and retain the necessary qualified personnel to accomplish our business objectives, we may experience constraints that will impede significantly the achievement of our business objectives and our ability to pursue our business strategy. New hires require significant training and, in most cases, take significant time before they achieve full productivity. New employees may not become as productive as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals. If our recruiting, training, and retention efforts are not successful or do not generate a corresponding increase in revenue, our business will be harmed.

A failure of the insurance companies that underwrite the identity theft insurance provided as part of our consumer services, or refusal by those insurance companies to provide the expected insurance, or failure of our products to comply with applicable state insurance regulations, could harm our business.

Our consumer services include identity theft insurance for our members that provides coverage for certain out-of-pocket expenses to our members, such as loss of income, replacement of fraudulent withdrawals, and costs associated with child and elderly care, travel, stolen purse/wallet, and replacement of documents. This identity theft insurance also backs our $1 million service guarantee. Any failure or refusal of our insurance providers to provide the expected insurance benefits, or failure of our products to comply with applicable state insurance regulations, could damage our reputation, cause us to lose members, expose us to liability claims by our members, negatively impact our sales and marketing efforts, and have a material adverse effect on our business, operating results, and financial condition.

Events such as a security breach at a large organization that compromise a significant number of our members’ personally identifiable information or that otherwise interfaces with our systems could result in a large number of identity-related events that in turn could severely strain our operations and have a negative impact on our business.

Events such as a security breach at a large organization (including major financial institutions, retailers, and Internet service providers) could compromise the personally identifiable information of a significant number of our members. Any such event could in turn result in a large number of identity-related events that we must address, placing severe strain on our operations. Any failure in our ability to appropriately and timely process and address a large number of identity-related events taking place at the same time could result in a loss of members, harm to our reputation, and other damage to our business. Moreover, any related remediation services we provide may not meet member expectations and further exacerbate these risks. Furthermore, if these events result in significant claims made under our identity theft insurance, this could negatively impact our insurance premiums and our ability to continue to provide what we refer to as our guarantee on a cost-effective basis, or at all.

We may require significant capital to fund our business, and our inability to generate and obtain such capital could harm our business, operating results, financial condition, and prospects.

To fund our expanding business, we must have sufficient working capital to continue to make significant investments in our service offerings, advertising, technology, and other activities. As a result, in addition to the revenue we generate from our business, we may need additional equity or debt financing to provide the funds required for these endeavors. If such financing is not available on satisfactory terms or at all, we may be unable to operate or expand our business in the manner and at the rate desired. Debt financing increases expenses, may contain covenants that restrict the operation of our business, and must be repaid regardless of operating results. Equity financing, or debt financing that is convertible into equity, could result in additional dilution to our existing stockholders, and any new securities we issue could have rights, preferences, and privileges superior to those associated with our common stock.

In addition, the current economic environment may make it difficult for us to raise additional capital or obtain additional credit, when needed, on acceptable terms or at all.

Our inability to generate or obtain the financial resources needed to fund our business and growth strategies may require us to delay, scale back, or eliminate some or all of our operations or the expansion of our business, which may have a material adverse effect on our business, operating results, financial condition, and prospects.

50

If we are unable to protect our intellectual property, including our LifeLock brand, the value of our brand and other intangible assets may be diminished, and our business may be adversely affected.

The success of our business depends in part on our ability to protect our intellectual property and the LifeLock brand. We rely on a combination of federal, state, and common law trademark, patent, and trade secret laws, confidentiality procedures, and contractual provisions to protect our intellectual property. However, these measures afford only limited protection and might be challenged, invalidated, or circumvented by third parties. The measures we take to protect our intellectual property may not be sufficient or effective, and in some instances we have not undertaken comprehensive searches with respect to certain of our intellectual property. We have limited protections in countries outside the United States, such as registrations for key trademarks. Moreover, our competitors may independently develop similar intellectual property.

While we generally obtain non-disclosure agreements from each of our employees and independent contractors, there are former independent contractors from whom we have not obtained these agreements. Therefore, these former independent contractors may inappropriately disclose our confidential information or use that confidential information illegally, which could harm our business.

We currently have a number of issued and pending patents and trademarks, many of which were procured in connection with our acquisition of ID Analytics. We cannot assure you that any patents will issue from our currently pending patent applications in a manner that gives us the protection that we seek, if at all, or that any future patents issued to us will not be challenged, invalidated, or circumvented. Any patents that may issue in the future from pending or future patent applications may not provide sufficiently broad protection or may not prove to be enforceable in actions against alleged infringers. We also cannot assure you that any future trademark or service mark registrations will be issued from pending or future applications or that any registered trademarks or service marks will be enforceable or provide adequate protection of our proprietary rights.

We may find it necessary to take legal action in the future to enforce or protect our intellectual property rights, and such action may be expensive and time consuming. In addition, we may be unable to obtain a favorable outcome in any such intellectual property litigation.

Our services may infringe the intellectual property rights of others, which may cause us to pay unexpected litigation costs or damages or prevent us from selling our services.

From time to time, third parties may claim that our services infringe or otherwise violate their intellectual property rights. We may be subject to legal proceedings and claims, including claims of alleged infringement by us of the intellectual property rights of third parties. Any dispute or litigation regarding intellectual property could be expensive and time consuming, regardless of the merits of any claim, and could divert our management and key personnel from our business operations.

If we were to discover or be notified that our services potentially infringe or otherwise violate the intellectual property rights of others, we may need to obtain licenses from these parties in order to avoid infringement. We may not be able to obtain the necessary licenses on acceptable terms, or at all, and any such license may substantially restrict our use of the intellectual property. Moreover, if we are sued for infringement and lose the lawsuit, we could be required to pay substantial damages or be enjoined from offering the infringing services. Our intellectual property portfolio may not be useful in asserting a counterclaim, or negotiating a license, in response to a claim of intellectual property infringement. Any of the foregoing could cause us to incur significant costs and prevent us from selling our services.

Our business depends on our ability to utilize intellectual property, technology, and content owned by third parties, the loss of which could harm our business.

Our services utilize intellectual property, technology, and content owned by third parties. From time to time, we may be required to renegotiate with these third parties or negotiate with other third parties to include or continue using their intellectual property, technology, or content in our existing service offerings, in new versions of our service offerings, or in new services that we offer. We may not be able to obtain the necessary rights from these third parties on commercially reasonable terms, or at all, and the third-party intellectual property, technology, and content we use or desire to use may not be appropriately supported, maintained, or enhanced by the third parties. If we are unable to obtain the rights necessary to use or continue to use third-party intellectual property, technology, and content in our services, or if those third parties are unable to support, maintain, and enhance their intellectual property, technology, and content, we could experience increased costs or delays or reductions in our service offerings, which in turn may harm our financial condition, damage our brand, and result in the loss of customers.

We are building our intellectual property portfolio internally and through acquisitions, such as our acquisitions of ID Analytics. We may be required to incur substantial expenses to do so, and our efforts may not be successful.

51

Our use of “open source” software could negatively affect our ability to sell our services and subject us to possible litigation.

Software code that is freely shared in the software development community is referred to as open source software. A portion of the technologies licensed by us incorporates such open source software, and we may incorporate open source software in the future. Such open source software is generally licensed by its authors under open source licenses. Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code. Some open source licenses, such as the GNU General Public License, require that source code subject to the license be disclosed to third parties, grant such third parties the right to modify and redistribute that source code and a requirement that the source code for any software derived from it be disclosed. If we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public. This would allow our competitors to create similar services and platforms with lower development effort and time and ultimately could reduce or eliminate our ability to commercialize or profit from our services.

Although we have established internal review and approval processes with respect to the use of open source software to avoid subjecting our technologies to conditions we do not intend, we cannot be certain that all open source software is submitted for approval prior to use in our services. The terms of many open source licenses have not been interpreted by the U.S. courts, and there is a risk that these licenses could be construed in a way that imposes unanticipated conditions or restrictions on our ability to commercialize our services. In this event, we could be required to seek licenses from third parties to continue offering our services, to make generally available, in source code form, our proprietary code, or to discontinue the sale of our services, any of which could adversely affect our business, operating results, and financial condition.

Our operating results may vary significantly and be unpredictable, which could cause the trading price of our stock to decline, make period-to-period comparisons less meaningful, and make our future results difficult to predict.

We may experience significant fluctuations in our revenue, expenses, and operating results in future periods. Our operating results may fluctuate in the future as a result of a number of factors, many of which are beyond our control. These fluctuations may result in declines in our stock price. Moreover, these fluctuations may make comparing our operating results on a period-to-period basis less meaningful and make our future results difficult to predict. You should not rely on our past results as an indication of our future performance. In addition, if our reported revenue does not meet our expectations, our operating results and ability to execute on our business plan are likely to be harmed. In addition to the other factors listed in this “Risk Factors” section, factors that could affect our operating results include the following:

• our ability to expand our customer base and the market for our services;

• our ability to generate revenue from existing customers;

• our ability to establish and maintain relationships with strategic partners;

• fluctuations in our expense and capital expenditure levels;

• service introductions or enhancements and market acceptance of new services by us and our competitors;

• pricing and availability of competitive services, which may put pressure on our pricing;

• our ability to address competitive factors successfully;

• changes in the competitive landscape as a result of mergers, acquisitions, or strategic alliances that could allow our competitors to gain market share, or the emergence of new competitors;

• changes or anticipated changes in economic conditions; and

• changes in legislation and regulatory requirements related to our business.

Due to these and other factors, our financial results for any quarterly or annual period may not meet our expectations or the expectations of investors or analysts that follow our stock and may not be meaningful indications of our future performance.

Because we recognize revenue in our consumer business from our members over the term of their subscription periods, fluctuations in sales or retention may not be immediately reflected in our operating results.

We recognize revenue in our consumer business from our members ratably over the term of their subscription periods. As a result, a large portion of the revenue we recognize in any period is deferred revenue from memberships purchased during previous periods. Consequently, a decline in new members or a decrease in member retention in any particular period will not necessarily be fully reflected in the consumer revenue in that period and will negatively affect our revenue in future periods. In addition, we may be unable to adjust our cost structure to reflect this reduced revenue. Accordingly, the effect of significant fluctuations in new members or member retention and market acceptance of our services may not be fully reflected in our

52

operating results until future periods. Our subscription model also makes it difficult for us rapidly to increase our revenue through additional sales in any period, as revenue from new members is recognized ratably over the applicable subscription periods.

We may be subject to assertions that taxes must be collected based on sales and use of our services in various states, which could expose us to liability and cause material harm to our business, financial condition, and results of operations.

Whether sales of our services are subject to state sales and use taxes is uncertain, due in part to the nature of our services and the relationships through which our services are offered, as well as changing state laws and interpretations of those laws. In 2012 we entered into a settlement agreement with the New York State Department of Taxation and Finances regarding our historic and ongoing tax collection obligations.  We currently collect and remit sales tax in several states related to the sale of our consumer services. Additional states or one or more countries or other jurisdictions may seek to impose sales or other tax collection obligations on us in the future. A successful assertion by any state, country, or other jurisdiction that we should be collecting sales or other taxes on the sale of our services could, among other things, increase the cost of our services, create significant administrative burdens for us, result in substantial tax liabilities for past sales, discourage current members and other consumers from purchasing our services, or otherwise substantially harm our business and operating results.

Increases in credit card processing fees would increase our operating expenses and adversely affect our operating results, and the termination of our relationship with any major credit card company would have a severe, negative impact on our business.

A substantial majority of our members pay for our services using credit cards. From time to time, the major credit card companies or the issuing banks may increase the fees that they charge for each transaction using their cards. An increase in those fees would require us to either increase the prices we charge for our services or suffer a negative impact on our margins, either of which could adversely affect our business, operating results, and financial condition.

In addition, our credit card fees may be increased by credit card companies if our chargeback rate, or the rate of payment refunds, exceeds certain minimum thresholds. If we are unable to maintain our chargeback rate at acceptable levels, our credit card fees for chargeback transactions, or for all credit card transactions, may be increased, and, if the problem significantly worsens, credit card companies may further increase our fees or terminate their relationship with us. In addition, changes in billing systems in the future could increase the per transaction cost that we pay. Any increases in our credit card fees could adversely affect our operating results, particularly if we elect not to raise the retail list price for our consumer services to offset the increase. The termination of our ability to process payments on any major credit card would significantly impair our business.

Any indebtedness could adversely affect our business and limit our ability to expand our business or respond to changes, and we may be unable to generate sufficient cash flow to satisfy our debt service obligations.

As of June 30, 2016, we had no outstanding debt. We may incur indebtedness in the future, including borrowings available under our credit facility with Bank of America. Any substantial indebtedness and the fact that a substantial portion of our cash flow from operating activities could be needed to make payments on this indebtedness could have adverse consequences, including the following:

• reducing the availability of our cash flow for our operations, capital expenditures, future business opportunities, and other purposes;

• limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate, which could place us at a competitive disadvantage compared to our competitors that may have less debt;

• limiting our ability to borrow additional funds;

• increasing our vulnerability to general adverse economic and industry conditions; and

• failing to comply with the covenants in our debt agreements could result in all of our indebtedness becoming immediately due and payable.

Our ability to borrow any funds needed to operate and expand our business will depend in part on our ability to generate cash. Our ability to generate cash is subject to the performance of our business as well as general economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control. If our business does not generate sufficient cash flow from operating activities or if future borrowings are not available to us under our senior credit facility or otherwise in amounts sufficient to enable us to fund our liquidity needs, our operating results, financial condition, and ability to expand our business may be adversely affected. Moreover, our inability to make scheduled payments on our debt obligations in the future would require us to refinance all or a portion of our indebtedness on or before maturity, sell assets, delay capital expenditures, or seek additional equity.

53

Covenants in our senior credit facility impose, and any future debt arrangements may impose, significant operating and financial restrictions that may adversely affect our business and ability to operate our business.

The agreement governing our senior credit facility with Bank of America contains covenants that limit various actions that we may take, including the following:

• incurring additional indebtedness;

• granting additional liens;

• making certain investments and distributions;

• merging, dissolving, liquidating, consolidating, or disposing of all or substantially all of our assets;

• certain acquisitions;

• prepaying and modifying debt instruments; and

• entering into transactions with affiliates.

These restrictions could limit our ability to finance our future operations or capital needs, make acquisitions, or pursue available business opportunities. Our senior credit facility also requires us to maintain specified financial ratios and satisfy financial condition tests at the end of each fiscal quarter. Our ability to meet these financial ratios and tests can be affected by events beyond our control, and we may not meet those tests. We may be required to take action to reduce our indebtedness or to act in a manner contrary to our business objectives to meet these ratios and satisfy these covenants. For example, under the terms of the recent amendment to our senior credit facility we are required to comply with certain additional financial and reporting covenants, including maintaining a minimum cash EBITDA. Pursuant to the amendment, we are also subject to certain limitations and conditions on borrowing, on acquisitions, and on making certain types of payments with respect to our equity interests. We could also incur additional indebtedness in the future having even more restrictive covenants.

Failure to comply with any of the covenants under our senior credit facility, or any other indebtedness we may incur, could result in a default under such agreements, which could result in an acceleration of the timing of payments on all of our outstanding indebtedness and other negative consequences. In addition, since our senior credit facility with Bank of America is secured by substantially all of our assets, a default under that facility could result in Bank of America exercising its lien on substantially all of our assets. Any of these events could have a material adverse effect on our business, operating results, and financial condition.

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

We incur significant legal, accounting, and other expenses as a public company, including costs resulting from public company reporting obligations under the Exchange Act and the rules and regulations regarding corporate governance practices, including those under the Sarbanes-Oxley Act, the Dodd-Frank Act, and the listing requirements of the stock exchange on which our securities are listed. Compliance with these reporting requirements, rules, and regulations has increased and will continue to increase our legal and financial compliance costs, make some activities more difficult, time-consuming, or costly, and increase demand on our systems and resources.   As a result, management’s attention may be diverted from other business concerns, which could harm our business and operating results.

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 are unsuccessful, regulatory authorities may initiate legal proceedings against us and our business may be harmed.

54

Our ability to use our net operating loss carry-forwards and certain other tax attributes may be limited, which could potentially result in increased tax liabilities to us in the future.

As of December 31, 2015, we had approximately $231.3 million of federal and approximately $99.9 million of state net operating loss carry-forwards. Under Section 382 of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, if a corporation undergoes an “ownership change” (generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period), a corporation’s ability to use its pre-change net operating loss carry-forwards and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. In 2013, we completed an analysis of prior year ownership changes and determined that in prior years we had experienced an “ownership change” as defined by Section 382 of the Internal Revenue Code. However, we determined that none of our federal and state net operating loss carry-forwards will expire solely as a result of our prior ownership changes. We may also experience an “ownership change” in the future as a result of subsequent shifts in our stock ownership. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carry-forwards to offset taxable income may be subject to limitations, which could potentially result in increased future tax liability to us.

Risks Related to Ownership of Our Common Stock

Our stock price has been and will likely continue to be volatile, and the value of an investment in our common stock may decline.

The trading price of our common stock has been, and is likely to continue to be, volatile. In addition to the risk factors described in this Quarterly Report on Form 10-Q, in our Annual Report on Form 10-K for fiscal 2015, and in our other filings with the SEC, factors that may cause the price of our common stock to fluctuate include the following:

• financial guidance we may provide to the public, any changes in such guidance, or our failure to meet such guidance;

• failure of industry or securities analysts to maintain coverage of our company, changes in financial estimates by any industry or securities analysts that follow our company, or our failure to meet such estimates;

• various market factors or perceived market factors, including rumors, whether or not correct, involving us, our customers, our strategic partners, or our competitors;

• sales, or anticipated sales, of large blocks of our common stock;

• short selling of our common stock by investors;

• actions of activist shareholders;

• additions or departures of key personnel;

• announcements of technological innovations by us or by our competitors;

• introductions of new services or new pricing policies by us or by our competitors;

• regulatory or political developments;

• litigation and governmental or regulatory investigations;

• acquisitions or strategic alliances by us or by our competitors; and

• general economic, political, and financial market conditions or events.

Furthermore, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These and other factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock, may induce shareholder activism and may otherwise negatively affect the price or liquidity of our common stock. In addition, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the company that issued the stock. For example, as described in more detail in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for fiscal 2015, we are subject to a securities class action lawsuit filed against us. As a result of this class action complaint, or if any of our stockholders were to bring a lawsuit against us in the future, we could incur substantial costs defending the lawsuits or paying for settlements or damages. Such lawsuits could also divert the time and attention of our management from our business.

55

Future sales of our common stock in the public market by our existing stockholders, or the perception that such sales might occur or not occur, could depress the market price of our common stock.

The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market, and even the perception that these sales could occur or not occur may depress the market price. As of June 30, 2016, we had approximately 91.7 million shares of common stock outstanding. These shares may be sold in the public market, subject to prior registration or qualification for an exemption from registration, including, in the case of shares held by affiliates, compliance with the volume restrictions of Rule 144. In addition, shares issued or issuable upon the exercise of options and warrants, and shares delivered under restricted stock unit or restricted stock awards, are also eligible for sale. Sales of stock by these stockholders could have a material adverse effect on the trading price of our common stock.

Former holders of our preferred stock are entitled, under contracts providing for registration rights, to require us to register our securities owned by them for public sale. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by our affiliates. Any sales of securities by these stockholders could have a material adverse effect on the trading price of our common stock.

Sales of common stock as restrictions end or pursuant to registration rights may make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Future sales and issuances of our common stock or rights to purchase common stock by us, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.

We intend to issue additional securities pursuant to our equity incentive plans and may issue equity or convertible securities in the future. To the extent we do so, our stockholders may experience substantial dilution. We may sell common stock, convertible securities, or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities, or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales and new investors could gain rights superior to our existing stockholders.

Anti-takeover provisions could impair a takeover attempt and adversely affect existing stockholders.

Certain provisions of our certificate of incorporation and bylaws and applicable provisions of Delaware law may have the effect of rendering more difficult, delaying, or preventing an acquisition of our company, even when this would be in the best interest of our stockholders.

Our certificate of incorporation and bylaws include provisions that provide for the following:

• authorize our board of directors to issue, without further action by the stockholders, up to 10,000,000 shares of undesignated preferred stock;

• require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;

• specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, our chief executive officer, or our president (in the absence of a chief executive officer);

• establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors;

• establish that our board of directors is divided into three classes, Class I, Class II, and Class III, with each class serving three-year staggered terms;

• prohibit cumulative voting in the election of directors;

• provide that our directors may be removed only for cause;

• provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and

• require the approval of our board of directors or the holders of a supermajority of our outstanding shares of capital stock to amend our bylaws and certain provisions of our certificate of incorporation.

In addition, we are 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 an interested stockholder for a period of three years following the date on which the stockholder became an interested stockholder, unless such transactions are approved by our board of directors. This provision could have the effect of delaying or preventing a change of control of our company, whether or not it is desired by or beneficial to our stockholders. In addition, other provisions of Delaware law may

56

also discourage, delay, or prevent someone from acquiring us or merging with us.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management. Any provision of our certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control 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.

If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they adversely change their recommendations regarding our stock, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that securities or industry analysts may publish about us, our business, our market, or our competitors. If adequate research coverage is not established or maintained on our company or if any of the analysts who may cover us downgrade our stock or publish inaccurate or unfavorable research about our business or provide relatively more favorable recommendations about our competitors, our stock price would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Since we do not expect to pay any cash dividends for the foreseeable future, our stockholders may be forced to sell their stock in order to obtain a return on their investment.

We have never declared or paid any cash dividends on our capital stock and do not anticipate declaring or paying any cash dividends in the foreseeable future. In addition, our senior credit facility with Bank of America restricts our ability to pay cash dividends. We plan to retain any future earnings to finance our operations and growth plans discussed elsewhere in this Annual Report on Form 10-K. Accordingly, investors must rely on sales of shares of their common stock after price appreciation, which may never occur, as the only way to realize any return on their investment.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information regarding repurchases of our common stock during the three-months ended June 30, 2016.

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
April 1, 2016 - April 30, 2016	49,905		$	11.57	49,905	$	48,077,108
May 1, 2016 - May 31, 2016	3,546,668		$	11.54	3,541,208	$	—
June 1, 2016 - June 30, 2016	28,555		$	11.97	25,982	$	—
Total	3,625,128	(b)			3,617,095

(a) On November 30, 2015, we announced that the Board of Directors had approved a share repurchase program which authorized the purchase up to $100 million of our common stock. The share repurchase program was completed during the first half of fiscal 2016, with final settlement of shares under our accelerated share repurchase program, completed in the third quarter of fiscal 2016.

(b) Includes approximately 76,000 shares acquired in the final settlement of an issuer forward repurchase transaction confirmation executed during the first quarter of 2016, 3.5 million shares acquired in the initial delivery of an issuer forward repurchase transaction confirmation executed in the second quarter of fiscal 2016, and approximately 8,000 shares surrendered to us to satisfy tax withholding obligations associated with the vesting of restricted stock.

Item 5. Other Information

On August 8, 2016, we provided notice to Ramakrishna “Schwark” Satyavolu that effective as of September 30, 2016 we were terminating the Advisory Agreement, dated February 18, 2016, between Mr. Satyavolu and us.

57

Item 6. Exhibits.

Exhibit Number	Description	Form	File No.	Exhibit	Filing Date	Filed Herewith
10.1	Lease Agreement, dated April 27, 2016, between LifeLock, Inc. and MV Campus Owners, LLC.					X
10.2†	LifeLock, Inc. Executive Performance Bonus Plan.					X
10.3	Issuer Forward Repurchase Transaction Confirmation, dated May 16, 2016, entered into with Bank of America, N.A.					X
10.4	Proposed Settlement Stipulation, executed June 30, 2016.	8-K	001-35671	10.1	July 5, 2016
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.					X
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.					X
32.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

† Indicates management contract or compensatory plan or arrangement.

58

SIGNATURES

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

		LIFELOCK, INC.
Date:	August 9, 2016	By:	/s/ Hilary Schneider
		Name:	Hilary Schneider
		Title:	Chief Executive Officer and President
			(Principal Executive Officer)
Date:	August 9, 2016	By:	/s/ Chris Power
		Name:	Chris Power
		Title:	Chief Financial Officer
			(Principal Financial and Accounting Officer)

59

EX-10.1

LEASE

by and between

MV CAMPUS OWNER, LLC,

a Delaware limited liability company

(“Landlord”)

and

LIFELOCK, INC.,

a Delaware corporation

(“Tenant”)

dated

April 27, 2016

For Premises Located At

321 E. Evelyn Avenue

Mountain View, California

LEASE

Basic Lease Information

The following Basic Lease Information is incorporated in and made a part of the Lease to which it is attached. If there is any conflict between the Basic Lease Information and the remainder of the Lease, the Basic Lease Information shall control.

Effective Date:	April 27, 2016
Landlord:	MV CAMPUS OWNER, LLC, a Delaware limited liability company
Landlord’s Address:	c/o Rockwood Capital, LLC 140 East 45th Street, 34th Floor New York, New York 10017 Attn: General Counsel/Chief Compliance Officer
with a copy to:	c/o Rockwood Capital, LLC 50 California Street, 30th Floor San Francisco, California 94111 Attn: MVCC Asset Manager
and to:	Paul Hastings LLP 55 Second Street, 24th Floor San Francisco, California 94105 Attn: Stephen I. Berkman, Esq.
Tenant:	LifeLock, Inc., a Delaware corporation
Tenant’s Address:	LifeLock, Inc. 60 E. Rio Salado Parkway, Suite 400 Tempe, AZ 85281 Attn:  Edward Lacasse
with a copy to:	LifeLock, Inc. 60 E. Rio Salado Parkway, Suite 400 Tempe, AZ 85281 Attn: General Counsel
Building:	321 E. Evelyn Avenue
Project:	The buildings shown on the exhibit attached hereto as Exhibit B-2, the Land, any other improvements now or hereafter constructed on the Land, and the Common Areas, which collectively are commonly referred to as the Mountain View Corporate Center.
Premises Rentable Square Feet:	59,702 rentable square feet (“RSF”). See Section 1(b).
Building Rentable Square Feet:	59,702 RSF. See Section 1(b).
Project Rentable Square Feet:	277,674 RSF. See Section 1(b).

Delivery Date:	The date that Landlord delivers possession of the Premises to Tenant pursuant to the Work Letter; provided, however, that if Landlord fails to deliver possession to Tenant due to delays caused by Tenant or any Tenant Party (as herein defined), the Delivery Date may, at Landlord’s election in its sole discretion, be accelerated to the date on which Landlord would have delivered possession to Tenant, but for the occurrence of delays caused by Tenant or any Tenant Party.
Lease Term:	Nine (9) years after the Rent Commencement Date, subject to extension pursuant to Exhibit E attached hereto.
Expiration Date:	See Section 2.
Premises:	59,702 RSF in the Building located at 321 E. Evelyn Avenue, Mountain View, California
Use of Premises:	General office and ancillary uses thereto.
Base Rental:	Initially $5.75 per RSF of the Premises per month, for a total per month initially of $343,286.50. Base Rental shall increase by three percent (3.0%) on each anniversary of the Lease Commencement Date (or, if the Lease Commencement Date does not fall on the first (1st) day of a calendar month, the first (1st) day of the calendar month immediately following the month in which the Lease Commencement Date occurs) during the Lease Term.
Lease Commencement Date:	The earlier of (i) four (4) months following the occurrence of the Delivery Date and (ii) the date that Tenant shall commence the conduct of business in the Premises or any portion thereof.
Rent Commencement Date:	The date which is five (5) months following the Lease Commencement Date, subject to extension pursuant to Section 3(a) of the Lease.
Advance Rent:	$343,286.50, payable on the execution and delivery of this Lease. See Section 4(c).
Tenant’s Share	100% of the Building, 21.5% of the Project
Letter of Credit:	$1,030,000.00, due upon the execution and delivery of this Lease. See Section 38.
Tenant Improvement Allowance:	The maximum amount of $60.00 per RSF in the Premises.
Broker(s):	Newmark Cornish & Carey and CBRE. See Section 40.

[remainder of page intentionally left blank]

LEASE

This Lease (together with the Basic Lease Information and the Exhibits, which are hereby incorporated into the Lease by this reference, collectively, this “Lease”) is made as of the date specified in the Basic Lease Information, by and between MV CAMPUS OWNER, LLC, a Delaware limited liability company (“Landlord”), and LIFELOCK, INC., a Delaware corporation (“Tenant”), who hereby agree as follows:

1.Lease of Premises.

(a)Lease of Premises. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, for the Lease Term (as defined below) and subject to the covenants to be performed by Tenant, those certain premises (the “Premises”) as described in the Basic Lease Information located in that certain building described in the Basic Lease Information (the “Building”) located on that certain tract of land (the “Land”) more particularly described on Exhibit A attached hereto. The Premises are outlined or crosshatched on the floor plan(s) attached hereto as Exhibit B-1. Tenant shall have the non-exclusive right and privilege to use the Common Areas of the Project in common with other tenants in the Project. The “Common Areas” shall mean all areas, improvements, space, and special services, if any, within the Building or on the Land made available by Landlord from time to time, if at all, for the common or joint use and benefit of all tenants, customers, and invitees of the Building, including, without limitation, those parking areas, parking garages and facilities, access roads, service drives, service areas, driveways, entrances, exits and other means of access, retaining walls, landscaped areas, truck serviceways, loading docks or ramps, pedestrian walkways, overstreet walkways, connecting malls, atriums, walls, ceilings, patios, courtyards, garden areas, plaza areas, park areas, concourses, ramps, sidewalks, corridors, washrooms, signs, maintenance buildings, utility buildings, hallways, lobbies, elevators, elevator foyers, escalators, stairs, common window areas, and trash, garbage or rubbish areas, but specifically excluding any space made available exclusively for the use or benefit of other tenants at the Project. Landlord or its successors or assigns hereby reserve the right from time to time in its sole discretion to change or modify the size, use, shape, location or nature of any of the Project and/or the Common Areas other than the Premises (except as otherwise permitted hereunder), or eliminate them altogether, all without any liability to Tenant. There is no easement, covenant or other implied right for light, view or air included in the Premises or being granted hereunder. Except as specifically set forth in this Lease and in the Work Letter attached hereto as Exhibit D (the “WorkLetter”), Landlord shall not be obligated to provide or pay for any improvement, work or services related to the Premises or the Project. Tenant acknowledges that Landlord has made no representation or warranty regarding the condition of the Premises, the Building, the Common Areas or the Project except as specifically set forth in this Lease.

(b)Calculation of RSF. Notwithstanding anything set forth in this Lease to the contrary, Landlord and Tenant hereby stipulate and agree that the RSF of the Premises, the Building and the Project are as set forth in the Basic Lease Information. The RSF shall not be subject to recalculation, except with respect to new construction beyond the “Landlord’s Work” specified in the Work Letter, additions or alterations which increase the floor area of the Premises or the Project, as applicable.

(c)Tenant Requirements. Concurrently with the execution and delivery of this Lease, Tenant shall deliver to Landlord the following: (i) the Letter of Credit (as described in the Basic Lease Information), and (ii) policies of insurance or duly executed certificates of insurance with respect thereto in accordance with Section 15 below. Within seven (7) days of the execution and delivery of this Lease, Tenant shall deliver to Landlord the Advance Rent (as described in the Basic Lease Information).

2.Term.

The term of this Lease (“Lease Term”) shall commence on the Lease Commencement Date and, unless sooner terminated as provided in this Lease, shall end on the expiration of the period designated in the Lease Term as described in the Basic Lease Information above (“ExpirationDate”), subject to extension as provided in Exhibit E. However, if the Expiration Date would not otherwise fall on the last day of a calendar month, then the Expiration Date shall be the last day of the calendar month in which the Expiration Date would otherwise occur. Within ninety (90) days following the Lease Commencement Date, Landlord shall send to Tenant a Supplemental Notice in the form of Exhibit C specifying the Lease Commencement Date, the Rent Commencement Date, the date of expiration of the Lease Term, and the other matters described therein (although the failure to do so shall not affect any of such information). Tenant shall execute and return such Supplemental Notice to Landlord within five (5) Business Days after receipt thereof. Notwithstanding that the Lease Term does not commence until the Lease Commencement Date, the provisions of this Lease shall be effective and binding upon Landlord and Tenant once this Lease has been executed and delivered by both Landlord and Tenant.

3.Possession.

(a)Landlord shall use commercially reasonable efforts to cause the Delivery Date to occur on or before November 1, 2016 (the “Target Delivery Date”). If Landlord, for any reason whatsoever, cannot deliver possession of the Premises to Tenant on or before the Target Delivery Date in the condition required by the Work Letter, this Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damage resulting therefrom, but the Delivery Date shall be delayed until the date Landlord delivers possession of the Premises to Tenant in the condition required by the Work Letter. No delay in delivery of possession of the Premises shall operate to extend the term of this Lease or amend Tenant’s obligations under this Lease; provided, however, that (i) if the Delivery Date is more than forty-five (45) days, but less than ninety (90) days after the Target Delivery Date, then, unless such delay is caused by a Force Majeure (as defined below) or a Tenant Delay (as defined below), for each calendar day after the expiration of such forty-five (45) day period until the earlier of (A) the date the Delivery Date occurs and (B) the date which is ninety (90) days after the Target Delivery Date, Tenant shall be entitled to an abatement of Base Rental equal to one half of one day (1/2 day) of Base Rental for each such day in excess of forty-five (45) days, but less than ninety (90) days, that the Delivery Date is delayed, and (ii) if the Delivery Date is more than ninety (90) days after the Target Delivery Date, then, unless such delay is caused by a Force Majeure or a Tenant Delay, for each calendar day after the expiration of such ninety (90) day period until the Delivery Date occurs, Tenant shall be entitled to an abatement of Base Rental equal to one (1) day of Base Rental for each such day in excess of ninety (90) days that the Delivery Date is delayed. The foregoing abatement of Base Rental shall be applied by extending the Rent Commencement Date by the applicable amount of calendar days of abated Base Rental. As used in this Lease, “Tenant Delay” shall mean any actual delay in the completion of Landlord’s Work or obtaining permits, certificates or approvals in connection therewith to the extent such delay is caused by or attributable to any act, negligence, delay, failure to act or omission of Tenant or any Tenant Parties, including, without limitation, any act or omission of Tenant or any Tenant Parties which: (i) constitutes a Default (as defined below) by Tenant under this Lease or the existence of any event or condition which, with the passage of time or the giving of notice or both would constitute such a Default; (ii) results from the presence of Tenant or such Tenant Parties in any portion of the Premises prior to completion of the Landlord’s Work; or (iii) materially interferes with Landlord’s ability to perform the Landlord’s Work. Tenant acknowledges that the length of any Tenant Delay or Force Majeure under this Section 3(a) is to be measured by the duration of the actual delay in completion of the Landlord’s Work caused by the event or conduct constituting such Tenant Delay or Force Majeure, which may exceed the duration of such event or conduct due to the necessity of rescheduling work or other related causes.

(b)From and after the Delivery Date, subject to conformance with all applicable Laws, Tenant shall be permitted to access the Premises for the purpose of commencing its Tenant Improvements thereto (“Early Occupancy”). Tenant’s Early Occupancy shall be subject to all of the terms, covenants and conditions of this Lease, including, but not limited to, Tenant’s insurance obligations contained in Section 15 below and Tenant’s indemnity obligations contained in Section 34 below, except that Tenant will not be obligated to pay Tenant’s Operating Expense Rental until the Lease Commencement Date or monthly Base Rental until the Rent Commencement Date, and such Early Occupancy shall not advance the Expiration Date.

(c)Tenant acknowledges and agrees that it has inspected the Premises and agrees to accept the same on the Delivery Date, “AS IS” and “WITH ALL FAULTS”. TENANT ACKNOWLEDGES THAT LANDLORD HAS NOT MADE, AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTIES TO TENANT WITH RESPECT TO THE QUALITY OF CONSTRUCTION OF ANY LEASEHOLD IMPROVEMENTS OR TENANT FINISH WITHIN THE PREMISES OR AS TO THE CONDITION OF THE PREMISES, EITHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD’S TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION, (xiii) DURABILITY (xiv) OPERATION, (xv) THE EXISTENCE OF ANY HAZARDOUS SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY OR (xvi) COMPLIANCE OF THE PREMISES WITH ANY REGULATIONS OR EASEMENT AGREEMENTS; AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT THE PREMISES IS OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT THE PREMISES HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF THIS SECTION 3(c) HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY EXPRESS OR IMPLIED WARRANTIES BY LANDLORD OTHER THAN AS EXPRESSLY SET FORTH IN SECTION 40 OF THIS LEASE WITH RESPECT TO ANY OF THE PREMISES, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR ARISING OTHERWISE. TENANT’S OBLIGATION TO PAY RENT UNDER THIS LEASE IS NOT DEPENDENT UPON THE CONDITION OF THE PREMISES.

(d)Tenant shall, at Tenant’s sole cost and expense, promptly comply with all laws, ordinances, codes, rules, regulations, orders and other requirements of any government or public authority now in force or which may hereafter be in force, with all requirements of any board of fire underwriters or similar body now or hereafter constituted, and with all directions, temporary and permanent certificates of occupancy and other relevant rules and regulations of interpretations thereof issued pursuant to any law by any governmental agency or officer, including, without limitation, the Americans with Disabilities Act of 1990 (as amended) and Title 24 of the California Code of Regulations and all regulations and guidelines promulgated thereunder (collectively, “Laws”), insofar as any of the foregoing relate to or are required by the condition, use or occupancy of the Premises or the operation, use or maintenance of any personal property, trade fixtures, machinery, equipment or improvements in the Premises; provided, however, that Tenant shall not be obligated cure any violations of Law to the extent such violations are caused by Landlord’s breach of its maintenance obligations as set forth in Section 13(a) of this Lease. The judgment of any court of competent jurisdiction or the admission of either party in any judicial action, regardless of whether the other party is a

party thereto, that such party has violated any of the foregoing Laws shall be conclusive of that fact as between Landlord and Tenant.

(e)Notwithstanding Section 3(c) hereof, Landlord acknowledges and agrees that Landlord’s Work shall be compliant with applicable Laws, including Title 24 and ADA requirements for renovation construction, at the time of issuance of any applicable permits for the construction thereof.

4.Rental Payments; Advance Rent.

(a)Commencing on the Lease Commencement Date and continuing throughout the Lease Term, Tenant hereby agrees to pay all Rent due and payable under this Lease. Notwithstanding the foregoing, Base Rental shall not be due or payable by Tenant until the Rent Commencement Date. Tenant’s Operating Expense Rental, together with any and all other amounts payable by Tenant to Landlord pursuant to the terms of this Lease, including without limitation any and all other sums that may become due by reason of any default of Tenant or failure on Tenant’s part to comply with the agreements, terms, covenants and conditions of this Lease to be performed by Tenant, are hereinafter collectively referred to as the “Additional Rental,” and the Base Rental and the Additional Rental are herein collectively referred to as “Rent.” Base Rental and Tenant’s Forecast Additional Rental shall be due and payable in twelve (12) equal installments (subject to Landlord’s right to vary Tenant’s Forecast Additional Rental pursuant to Section 6(a)) on the first day of each calendar month, commencing on the Lease Commencement Date and continuing thereafter throughout the Lease Term and any extensions or renewals thereof. Tenant hereby agrees to pay such Rent to Landlord at Landlord’s address as provided herein (or such other address as Landlord designates from time to time) monthly in advance. Tenant shall pay all Rent and other sums of money which are due and payable by Tenant to Landlord at the times and in the manner provided in this Lease, without demand, set off, counterclaim or abatement (except as specifically provided to the contrary herein).

(b)If the Lease Commencement Date is other than the first day of a calendar month or if this Lease terminates on other than the last day of a calendar month, then the installments of Base Rental, Tenant’s Forecast Additional Rental and Tenant’s Operating Expense Rental for such month or months shall be prorated on a daily basis and the installment or installments so prorated shall be paid in advance.

(c)Tenant shall deposit with Landlord upon execution of this Lease the sum set forth under “Advance Rent” in the Basic Lease Information. Such amount shall be applied by Landlord to the first monthly installment of Base Rental following the Rent Commencement Date as it becomes due hereunder. In the event Tenant fails to take possession of the Premises when required or otherwise fails to comply with any of Tenant’s obligations or warranties hereunder, the Advance Rent shall be retained by Landlord for application in reduction, but not in satisfaction, of damages suffered by Landlord as a result of Tenant’s breach. Landlord shall not be required to keep the Advance Rent separate from its general accounts, or to pay interest thereon.

5.Base Rental.

From and after the Rent Commencement Date, Tenant shall pay to Landlord a base monthly rental (herein called “Base Rental”) equal to the Base Rental set forth in the Basic Lease Information.

6.Additional Rental.

(a)For purposes of this Lease, “Tenant’s Forecast Additional Rental” means Landlord’s reasonable estimate of Tenant’s Operating Expense Rental for the initial period of the Lease Term from the Lease Commencement Date until the end of the first calendar year of the Lease Term, and for all subsequent calendar years or portions thereof occurring during the balance of the Lease Term. If at any time it reasonably appears to Landlord that Tenant’s Operating Expense Rental for the current calendar year will vary from Landlord’s estimate, Landlord shall have the right to revise its estimate for such year by notice to Tenant and subsequent payments by Tenant for such year shall be based upon such revised estimate. Failure to make

such a revision shall not prejudice Landlord’s right to collect the full amount of Tenant’s Operating Expense Rental. Prior to the Lease Commencement Date and thereafter prior to the beginning of each calendar year during the Lease Term, including any extensions thereof, Landlord shall present to Tenant a statement of Tenant’s Forecast Additional Rental for such calendar year; provided, however, that if such statement is not given prior to the beginning of any calendar year, Tenant shall continue to pay during the next ensuing calendar year on the same basis as in the prior calendar year until the month after such statement is delivered to Tenant. Commencing with the first day of the calendar month following the month in which the Tenant’s Forecast Additional Rental was delivered to Tenant, Tenant shall pay Tenant’s Forecast Additional Rental (less amounts, if any, previously paid toward such excess for such year) to Landlord in equal monthly installments over the remainder of such calendar year in advance on the first day of each month.

(b)For purposes of this Lease, “Tenant’s Operating Expense Rental” means for each calendar year (or portion thereof) during the Lease Term Tenant’s Share of Operating Expenses (as defined below) plus a management fee in an amount equal to three percent (3.0%) of Tenant’s then current Base Rental. “ExpenseYear” means each calendar year during the Lease Term and each portion of a calendar year at the beginning and end of the Lease Term. Landlord, upon notice to Tenant, may change the Expense Year from time to time to any other twelve (12) consecutive-month period. In the event of any such change, Tenant’s Operating Expense Rental shall be equitably adjusted for any Expense Year involved in any change. “Tenant’s Share” as it relates to Operating Expenses for the Building shall be determined by dividing the RSF of the Premises by the total number of RSF in the Building, expressed as a percentage. “Tenant’s Share” as it relates to Operating Expenses for the Project other than the Building shall be determined by dividing the RSF of the Premises by the total number of RSF in the Project, expressed as a percentage.

(c)Within one hundred twenty (120) days after the end of (i) the calendar year in which the Lease Commencement Date occurs and (ii) each Expense Year thereafter during the Lease Term, or as soon thereafter as practicable, Landlord shall provide Tenant a statement showing the Operating Expenses for said Expense Year, as prepared by Landlord, and a statement prepared by Landlord comparing Tenant’s Forecast Additional Rental with Tenant’s Operating Expense Rental (the “Reconciliation Statement”). In the event Tenant’s Forecast Additional Rental paid exceeds Tenant’s Operating Expense Rental for said Expense Year, Landlord shall credit such excess against Rent next due hereunder or, if the Lease Term has expired or is about to expire, refund such excess to Tenant within thirty (30) days after Landlord’s delivery of such Reconciliation Statement if Tenant is not in default under this Lease (in the instance of a default such excess shall be held as additional security for Tenant’s performance, may be applied by Landlord to cure any such default, and shall not be refunded until any such default is cured to Landlord’s reasonable satisfaction). In the event that Tenant’s Operating Expense Rental exceeds Tenant’s Forecast Additional Rental paid for said Expense Year, Tenant shall pay Landlord, within thirty (30) days of receipt of the statement, an amount equal to such difference. The provisions of this paragraph (c) shall survive the expiration or earlier termination of this Lease.

(d)For so long as Tenant is not in default under this Lease, Landlord’s books and records pertaining to the calculation of Operating Expenses for any Expense Year within the Lease Term may be audited, at Tenant’s expense, by an Authorized Representative of Tenant for a period of one hundred eighty (180) days following the delivery of a Reconciliation Statement (or any Statement revising the same); provided, that Tenant shall give Landlord not less than ten (10) Business Days’ prior written notice of any such audit. For purposes hereof, an “Authorized Representative” of Tenant shall mean a bona fide employee of Tenant, any national accounting firm, or any other party reasonably approved in writing by Landlord, in each case who is not representing, and agrees not to represent, any other tenant or subtenant in the Project regarding Additional Rental and is not working on a contingency basis. In no event shall an Authorized Representative of Tenant include the owner of any office building in the Silicon Valley area or any affiliate of such owner. Prior to the commencement of any audit, Tenant shall cause its Authorized Representative to agree in writing for the benefit of Landlord that such Authorized Representative will keep the results of

the audit confidential and that such representative will not disclose or divulge the results of such audit except to Tenant and Landlord or their professional consultants including attorneys, accountants and lenders, in response to a subpoena or other legal obligation and except in connection with any dispute between Landlord and Tenant relating to Operating Expenses. Such audit shall be conducted during reasonable business hours at Landlord’s office where Landlord’s books and records are maintained. Tenant shall cause a written audit report to be prepared by its Authorized Representative following any such audit and shall provide Landlord with a copy of such report promptly after receipt thereof by Tenant. If Landlord’s calculation of Tenant’s Operating Expense Rental for the audited Expense Year is incorrect, then Tenant shall be entitled to a prompt refund of any overpayment or Tenant shall promptly pay to Landlord the amount of any underpayment, as the case may be. Tenant agrees to pay the cost of such certification and the investigation with respect thereto unless it is determined that the Operating Expenses stated in the Reconciliation Statement were overstated in Landlord’s favor by five percent (5%) or more, in which case Landlord shall pay the reasonable cost of same, not to exceed Five Thousand Dollars ($5,000.00). Tenant waives the right to dispute or contest, and shall have no right to dispute or contest, any matter relating to the calculation of Operating Expenses or other forms of Rent under the Lease (and waives the right to inspect Landlord’s records with respect thereto) with respect to each Expense Year during the Lease Term for which a Reconciliation Statement is given to Tenant if no claim or dispute with respect thereto is asserted by Tenant in writing to Landlord within one hundred eighty (180) days of delivery to Tenant of the original or most recent Reconciliation Statement with respect thereto.

(e)Landlord shall have the right, from time to time, to equitably allocate some or all of the Operating Expenses for the Project among different portions or occupants of the Project (the “Cost Pools”), in Landlord’s reasonable discretion. Such Cost Pools may include, but shall not be limited to, the office space tenants of a building of the Project or of the Project, and the retail space tenants of a building of the Project or of the Project. The Operating Expenses within each such Cost Pool shall be allocated and charged to the tenants within such Cost Pool in an equitable manner.

7.Operating Expenses.

(a)For the purposes of this Lease, “Operating Expenses” shall mean all expenses, costs and disbursements (but not specific costs billed to or paid directly by specific tenants of the Project) of every kind and nature, computed on the accrual basis, relating to or incurred or paid by Landlord in connection with the ownership, management, operation, repair and maintenance of the Project, including but not limited to, the following:

(1)wages, salaries and other costs of all on site and off site employees at or below the level of general manager or senior property manager engaged either full or part time in the operation, management, maintenance or access control of the Project, including taxes, insurance and benefits relating to such employees, allocated based upon the time such employees are engaged directly in providing such services;

(2)the cost of all supplies, tools, equipment, materials and personal property used in the operation, management, maintenance and access control of the Project or otherwise made available in the Common Areas;

(3)the cost of all utilities for the Common Areas of the Project, including but not limited to the cost of heat, light, steam, electricity, gas, water and sewer services;

(4)the cost of all cleaning, maintenance and service agreements for the Project and the equipment therein to the extent provided by Landlord, including but not limited to, as applicable, any security and/or alarm service, window cleaning, elevator maintenance, HVAC and other air conditioning maintenance, elevator maintenance, waste recycling service, landscaping maintenance, customary

landscaping replacement, and maintenance (including striping and painting) of the surface and structured parking area;

(5)the cost of repairs and general maintenance of the Project, including the cost of repair following a casualty to the extent not reimbursed by insurance proceeds or other payments from a third party;

(6)the acquisition and/or installation costs of capital investment items (including security and energy management equipment) which are installed for the purpose of reducing operating expenses, increasing energy efficiency, promoting safety, complying with governmental regulations and requirements, or maintaining the first-class nature of the Project including capital investment items which are replacements of items which are obsolete or cannot be repaired in an economically feasible manner, costing less than $1.00 per RSF of the Premises on an aggregate annual basis, or to the extent costs per year exceeds $1.00 per RSF of the Premises, such costs shall be amortized over their respective useful lives as determined in accordance with generally accepted accounting principles, together with reasonable financing charges (whether or not actually incurred);

(7)the cost of casualty, rental loss, liability and other insurance, including earthquake, applicable to the Building and the Project, including commercially reasonable deductibles, and endorsements thereto;

(8)the cost of any transportation services made available to Tenant;

(9)the cost of trash, waste and garbage removal, recycling, air quality audits, vermin extermination, and snow, ice and debris removal;

(10)the cost of legal and accounting services incurred by Landlord in connection with the management, maintenance, operation and repair of the Project, excluding the owner’s or Landlord’s general accounting, such as partnership statements and tax returns, and excluding services described in Section 7(b)(12) below;

(11)the cost of complying with the rules and regulations applicable to the Project as mandated by governmental authorities with jurisdiction over the Project, including without limitation any costs related to licenses, permits and inspection fees;

(12)all “Tax Expenses,” which means all taxes, assessments and governmental charges attributable to the Project, whether or not directly paid by Landlord, whether federal, state, county or municipal and whether they be by taxing districts or authorities presently taxing the Project or by others subsequently created or otherwise, and any other taxes and assessments attributable to the Project or its operation (and the costs of contesting any of the same), including community improvement district taxes, sales, use and service taxes, and business license taxes and fees, excluding, however, taxes and assessments imposed on the personal property of the tenants of the Project, federal and state taxes on income, death taxes, franchise taxes, penalties (but only if Landlord is negligent in paying such taxes in a timely manner), interest, transfer taxes, and any taxes (other than business license taxes and fees and taxes on Landlord’s rental income from the Project but not its other income) imposed or measured on or by the income of Landlord from the operation of the Project;

(13)fees and expenses for accounting, financial management, data processing and information services; and

(14)any other expenses of any other kind whatsoever incurred in managing, operating, overseeing, maintaining and repairing the Project.

(b)For purposes of this Lease, and notwithstanding anything in any other provision of this Lease to the contrary, “Operating Expenses” shall not include the following:

(1)the cost of any special work or service performed for any tenant (including Tenant) at such tenant’s cost;

(2)the cost of installing, operating and maintaining any specialty service, such as an observatory, broadcasting facility, luncheon club, restaurant, cafeteria, retail store, sundry shop, newsstand, or concession, but only to the extent such costs exceed those which would normally be expected to be incurred had such space been general office space;

(3)compensation paid to officers and executives of Landlord (but it is understood that property management employees may carry a title such as vice president and the salaries and related benefits of these officers/employees of Landlord would be allowable Operating Expenses under Section 7(a)(1) above);

(4)the cost of any items for which Landlord is reimbursed by insurance, condemnation or warranties or by any tenant or third party;

(5)the cost of any additions, improvements, changes, replacements and other items which are made in order to prepare for a new tenant’s occupancy;

(6)the cost of repairs incurred by reason of fire or other casualty to the extent reimbursed by a tenant, third party or insurance proceeds (other than business interruption and rent loss insurance proceeds) under policies maintained by Landlord;

(7)insurance premiums to the extent Landlord is directly reimbursed therefor, other than through Operating Expenses;

(8)financing costs including interest on debt or amortization payments or other charges on any mortgage or deed of trust and rental under any ground lease or other underlying lease except to the extent, in each case, that the debt which is being amortized was incurred to pay for an expense which is properly included in Operating Expenses pursuant to Section 7(a);

(9)any real estate brokerage commissions or other costs, including attorneys’ fees for the negotiation of leases for new tenants, incurred in procuring tenants or any fee in lieu of such commissions;

(10)any advertising and promotional expenses incurred in connection with the marketing of any space that is available for lease;

(11)any expenses for repairs or maintenance which are covered by warranties and service contracts, to the extent such maintenance and repairs are made at no cost to Landlord;

(12)legal expenses arising out of the enforcement or negotiation of the provisions of any lease affecting the Land including without limitation this Lease, or relating to the sale, financing or refinancing of the Project or any interest therein except to the extent directly related to financing in connection with the management, maintenance, operation or repair of the Project;

(13)fines and penalties assessed by a court or governmental agency to the extent such fines and penalties are based on Landlord’s violation of law or negligence in failing to perform an act or pay an amount due;

(14)costs or expenses arising from any liability from a lawsuit, cause of action or administrative action against Landlord (or any representative thereof);

(15)depreciation of the Building or Property;

(16)expenditures for repairing or replacing any defect in the design or construction of Building, to the extent such expenditures are recovered by warranty for such work;

(17)costs relating to maintaining Landlord’s legal existence, either as a corporation, partnership or other entity;

(18)all costs of Landlord’s general corporate and general administrative and overhead expenses (except as to items specifically included in Operating Expenses above and as distinguished from the costs of the operation of the Project);

(19)any fines or penalties imposed or assessed against Landlord for Landlord’s failure to comply with any governmental or regulatory agency’s rules or regulations;

(20)costs of capital improvements except as expressly permitted above; and

(21)legal, accounting or consulting costs incurred in connection with the acquisition or disposition of the Project.

(22) a management fee in addition to the costs outlined in Section 7.a.1

8.Tenant Taxes; Rent Taxes.

(a)Tenant shall pay promptly when due all taxes directly or indirectly imposed or assessed upon Tenant’s gross sales, business operations, machinery, equipment, trade fixtures and other personal property or assets, whether the aforementioned are owned or leased by Tenant, and whether such taxes are assessed against Tenant, Landlord, the Building or the Project. In the event that such taxes are imposed or assessed against Landlord, the Building or the Project, Landlord shall furnish Tenant with all applicable tax bills, public charges and other assessments or impositions and Tenant shall forthwith pay the same either directly to the taxing authority or, at Landlord’s option, to Landlord, in which event Landlord shall pay such amounts to the taxing authority promptly after receipt of the funds from Tenant. In addition, in the event there is imposed at any time a tax upon and/or measured by the rental payable by Tenant under this Lease, whether by way of a sales or use tax or otherwise, Tenant shall be responsible for the payment of such tax and shall pay the same on or prior to the due date thereof; provided, however, that the foregoing shall not include any inheritance, estate, succession, transfer, gift or income tax imposed on Landlord.

(b)Tenant will be responsible for ad valorem taxes on its personal property, whether owned or leased by Tenant and on the value of the leasehold improvements in the Premises (and if the taxing authorities do not separately assess Tenant’s leasehold improvements, Landlord may make an appropriate allocation of the ad valorem taxes allocated to the Project to give effect to this sentence), and such taxes relating to other tenants of the Project will not be included in Operating Expenses.

9.Payments.

All payments of Rent and other payments to be made to Landlord shall be made on a timely basis, without demand, notice, abatement (except as expressly set forth herein), deduction or set-off, and shall be payable to Landlord or as Landlord may otherwise designate. All such payments shall be mailed or delivered to Landlord’s Address designated in the Basic Lease Information above or at such other place or in some other manner as Landlord may designate from time to time in writing. If mailed, all payments shall be mailed in sufficient time and with adequate postage thereon to be received in Landlord’s account by no later than the due date for such payment. Following Landlord’s written request Tenant shall deliver payments of Rent and any amounts otherwise due hereunder via wire transfer of immediately available funds to such account or accounts as Landlord may designate. Tenant agrees to pay to Landlord Two Hundred Fifty Dollars ($250.00) for each check presented to Landlord in payment of any obligation of Tenant which is not paid by the bank on which it is drawn. Any sums due to Landlord from Tenant not paid when due shall bear interest

at the Interest Rate from the date due until paid. The “Interest Rate” shall mean ten percent (10%) per annum compounded (not to exceed the maximum rate permitted by law).

10.Late Charges.

Any Rent or other amounts payable to Landlord under this Lease, if not paid by the fifth (5th) day of the month with respect to Base Rental and Additional Rental, or within five (5) days after the due date specified on any invoice from Landlord for any other amounts payable hereunder, shall upon delivery of written notice to Tenant (“Delinquency Notice”), incur a late charge of ten percent (10%) of the overdue amount (the “Late Charge”) for Landlord’s administrative expense in processing such delinquent payment and in addition thereto shall bear interest at the Interest Rate from and after the due date for such payment; provided, however, that Tenant shall only be entitled to receipt of a Delinquency Notice for the first late payment in any twelve (12) month period and thereafter Late Charges and interest at the Interest Rate shall be assessed automatically from and after the due dates set forth above. Tenant agrees that this Late Charge represents a fair and reasonable estimate of the cost Landlord will incur by reason of Tenant’s late payment. Accepting any Late Charge shall not constitute a waiver by Landlord of Tenant’s default with respect to any overdue amount nor prevent Landlord from exercising any other rights or remedies available to Landlord.

11.Use Rules.

The Premises shall be used solely for the purposes set forth in the Basic Lease Information and no other purposes and consistent with the character of the Building and the Project as a Class “A” office building and office campus. Tenant shall comply with all Laws regarding the use of the Premises. Noise-producing equipment, including fans and vents, shall be oriented away from residential areas or appropriately screened and muffled. No outside storage, unenclosed uses or outside activity areas shall be permitted except screened refuse disposal containers and equipment reasonably approved by Landlord. Tenant covenants and agrees to abide by the Rules and Regulations attached as Exhibit G in all respects as now set forth or as changed from time to time by Landlord. Landlord shall have the right at all times during the Lease Term to establish and enforce such reasonable and non-discriminating rules and regulations as it deems necessary in its reasonable discretion to protect the tenantability, safety, operation, and welfare of the Premises and the Project. In the event of any inconsistency between the Lease and the Rules and Regulations, the Lease shall prevail.

(a)No Obstruction. Tenant shall not obstruct the areas outside of Tenant’s doors, or any portion of the Common Areas of the Project with any item, including, without limitation, trash or other debris.

(b)Advertisement. Except as expressly permitted by Section 41 below, Tenant shall not place or permit to be placed any sign, marquee, awning, decoration or other attachment on or to the storefront, windows (inside or outside), doors (inside or outside), or exterior walls of the Premises or at any other location in or adjacent to the Premises except with the prior written consent of Landlord. Landlord may, without liability to Tenant, enter upon the Premises and remove any such sign, marquee, awning, decoration or attachment affixed in violation of this Section 11, and Tenant agrees to pay the cost of any such removal. Tenant shall not exhibit or affix flags, pennants, banners or similar items on or to the exterior of the Premises or the Building of which the Premises are a part. No advertising medium shall be utilized by Tenant which can be heard or experienced outside the Premises, including, without limitation, flashing lights, searchlights, loudspeakers, phonographs, radios or television. Tenant shall not display, paint, or place, or cause to the displayed, painted or placed, any handbills, bumper stickers or other advertising devices in the Common Areas of the Project or on any vehicle parked in the surface of structured parking area of the Project, including those belonging to Tenant, or to Tenant’s agent or any other person; nor shall Tenant distribute or cause to be distributed in the Project any handbills or other advertising devices. Except as expressly permitted by

Section 41 below, any signs, notices, logos, pictures, names or advertisements which are installed or placed outside of the Premises and that have not been individually approved by Landlord may be removed without notice by Landlord at the sole expense of Tenant. Except as expressly permitted by Section 41 below, Tenant may not, without the prior written approval of Landlord, install any signs on the exterior of the Building or in the Common Areas of the Building or the Project, or install any other items visible from the exterior of the Premises or Building.

(c)Deliveries. Tenant agrees to cause its deliveries (including loading and unloading) to be made in such a way as to cause as little inconvenience as reasonably possible to other tenants and neighbors of the Project. In any event, Tenant shall comply with all Laws and reasonable regulations of the Project promulgated by Landlord concerning deliveries, including restrictions on noise levels, loading zones and traffic patterns.

12.Alterations.

(a)Tenant shall not make, suffer or permit to be made any alterations, additions or improvements to or of the Premises or any part thereof, or remove any portion of the Premises which is affixed thereto, or attach any fixtures or equipment thereto (collectively, the “Alterations”), without first notifying Landlord of such proposed Alterations and obtaining Landlord’s written consent, which consent shall not be unreasonably withheld and which consent shall be requested by Tenant not less than thirty (30) days prior to the commencement of any such work. Landlord shall notify Tenant of its consent or disapproval to Alterations within fifteen (15) Business Days following the later to occur of (x) receipt of Tenant’s notice requesting such consent and (y) the date upon which Landlord receives all documents and information reasonably requested in connection with its evaluation of the proposed Alteration. Tenant’s request for Landlord’s consent to any proposed Alterations shall include a description of the proposed Alterations and shall be accompanied by materials sufficient to enable Landlord to evaluate the request. Depending on the nature and extent of the proposed Alterations, it is anticipated that such materials could range from paint chips, internally prepared diagrams, plans and specifications prepared by licensed architects and engineers, a description of proposed construction means and methods, the identity of any contractor or subcontractor to be employed in the construction of the Alterations, the estimated cost of such work and the estimated time for performance thereof. Tenant’s notice requesting consent shall describe the Alterations and the anticipated commencement date thereon so that Landlord may file a notice of nonresponsibility described in Sections 3094 and 3129 of the California Civil Code. The construction of the Tenant Improvements (as defined in the Work Letter) shall be governed by the terms of the Work Letter. However, Tenant shall not be obligated to obtain Landlord’s consent for a particular Alteration (although the above notice will always be required) in the following circumstances: (i) the cost of the Alteration in question and all work being done by Tenant in the Premises in connection with such Alteration does not exceed $50,000 and all prior Alterations for which Landlord’s consent was not required will not exceed $100,000 in any twelve (12) month period; (ii) the Alteration in question will have no effect on the various systems of the Building, including without limitation, the HVAC, plumbing and fire protection systems, the Building structure or the exterior appearance of the Building, and (iii) such Alteration will not cause Tenant to exceed the maximum floor load for the Building. Tenant shall pay to Landlord on demand an amount equal to five percent (5%) of all charges incurred by Tenant or its contractors or agents in connection with any Alterations to cover Landlord’s overhead and expenses for plan review, coordination, scheduling and supervision. In addition, upon demand, Tenant shall reimburse Landlord for all out-of-pocket costs incurred by Landlord in connection with any Alterations, including, without limitation, the costs of any third-party architects, engineers or consultants hired by Landlord to review drawings for Alterations.

(b)Landlord may impose, as a condition of its consent to all Alterations such requirements as Landlord deems desirable including, but not limited to: (i) the requirement that upon Landlord’s request, made at the time such consent is given, Tenant shall, at Tenant’s expense, remove such Alterations upon the

expiration or any early termination of the Lease Term and repair any damage to the Premises and Building caused by such removal; (ii) the requirement that Tenant utilize for such purposes only contractors, materials, mechanics and materialmen selected by Tenant and approved by Landlord, which approval shall not be unreasonably withheld or delayed; and/or (iii) require that Tenant fully comply with the provisions of Section 8700 of the California Civil Code or submit evidence satisfactory to Landlord that Tenant is exempt from the requirements of such Section 8700. Notwithstanding anything herein to the contrary, to the extent any Alterations would materially affect the systems of the Building, including without limitation, the HVAC, plumbing, and fire protection systems, the exterior of the Building or any equipment located on the exterior of the Building, any portion of the Project outside of the Building or any structural component of the Building, such Alterations shall be subject to Landlord’s consent in the exercise of its sole discretion; to the extent such Alterations would merely affect the systems of the Building, including without limitation, the HVAC, plumbing, and fire protection systems, but not materially, Tenant shall observe reasonable rules relating thereto established by Landlord. Tenant shall construct such Alterations and perform any repairs which Tenant is obligated to perform hereunder at Tenant’s cost and in conformance with any and all applicable Laws, rules and regulations of any federal, state, county or municipal code or ordinance (including, without limitation, Title 24 of the California Administrative Code) and pursuant to a valid building permit, issued by the city and/or county in which the Building is located, in conformance with Landlord’s construction rules and regulations. Neither Landlord’s selection or approval of a contractor nor its approval of the plans, specifications and working drawings for Alterations shall create any responsibility or liability on the part of Landlord for the quality or adequacy of the contractor, for the completeness, design sufficiency, or compliance of such plans, specifications and working drawings with all Laws. All work with respect to any Alterations must be done in a good and workmanlike manner and diligently prosecuted to completion to the end that the Premises shall at all times be a complete unit except during the period of work. Tenant shall cause all work to be performed in such manner as not to obstruct access to the Project or the Common Areas for any other tenant of the Project, and as not to obstruct the business of Landlord or other tenants in the Project, or unreasonably interfere with the labor force working on the Project. Promptly upon completion of any Alterations, Tenant agrees to cause a Notice of Completion to be recorded in the office of the Recorder of the county in which the Building is located in accordance with Section 8182 of the Civil Code of the State of California or any successor statute, and Tenant shall deliver to Landlord a reproducible copy of the “as built” drawings of the Alterations and, if available, such drawings in “CAD” format.

(c)All Alterations which may be installed or placed in or about the Premises, and all signs installed in, on or about the Premises, from time to time, shall be at the sole cost of Tenant and shall be and become the property of Landlord, other than trade fixtures and equipment which may be removed without material damage to the Premises on the expiration of the Lease Term or its earlier termination; provided, however, that to the extent any trade fixtures and equipment were installed or placed in or about the Premises at the cost and expense of Landlord, such trade fixtures and equipment shall remain the property of Landlord upon expiration of the Lease Term or its earlier termination. If Tenant fails to complete such removal and/or to repair any damage caused by the removal of any Alterations, then as a matter which shall survive termination of this Lease, Landlord may do so and may charge the cost thereof to Tenant. Tenant hereby indemnifies and holds Landlord harmless from any liability, cost, obligation, expense or claim of lien in any manner relating to the installation, placement, removal or financing of any Alterations by Tenant or at Tenant’s behest.

13.Repairs.

(a)Except as otherwise expressly provided in this Lease, Landlord shall have no obligation to alter, remodel, improve, repair, renovate, redecorate or paint all or any part of the Premises. Landlord shall repair, maintain and replace as necessary, as part of Operating Expenses to the extent provided in Section 7 hereof, (i) the foundation and structural elements of the Building (including structural load bearing walls and roof structure), (ii) the Building’s and Project’s Common Areas, and (iii) to the extent installed

by Landlord, the base Building mechanical, utility lines, connections and meters (but expressly excluding any tenant sub-meters); provided, however, to the extent such maintenance, repairs or replacements are required as a result of any act, neglect, fault or omission of Tenant or any of Tenant’s agents, contractors, employees, invitees, licensees, tenants or assigns (the “Tenant’s Parties”) or because of Tenant’s specific use of or Alterations to the Premises, Tenant shall pay to Landlord, as Additional Rental, the costs of such maintenance, repairs and replacements. Landlord shall not be liable for any failure to make any such repairs, or to perform any maintenance unless such failure shall persist for an unreasonable time after written notice of the need of such repairs or maintenance is given to Landlord by Tenant. There shall be no abatement of rent and no liability of Landlord by reason of any injury to or interference with Tenant’s business arising from the making of any repairs, alterations or improvements in or to any portion of the Project, Building or the Premises or in or to fixtures, appurtenances and equipment therein. Landlord shall not be required to make any repairs or improvements to the Premises other than as expressly required under this Lease.

(b)Except for Landlord’s obligations specifically set forth elsewhere in this Lease, Tenant shall at all times and at Tenant’s sole cost and expense, manage and maintain the Premises (including all Building systems) in a first-class condition consistent with similar Class “A” buildings in Mountain View and Palo Alto and shall keep, maintain, clean, repair, renovate, retrofit, preserve and replace, as necessary, the Premises and all parts thereof, including, without limitation, plumbing/pipes and conduits at the point of entry into the Building and inside the Premises, all HVAC systems located within the Premises, all windows, restrooms, ceilings, interior walls, skylights, interior and demising walls, doors, electrical and lighting equipment, sprinkler systems, loading dock areas and doors, fences, signs, sprinkler and electrical systems within the Premises, fire and life safety systems and lighting and HVAC control systems, and any Tenant Improvements and Alterations, so as to keep the Premises in such first class condition and repair, reasonable wear and tear and casualty damage excepted. Additionally, Tenant shall be responsible for the expense of installation, operation, and maintenance of its telephone and other communications cabling from the point of entry into the Project to the Premises and throughout the Premises. Tenant shall promptly report, in writing, to Landlord any defective or dangerous condition known to Tenant. Tenant shall maintain the Building’s structure or systems which are located in the interior of the Premises. At Landlord’s option, if Tenant fails to maintain the Premises or to make such repairs, Landlord may, but need not, perform such maintenance or make such repairs, in which case Tenant shall pay Landlord the cost thereof, including a percentage of the cost thereof sufficient to reimburse Landlord for all overhead, general conditions, fees and other costs or expenses arising from Landlord’s involvement upon being billed for same. Landlord may, but shall not be required to, enter the Premises at all reasonable times to make such repairs and maintenance to the Premises or to any equipment located in the Building as Landlord shall desire or deem necessary or as Landlord may be required to do by governmental or quasi-governmental authority or court order or decree. To the fullest extent permitted by Law, Tenant hereby waives and releases all rights to make repairs at the expense of Landlord or in lieu thereof to vacate the Premises as may be provided by any law, statute or ordinance now or hereafter in effect, including Sections 1941 and 1942 of the California Civil Code. Landlord has no obligation and has made no promise to alter, remodel, improve, repair, decorate or paint the Premises or any part thereof, except as specifically and expressly herein set forth.

(c)Tenant shall, at Tenant’s sole cost and expense, procure and maintain regularly scheduled preventive maintenance/service contracts (copies of which shall be delivered to Landlord upon request), in form and substance approved by Tenant, for: (a) heating, air conditioning and ventilation equipment; (b) boiler, fired or unfired pressure vessels; (c) fire sprinkler and/or standpipe and hose or other automatic fire extinguishing systems, including fire alarm and/or smoke detection; and (d) elevators, to the extent solely within the Building and solely servicing the Premises. All maintenance/service contracts shall include all services recommended by the equipment manufacturer within the operation/maintenance manual and shall become effective (and a copy thereof delivered to Landlord) within thirty (30) days following the

Lease Commencement Date. The term of any such service contracts shall not extend beyond the Lease Term.

(d)If Tenant refuses or neglects to repair and maintain the Premises properly as required hereunder to the reasonable satisfaction of Landlord, then at any time following ten (10) Business Days from the date on which Landlord makes a written demand on Tenant to effect such repair and maintenance, Landlord may (i) enter upon the Premises and perform such maintenance and/or make such repairs, and upon completion thereof, Tenant agrees to pay to Landlord as Additional Rental, Landlord’s costs for making such repairs plus ten percent (10%) of such costs for overhead, within ten (10) days after receipt from Landlord of a written itemized bill therefor, or (ii) take over Tenant’s repair obligations for the remainder of the Term (including any Option Term), and include the cost of same in Operating Expenses. Any amounts not reimbursed by Tenant within the aforementioned ten (10) Business Day period will bear interest at the Interest Rate until paid by Tenant.

14.Landlord’s Right of Entry.

Notwithstanding anything to the contrary contained in this Section 14, Landlord shall retain duplicate keys to all doors of the Premises and Landlord or any Landlord Party may enter the Premises at any time to: (a) examine and inspect the Premises (including to confirm Tenant’s compliance with its obligations under this Lease), (b) show the Premises to prospective investors, purchasers, mortgagees, lessors or lessees, (c) make such repairs, alterations, replacements or additions to the Premises (i) which Landlord may elect to perform following Tenant’s failure to perform or in the event of an emergency, or (ii) for which Landlord is responsible, (d) comply with any Laws, (e) post notices of nonresponsibility and (f) exercise Landlord’s remedies upon the occurrence and during the continuation of a Default all without being liable to Tenant in any manner whatsoever for any damages arising therefrom; provided, however, that Landlord shall, except in case of emergency, afford Tenant such prior notification of an entry into the Premises as shall be reasonably practicable under the circumstances, but not less than one (1) Business Day, unless otherwise agreed to by Tenant. Landlord shall be allowed to take into and through the Premises any and all materials that may be required to make any such repairs, additions, alterations or improvements. Any such entries shall be without the abatement of Rent and shall include the right to take such reasonable steps as are required to accomplish the stated purposes. Tenant hereby waives any claims for damages or for any injuries or inconvenience to or interference with Tenant’s business, lost profits, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned thereby except in the case of the gross negligence or willful misconduct of Landlord or its agents, employees or contractors. In an emergency, Landlord shall have the right to use any means that Landlord may deem proper to open the doors in and to the Premises. Any entry into the Premises in the circumstances and manner described in this Section 14 shall not be deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an actual or constructive eviction of Tenant from any portion of the Premises.

15.Insurance.

(a)Tenant shall procure at its expense and maintain throughout the Lease Term the following policies of insurance:

(1)commercial general liability insurance including contractual liability and broad form property damage (“CGL Insurance”) with an each occurrence limit of Fifteen Million Dollars ($15,000,000) and a general aggregate limit of Fifteen Million Dollars ($15,000,000). Such insurance shall name Landlord and its property manager and their respective officers, partners, members and employees and such additional persons or entities as Landlord may from time-to-time designate in writing as an additional insured, shall specifically include the liability assumed hereunder by Tenant, and is intended to be primary insurance, and not excess over or contributory with any other valid, existing, and applicable insurance in force for or on behalf of Landlord, and shall provide that Landlord shall receive thirty (30) days’ written

notice (except in the case of a non-payment of premium where the notice is ten (10) days) from the insurer prior to any cancellation or change of coverage that materially alters the coverage and/or limit required. Such insurance shall, in addition, extend to provide contractual liability coverage, extending to the indemnities by Tenant provided for in this Lease and to any liability assumed in any contract entered into in the course of Tenant’s business. The limits required can be complied with by a combination of a Commercial General Liability policy and an Umbrella Liability policy;

(2)automobile liability insurance covering owned, hired and non-owned automobiles in amount not less than $1,000,000 each accident;

(3)“all risk” property insurance on a “special causes of loss” basis (including boiler and machinery (if applicable); business income and extra expense; sprinkler damage, vandalism and malicious mischief) on the Tenant Improvements, any Alterations installed in the Premises by or on behalf of Tenant, all leasehold improvements installed in the Premises by Tenant at its expense, and all of Tenant’s personal property, such insurance to include a waiver of subrogation from Tenant’s insurer in favor of Landlord and any parties reasonably designated by Landlord. Such insurance shall be an amount equal to full replacement cost of the aggregate of the foregoing and for business income and extra expense shall equal 12 months of income and shall provide coverage comparable to the coverage in the standard ISO “special causes of loss” form, when such form is supplemented with the coverages required above, and shall name Landlord as a loss payee “as their interests may appear”;

(4)worker’s compensation insurance, statutory and employer’s liability coverage in an amount not less than $1,000,000 Disease-Policy Limit; and

(5)such other insurance as may be required by Law.

Additionally, Tenant shall at a minimum require all of its contractors, subcontractors, and vendors to maintain (A) CGL Insurance with occurrence limits and general aggregate limits in the following amounts, but otherwise meeting the requirements of Section 15(a)(1): (i) Tenant’s general contractor shall maintain CGL Insurance with limits of Fifteen Million Dollars ($15,000,000) per occurrence and Fifteen Million Dollars ($15,000,000) aggregate, (ii) all of Tenant’s contractors, subcontractors and vendors providing services to Building systems or utilities, including, without limitation, gas, HVAC, plumbing, mechanical or electrical systems, shall maintain CGL Insurance with limits of Five Million Dollars ($5,000,000) per occurrence and Five Million Dollars ($5,000,000) aggregate, and (iii) all other contractors, subcontractors and vendors of Tenant shall maintain CGL Insurance with limits of One Million Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) aggregate, (B) automobile liability per Section 15(a)(2), and (C) workers’ compensation coverage, including employer’s liability, per Section 15(a)(4). The foregoing coverages described in clauses (A) through (C) shall include a Waiver of Subrogation in favor of Landlord, its property manager and their respective officers, partners, members and employees and such additional persons or entities as Landlord may from time-to-time designate in writing. All of Tenant’s contractors, subcontractors, and vendors shall provide such evidence of insurance as required by Landlord. At a minimum they shall be required to provide evidence of coverage and such other insurance as may be required by Landlord. Additionally, contractors, subcontractors and vendors participating in the construction of the Tenant Improvements shall be required to provide the insurance specified in the Work Letter.

All insurance policies required under Section 15(a) shall be issued by carriers licensed to do business in the State of California each with a Best’s Insurance Reports policy holder’s rating of not less than A- and a financial size category of not less than Class X, shall be written on an “occurrence basis,” which shall afford coverage for all claims based on acts, omissions, injury and damage, which occurred or arose (or the onset of which occurred or arose) in whole or in part during the policy period and shall be non-cancellable and not subject to changes of coverage that materially alter the coverage and/or limits required herein, except after thirty (30) days’ written notice to Landlord and any mortgagee or underlying ground lessor of Landlord

except for non-payment of premium in which case ten (10) days’ notice shall be given. Tenant shall deliver policies of such insurance or certificates thereof to Landlord prior to the date that Tenant occupies the Premises for any reason, and evidence of renewals of such policies shall be delivered to Landlord at least ten (10) days prior to the expiration of each respective policy term. In the event Tenant shall fail to procure and keep such insurance in full force and effect during the Term, or to deliver such policies or certificates within said time frame, Landlord may, at its option, procure same for the account of Tenant, and the cost thereof shall be paid to Landlord as Additional Rental within five (5) Business Days after delivery to Tenant of bills therefor. Tenant shall have the right to satisfy the foregoing insurance requirements pursuant to so-called “umbrella” or “blanket” insurance coverage so long as the minimum coverages described above are applicable to the Premises, Landlord and the Project, as applicable.

(b)Landlord shall maintain at its expense (but with the expense to be included in Operating Expenses) throughout the Lease Term insurance on the Building against fire and risks covered by “special causes of loss” form on a 100% “replacement cost” basis. At Landlord’s election, in its sole and absolute discretion, Landlord may procure earthquake coverage as a part of such insurance. Landlord’s insurance shall: (i) cover the Building; (ii) not cover any Alterations installed in the Premises by or on behalf of Tenant; (iii) have a building ordinance provision; and (iv) provide for rental interruption insurance covering a period of twelve (12) full months. In no event shall Landlord agree to any co-insurance obligations under any such policies (beyond standard deductibles). Landlord shall also maintain at its expense (but with the expense to be included in Operating Expenses) commercial general liability insurance including contractual liability coverage (or with contractual liability endorsement) on an occurrence basis in amounts not less than Five Million Dollars ($5,000,000) per occurrence and general aggregate limit of Five Million Dollars ($5,000,000) with respect to bodily injury or death and property damage. Notwithstanding the foregoing obligations of Landlord to carry insurance, Landlord may (x) modify the foregoing coverages if and to the extent it is commercially reasonable to do so, and (y) carry additional insurance, including without limitation earthquake and flood, at its sole discretion, and the cost thereof shall be included in Operating Expenses. Any insurance required or permitted to be carried by Landlord hereunder may be carried under blanket policies covering other properties of Landlord and/or its partners and/or their respective related or affiliated corporations so long as such blanket policies provide insurance at all times for the Project as required by this Lease.

16.Waiver of Subrogation. Notwithstanding anything to the contrary in this Lease, to the extent that this waiver does not invalidate or impair their respective insurance policies. Landlord and Tenant shall each obtain from their respective insurers under all policies of fire, theft, and other property insurance maintained by either of them at any time during the Term insuring or covering the Project or any portion thereof of its contents therein, a waiver of all rights of subrogation which the insurer of one party might otherwise, if at all, have against the other party. This provision shall not operate to prevent Landlord from including the cost of the deductibles of such insurance in Operating Expenses.

17.Default.

(a)The following events shall be deemed to be events of default by Tenant under this Lease (each, a “Default”): (i) Tenant shall fail to pay when due any installment of Rent or any other charge or assessment against Tenant pursuant to the terms hereof, and shall fail to cure such breach within five (5) days after the due date thereof; (ii) Tenant shall fail to perform any obligation of Tenant or to comply with any provision of this Lease, other than the payment of the Rent or any other charge or assessment payable by Tenant or compliance with the items in clauses (iii) through (xi) hereof, and shall not cure such failure within fifteen (15) days after written notice thereof to Tenant; provided however, that any such notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 or any similar or successor law; and provided further, that if the nature of such failure is that it cannot reasonably be cured within a fifteen (15) day period, Tenant shall not be deemed to be in default if it diligently commences such cure within such period, notifies Landlord within such period that it cannot reasonably

complete such cure within fifteen (15) days and thereafter diligently proceeds to cure said failure as soon as possible but in no event later than ninety (90) days after receipt of Landlord’s notice; (iii) abandonment of the Premises by Tenant as defined in California Civil Code Section 1951.3; (iv) Tenant shall make a general assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts as they become due, or shall file a petition in bankruptcy, or shall be adjudicated as bankrupt or insolvent, or shall file a petition in any proceeding seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, or shall file an answer admitting or fail timely to contest the material allegations of a petition filed against it in any such proceeding; (v) a proceeding is commenced against Tenant seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, and such proceeding shall not have been dismissed within sixty (60) days after the commencement thereof; (vi) a receiver or trustee shall be appointed for the Premises or for all or substantially all of the assets of Tenant; (vii) Tenant shall fail to take possession of the Premises as provided in this Lease; (viii) Tenant shall do or permit to be done anything which creates a lien upon the Premises or the Project and such lien is not removed or discharged within fifteen (15) days after the filing thereof; and (ix) Tenant fails to return a properly executed instrument to Landlord in accordance with Section 25 hereof within the time period and subject to the notice requirements provided therein or Tenant fails to return a properly executed estoppel certificate to Landlord in accordance with Section 26 hereof within the time period and subject to the notice requirements provided therein.

(b)In the event of any such Default by Tenant, in addition to any other remedies available to Landlord at law or in equity, Landlord shall have the immediate option to terminate this Lease and all rights of Tenant hereunder and to remove Tenant from the Premises in accordance with law. In the event that Landlord shall elect to so terminate this Lease then Landlord may recover from Tenant:

(i)the worth at the time of award of any unpaid rent which had been earned at the time of such termination; plus

(ii)the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus

(iii)the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; plus

(iv)any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom.

As used in clauses (i) and (ii) above, the “worth at the time of award” is computed by allowing interest at the maximum rate permitted by law per annum. As used in clause (iii) above, the “worth at the time of award” is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

(c)In the event of any Default by Tenant, Landlord shall also have the right, with or without terminating this Lease, but subject to applicable law, to re-enter the Premises and remove all persons and property from the Premises; such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant for such period of time as may be required by applicable law after which time Landlord may dispose of such property in accordance with applicable law. No re-entry or taking possession of the Premises by Landlord pursuant to this Section 17(c) shall be construed as an election to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination thereof be decreed by a court of competent jurisdiction. In addition to its other rights under this Lease,

Landlord has the remedy described in California Civil Code Section 1951.4 (Landlord may continue the Lease in effect after Tenant’s breach and abandonment and recover the rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations).

(d)Upon the occurrence of a Default, Landlord shall have the right to exercise and enforce all rights and remedies granted or permitted by law. The remedies provided for in this Lease are cumulative and in addition to all other remedies available to Landlord at law or in equity by statute or otherwise. Exercise by Landlord of any remedy shall not be deemed to be an acceptance of surrender of the Premises by Tenant, either by agreement or by operation of law. Surrender of the Premises can be effected only by the written agreement of Landlord and Tenant.

(e)No reentry or taking possession of the Premises by Landlord or any other action taken by or on behalf of Landlord shall be construed to be an acceptance of a surrender of this Lease or an election by Landlord to terminate this Lease unless written notice of such intention is given to Tenant. Tenant agrees to pay to Landlord all costs and expenses incurred by Landlord in the enforcement of this Lease, including, without limitation, the reasonable fees of Landlord’s attorneys. Tenant waives any right of redemption arising as a result of Landlord’s exercise of its remedies under this Section 17.

18.Waiver of Breach.

No waiver of any breach of the covenants, warranties, agreements, provisions, or conditions contained in this Lease shall be construed as a waiver of said covenant, warranty, provision, agreement or condition or of any subsequent breach thereof, and if any breach shall occur and afterwards be cured, compromised, settled or adjusted, this Lease shall continue in full force and effect as if no breach had occurred.

19.Assignment and Subletting.

(a)Tenant may not directly or indirectly, voluntarily or by operation of law (i) assign this Lease or any interest herein or in the Premises, or mortgage, pledge, encumber, hypothecate or otherwise transfer or sublet the Premises or any part thereof or (ii) permit the use of the Premises by any party other than Tenant, including another tenant of the Project (all of the foregoing are hereinafter sometimes referred to collectively as “Transfer,” and any person to whom any Transfer is made or sought to be made is hereinafter sometimes referred to as a “Transferee”) without Landlord’s prior written consent in each instance, which shall not be unreasonably withheld or delayed and subject to Sections 19(c), 19(h) and 19(i), below. In addition, Tenant shall not create or distribute materials or information intended to market the Premises in this Lease to any potential Transferee without disclosing any such materials or information to Landlord prior to distribution. Consent to one or more Transfers shall not operate to waive this requirement for Landlord’s consent, and all subsequent Transfers shall likewise be made only upon obtaining the prior written consent of Landlord.

(b)If Tenant desires to effect any Transfer, Tenant shall notify Landlord in writing, which notice (the “Transfer Notice”) shall include (i) the proposed effective date of the Transfer, which shall not be less than forty-five (45) days nor more than one hundred eighty (180) days after the date of delivery of the Transfer Notice, (ii) a description of the portion of the Premises to be transferred (the “Subject Space”), (iii) all of the terms of the proposed Transfer and the consideration therefor, including a calculation of the “Transfer Premium” (defined below), the name and address of the proposed Transferee, and a copy of all existing and/or proposed documentation pertaining to the proposed Transfer, including all existing operative documents to be executed to evidence such Transfer or the agreements incidental or related to such Transfer, (iv) current financial statements of the proposed Transferee certified by an officer, partner or owner thereof, and (v) any other information reasonably required by Landlord which will enable Landlord to determine the financial responsibility, character, and reputation of the proposed Transferee, nature of such Transferee’s business and proposed use of the Subject Space. Within thirty (30) days after Landlord’s receipt of such Transfer Notice, Landlord shall recapture (to the extent permitted pursuant to Section 19(h)), approve, or

reasonably disapprove such Transfer. Any Transfer made without Landlord’s prior written consent or deemed approval shall, at Landlord’s option, be void and shall constitute a Default. Whether or not Landlord grants consent, Tenant shall pay Landlord’s review and processing fees, as well as any reasonable legal fees and other out of pocket costs incurred by Landlord, within thirty (30) days after written request by Landlord, which fees shall not in the aggregate exceed $12,000. If Landlord consents to any Transfer (and does not exercise any recapture rights Landlord may have under Section 19(h) below), Tenant may within three (3) months after Landlord’s consent, enter into such agreement to Transfer the Premises or portion thereof, upon the same terms and conditions as are set forth in the Transfer Notice.

(c)Notwithstanding Section 19(a) above, without otherwise limiting the criteria upon which Landlord may withhold its consent to any proposed Transfer, it shall be reasonable for Landlord to withhold its consent to Transfer if (i) the proposed Transferee is a party who would (or whose use would) detract from the character of the Project as Class “A” office building, such as, without limitation, a dental, medical or chiropractic office or a governmental office; (ii) the proposed assignment or subletting is to a governmental subdivision or agency or any person or entity who enjoys diplomatic or sovereign immunity; (iii) such proposed Transferee is an existing tenant of the Project; (iv) such proposed assignment, subletting or use would contravene any restrictive covenant (including any exclusive use) granted to any other tenant of the Project; (v) the proposed assignee or subtenant is a person or entity then negotiating with Landlord for the lease of space in the Project; or (vi) the creditworthiness of the proposed sublessee or assignee is not reasonably acceptable to Landlord (e.g. there does not exist reasonable evidence that sublessee or assignee can pay the rent and additional rent to be charged to sublessee or assignee).

(d)Sublessees or transferees of the Premises shall become directly liable to Landlord for all obligations of Tenant hereunder pertaining to that portion of the Premises covered by their subleases or other instruments of transfer (e.g., an assignment) without relieving Tenant of any liability therefor, and Tenant shall remain obligated for all liability to Landlord arising under this Lease during the entire remaining Lease Term including any extensions thereof, whether or not authorized herein.

(e)If Tenant is a partnership, an aggregate withdrawal or change, whether voluntary, involuntary or by operation of law, of partners owning a controlling interest in Tenant shall be deemed a voluntary assignment of this Lease and subject to the foregoing provisions. If neither Tenant nor any affiliate which controls Tenant is a corporation, partnership or other entity that is publicly traded on a recognized national stock exchange, then any transaction or series of related or unrelated transactions (including, without limitation, any dissolution, merger, consolidation or other reorganization, any withdrawal or admission of a partner or change in a partner’s interest, or any issuance, sale, gift, transfer or redemption of any capital stock of or ownership interest in such entity, whether voluntary, involuntary or by operation of law, or any combination of any of the foregoing transactions) resulting in the transfer of control of such Tenant, shall be deemed to be an assignment of this Lease subject to the provisions of this Section 19. The term “control” as used in this Section 19(e) means the power to directly or indirectly direct or cause the direction of the management or policies of Tenant. Any transfer of control of a subtenant which is a corporation or other entity shall be deemed an assignment of any sublease by such subtenant. However, the lack of a consent requirement shall not relieve Tenant of the obligation to deliver a timely Transfer Notice to Landlord.

(f)Fifty percent (50%) of any consideration, net of Tenant’s reasonable, out-of-pocket costs incurred in the assignment or subletting (including Tenant’s reasonable expenses in constructing improvements specifically for the subtenant or assignee and reasonable brokerage commissions in connection with the Transfer), which is in excess of the Rent and other amounts due and payable by Tenant under this Lease, and which is due to Tenant by any assignee of this Lease or successor to Tenant (including pursuant to Section 19(b)) for its assignment, or by any sublessee under or in connection with its sublease, or otherwise due to Tenant by another party for use and occupancy of the Premises or any portion thereof, on a per-rentable-square foot basis if less than all of the Premises is transferred (the “Transfer Premium”), shall be promptly

remitted by Tenant to Landlord as Additional Rental hereunder and Tenant shall have no right or claim thereto as against Landlord.

(g)No assignment of this Lease consented to by Landlord shall be effective unless and until Landlord shall receive an original assignment and assumption agreement, in form and substance satisfactory to Landlord, signed by Tenant and Tenant’s proposed assignee, whereby the assignee assumes due performance of this Lease to be done and performed for the balance of the then remaining Lease Term. No subletting of the Premises, or any part thereof, shall be effective unless and until there shall have been delivered to Landlord an agreement, in form and substance satisfactory to Landlord, signed by Tenant and the proposed sublessee, whereby the sublessee acknowledges the right of Landlord to continue or terminate any sublease, in Landlord’s sole discretion, upon termination of this Lease, and such sublessee agrees to recognize and attorn to Landlord in the event that Landlord elects under such circumstances to continue such sublease.

(h)Notwithstanding anything to the contrary contained in this Section 19 except paragraph (i) below, upon receipt of any Transfer Notice which contemplates a Transfer that (i) will result in Tenant or its Permitted Transferees (as hereinafter defined) no longer occupying at least fifty percent (50%) of the RSF of the Premises or (ii) has a term (excluding any extension or renewal options) that is longer than fifty percent (50%) of the then remaining Lease Term, Landlord shall have the option exercisable by written notice to Tenant given within thirty (30) days after receipt of the Transfer Notice, to recapture the space proposed to be sublet or assigned (“Transfer Space”). If Landlord exercises its option to recapture, the Lease shall terminate with respect to the Transfer Space on the commencement date specified in the Transfer Notice, and if there is no such date then thirty (30) days after Landlord sends its written notice of recapture. In the event of a recapture by Landlord, if this Lease shall be canceled with respect to less than the entire Premises, Landlord and Tenant shall enter into an appropriate amendment to this Lease confirming such partial termination of this Lease, providing for a prorata reduction in and apportionment of Base Rental and Tenant’s Share on a straight square footage basis, adding commercially reasonable lease provisions for a multi-tenant Building, if applicable, such as reasonable and appropriate access to the Transfer Space through the remainder of the Building and the equitable use of common facilities and parking, and Landlord shall have the right to use or relet the Transfer Space for any legal purpose in its sole discretion. If Landlord elects to recapture the Transfer Space, then Landlord shall separately demise the portion of the Premises so recaptured by Landlord from the balance of the Premises, including, without limitation, capping, re-routing or reconfiguring all mechanical, electrical, plumbing, life-safety and other systems and equipment serving the affected portions of the Premises and construct such other improvements as may be required by law or which Landlord reasonably deems to be necessary or appropriate to so demise the portion of the Premises so recaptured and the cost of such work shall be paid by Tenant. If Landlord declines, or fails to elect in a timely manner to recapture the Transfer Space within such thirty (30) day period, then, provided Landlord has consented or is deemed to have consented to the proposed Transfer, Tenant shall be entitled to proceed to transfer the Transfer Space to the proposed Transferee, subject to the provisions of the last sentence of this grammatical paragraph. Any subsequent proposed Transfer of the applicable space shall be subject to this Section. If a proposed Transfer is not consummated within three (3) months after the date of the relevant Transfer Notice, Tenant shall be required to submit a new Transfer Notice to Landlord with respect to any contemplated Transfer of the Transfer Space described in the first Transfer Notice.

(i)Notwithstanding Sections 19(a) and (b), an assignment or subletting by Tenant of all or a portion of the Premises or this Lease to (i) an entity which is 100% owned by Tenant, directly or indirectly; (ii) any entity which purchases all or substantially all of the stock or assets of Tenant; (iii) any entity into which Tenant is merged or consolidated; or (iv) the sale or transfer of the capital stock of Tenant as provided hereinbelow (all such persons or entities described in (i), (ii), (iii) and (iv) being sometimes hereinafter referred to as “Affiliates”), shall not require Landlord’s consent and shall not be deemed a Transfer under this Section 19, provided that (A) any such Affiliate was not formed as a subterfuge to avoid the obligations

of this Section 19; (B) Tenant gives Landlord at least twenty (20) days’ prior notice of any such assignment or sublease to an Affiliate; (C) such Affiliate shall have, as of the effective date of any such assignment or sublease, a Tangible Net Worth which is equal to or greater than the greater of (x) the net worth of LifeLock, Inc., a Delaware corporation (“Original Tenant”), as of the Lease Commencement Date and (y) the Tangible Net Worth of the Original Tenant as of the date of the applicable assignment or sublease to its Affiliate; (D) any such assignment or sublease shall be subject and subordinate to all of the terms and provisions of this Lease, and such Affiliate shall assume, in a written document reasonably satisfactory to Landlord and delivered to Landlord upon or prior to the effective date of such assignment or sublease, all the obligations of Tenant under this Lease with respect to the portion of the Premises which is the subject of such assignment or sublease (other than the amount of Base Rental payable by Tenant with respect to a sublease); and (E) Tenant shall remain fully liable for all obligations to be performed by Tenant under this Lease. Any Affiliate to whom Tenant may assign this Lease or sublease a portion of the Premises as permitted by this Section 19(i) shall be deemed to be a “Permitted Transferee”. The terms and provisions of Sections 19(f) and 19(h) shall not be applicable to a Transfer described in this Section 19(i). However, no assignment or subletting under this Section 19(i) shall be effective until Tenant and the assignee or sublessee have complied with Section 19(g) above.

20.Destruction.

(a)If the Premises are damaged by fire or other casualty, the same shall be repaired as speedily as practicable, subject to reasonable delay for insurance adjustment or other matters beyond Landlord’s reasonable control under the circumstances, at the expense of Landlord (subject to Section 20(c) below), unless this Lease is terminated as provided in this Section. Beginning on the date of such casualty and continuing during the period required for repair, a just and proportionate part of the Base Rental and Tenant’s Operating Expense Rental shall be abated for the time and to the extent the Premises are unfit for occupancy for the purposes permitted under this Lease, and not occupied by Tenant as a result thereof, unless such damage to the Premises is due to the negligence or willful misconduct of Tenant or Tenant’s employees, contractors, licensees, or invitees, in which event Base Rental and Additional Rental shall be abated only to the extent Landlord is reimbursed from the proceeds of rental income or interruption insurance purchased by Landlord as part of Operating Expenses.

(b)If the Premises are (i) damaged to such an extent that repairs cannot, in Landlord’s judgment, be completed within six (6) months after the date of the casualty; (ii) damaged or destroyed as a result of a risk which is not insured under standard special form/all risk insurance policies or any other insurance carried by Landlord; (iii) damaged and the holder of any mortgage on the Project or ground or underlying lessor with respect to the Project and/or the Building requires that the insurance proceeds or any portion thereof be used to retire the mortgage debt or terminates the ground or underlying lease, as the case may be; or (iv) substantially damaged or destroyed during the last twenty-four (24) months of the Lease Term, as extended if permitted herein; or if the Premises is damaged in whole or in part to such an extent that the Project cannot, in Landlord’s reasonable judgment, be operated economically as an integral unit and is not operated as an integral unit as originally built, then in any such event Landlord may at its option terminate this Lease by notice in writing given to Tenant within sixty (60) days after the date of such damage or destruction. If the Premises are damaged to such an extent that repairs cannot, in Landlord’s judgment, be completed within six (6) months after the date of the casualty or if the Premises are substantially damaged during the last twenty-four (24) months of the Lease Term, as it may have been extended if permitted herein, then in either such event Tenant may elect to terminate this Lease by notice in writing to Landlord within thirty (30) days after notice from Landlord of the estimated repair time. Unless Landlord or Tenant elects to terminate this Lease as hereinabove provided, this Lease will remain in full force and effect and Landlord shall repair such damage to the extent required in this Section 20 as expeditiously as possible under the circumstances. If Landlord or Tenant terminates the Lease pursuant to this Section 20, then Tenant shall pay the Base Rental and Additional Rental properly apportioned (and as the same may have been abated in

accordance with Section 20(a) above) up to such date of termination or casualty, as the case may be, and both parties hereto shall thereafter be freed and discharged of all further obligations hereunder, except as provided for in provisions of this Lease which by their terms survive the expiration or earlier termination of the Lease Term.

(c)If Landlord should elect or be obligated pursuant to Section 20(a) above to repair because of any damage or destruction, Landlord’s obligation shall be limited solely to restoration of the Building to the condition provided to Tenant on the Delivery Date and shall not extend to any leasehold improvements in the Premises, furniture, equipment, supplies, trade fixtures or other personal property owned or leased by Tenant, its employees, contractors, invitees or licensees. If the cost of performing such repairs and restoration exceeds the actual proceeds of insurance paid or payable to Landlord on account of such casualty, or if Landlord’s mortgagee under a mortgage or the lessor under an underlying lease shall require that any insurance proceeds from a casualty loss be paid to it, Landlord may terminate this Lease.

(d)In no event shall Landlord be liable for any loss or damage sustained by Tenant or its visitors, or injury to Tenant’s business by reason of casualties mentioned hereinabove or any other accidental casualty.

(e)The provisions of this Lease, including this Section, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises, the Building or any other portion of the Project. Any statute or regulation of the state in which the Building is located including, without limitation, Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any rights or obligations concerning damage or destruction in the absence of an express agreement between the parties, shall have no application to this Lease or any damage or destruction to all or any part of the Premises, the Building or any other portion of the Project.

21.Tenant’s Property.

Provided that Tenant shall not be in default under this Lease, Tenant shall be permitted to remove its trade fixtures, personal property, equipment and furniture from the Premises at any time during the Lease Term and any extensions thereof, and at the expiration or termination of the Lease, subject to and in accordance with the terms and conditions of this Lease otherwise governing the same.

22.Services to the Premises.

(a)Subject to the Rules and Regulations attached hereto as Exhibit G and unless access to the Premises is restricted by casualty, condemnation, Force Majeure or any governmental action, Tenant shall have access to the Premises 24 hours per day, 365 days per year, during the Lease Term.

(b)Tenant shall pay for all water, gas, heat, light, power, telephone, sewer, sprinkler system charges, janitorial services, trash collection services, and other utilities and services used on or from the Premises, together with any taxes, penalties, and surcharges or the like pertaining thereto and any maintenance charges for utilities. Tenant shall furnish all electric light bulbs, tubes and ballasts, battery packs for emergency lighting and fire extinguishers. If any such services are not separately metered to Tenant, Tenant shall pay such proportion of all charges jointly metered with other premises as determined by Landlord, in its sole discretion. Any such charges paid by Landlord and assessed against Tenant shall be immediately payable to Landlord on demand and shall be Additional Rent hereunder. In addition, if applicable, to the extent any utility is not separately metered to the Premises, Landlord may, at Tenant’s expense, install and shall have access to the Premises to monitor a separate meter (or submeter) to determine the actual use of any utility in the Premises or any shared common area and may make available and share actual whole-project energy and water usage data as necessary to maintain the Building's "green building" certification, if any. If there is no meter or submeter in the Premises, then, upon request, Tenant shall provide monthly utility usage to Landlord in electronic or paper format or provide permission for Landlord to request information regarding Tenant's

utility usage directly from the utility company. Tenant will not, without the written consent of Landlord, contract with a utility provider to service the Premises with any utility, including, but not limited to, telecommunications, electricity, water, sewer or gas, which is not previously providing such service to other tenants in the Building. Landlord shall in no event be liable for any interruption or failure of utility services on or to the Premises. If Tenant is billed directly by a public utility with respect to Tenant's energy usage at the Premises, then, upon request, Tenant shall provide monthly energy utility usage for the Premises to Landlord for the period of time requested by Landlord (in electronic or paper format) or, at Landlord's option, provide any written authorization or other documentation required for Landlord to request information regarding Tenant's energy usage with respect to the Premises directly from the applicable utility company.

(c)At the time of Landlord’s approval of Tenant’s Final Working Drawings (as such term is defined in the Work Letter) and of any proposed Alterations, Landlord may designate any improvements which Landlord reasonably believes will cause there to be wear and tear of any related dedicated HVAC system(s) or other building systems within the Premises or the Project (“Tenant’s Wear and Tear”) that is significantly greater than that which would be customary for premises being used for normal general office uses (“Normal Wear and Tear”), because of the hours during which such dedicated HVAC system(s) or building systems will be in use, the impact which equipment being operated by Tenant within the Premises will have on such dedicated HVAC system(s) or building systems, or other similar factors (the extent to which Tenant’s Wear and Tear exceeds Normal Wear and Tear being referred to herein as “Excess Wear and Tear”). If Landlord makes such a designation and Tenant constructs the improvements in question, then the incremental cost of operating the dedicated HVAC system(s) and/or building systems due to the Excess Wear and Tear along with the incremental cost of maintaining, repairing and replacing all or any portion of the dedicated HVAC system(s) and/or building systems resulting from such Excess Wear and Tear shall be paid by Tenant within thirty (30) days after written demand from Landlord as Additional Rental.

(d)HVAC shall be supplied to the Premises from 7:00 A.M. to 7:00 P.M. Monday through Friday and 8:00 A.M. to 1:00 P.M., Saturdays (collectively, the “Business Hours”), except for the date of observation of New Year’s Day, Independence Day, Labor Day, Memorial Day, Thanksgiving Day, and Christmas Day, and at Landlord’s good faith discretion, other state and nationally recognized holidays selected by Landlord (collectively, the “Holidays”); provided, however, that if Tenant desires HVAC to be provided to the Premises during hours (“Non-Business Hours”) other than Business Hours (“After Hours HVAC”), Tenant shall provide Landlord with prior written notice (which at a minimum shall be delivered not less than 24 hours prior to Tenant’s desired After Hours HVAC use).  Tenant shall pay to Landlord an amount equal to twenty-five dollars ($25) per hour for each hour of After Hours HVAC supplied to Tenant hereunder (the “After Hours HVAC Rate”) within ten (10) days of receipt of a bill therefor.  Landlord may reasonably increase the After Hours HVAC Rate to reflect changes in costs following the Lease Commencement Date. Tenant shall be responsible for and shall pay to Landlord any additional costs (including, without limitation, the costs of installation of additional HVAC equipment) incurred by Landlord because of the failure of the HVAC system to perform its function due to the occupancy of the Premises by more than one (1) person per 150 feet of RSF of the Premises, arrangement of partitioning in the Premises or changes or alterations thereto or from any use by Tenant of heat-generating machinery or equipment other than normal office equipment.

(e)Tenant agrees that Landlord shall not be liable for damages, by abatement of Rent or otherwise, for failure to furnish or delay in furnishing any service or utility, or for any diminution in the quality or quantity thereof, whether such failure or delay or diminution is occasioned, in whole or in part, by repairs, replacements, or improvements, by Force Majeure, by any strike, lockout or other labor trouble, by inability to secure electricity, gas, water, or other fuel at the Building or Project, by any accident or casualty whatsoever, by act or default of Tenant or other parties, or by any other cause; and such failures or delays or diminution shall never be deemed to constitute an eviction or disturbance of Tenant’s use and possession of the Premises or, except as expressly provided in this Lease, relieve Tenant from paying Rent or performing any of its obligations under this Lease. Furthermore, Landlord shall not be liable under any circumstances

for a loss of, or injury to, property or for injury to, or interference with, Tenant’s business, including, without limitation, loss of profits, however occurring, through or in connection with or incidental to a failure of Tenant to receive any of the services or utilities as set forth in this Section 22. Notwithstanding the foregoing, if there is Service Failure (as defined below) that continues for not less than three (3) consecutive Business Days, then Tenant, as its sole remedy therefor, shall be entitled to an abatement of Base Rental for each day during the period beginning on the fourth (4th) consecutive Business Day of the Service Failure and ending on the day the Service Failure has been abated. As used herein, “Service Failure” shall mean a material interruption or termination occurring during the period of construction of Landlord’s Work of any utility to be provided to Tenant at the Premises, which such interruption or termination is solely a result of Landlord’s gross negligence or willful misconduct in the course of Landlord’s Work.

23.Waiver of Jury Trial.

If either party commences litigation against the other for the specific performance of this Lease, for damages for the breach hereof or otherwise for enforcement of any remedy hereunder or at law, the parties hereto agree to and hereby do waive any right to a trial by jury.

24.Time.

Time is of the essence of this Lease and each of its provisions and whenever a certain day is stated for payment or performance of any obligation of Tenant or Landlord, the same enters into and becomes a part of the consideration hereof.

25.Subordination and Attornment.

(a)Except to the extent that Landlord’s mortgagee (or lessor under a ground lease) elects to make the Lease senior to the mortgage (or ground lease) pursuant to Section 25(b), Tenant agrees that this Lease and all rights of Tenant hereunder are and shall be subject and subordinate to any ground or underlying lease which may hereafter be in effect regarding the Project or any component thereof, to any mortgage now or hereafter encumbering the Premises or the Project or any component thereof, to all advances made or hereafter to be made upon the security of such mortgage, to all amendments, modifications, renewals, consolidations, extensions, and restatements of such mortgage, and to any replacements and substitutions for such mortgage. The terms of this provision shall be self-operative and no further instrument of subordination shall be required. Tenant, upon request of any party in interest, shall execute within ten (10) days of written request by Landlord such instrument or certificates as may be reasonably required to carry out the intent hereof, whether said requirement is that of Landlord or any other party in interest, including, without limitation, any mortgagee. If Landlord or its mortgagee requests the same, Tenant agrees to execute, acknowledge and deliver within ten (10) days following demand a subordination, non-disturbance and attornment agreement upon such mortgagee’s commercially reasonable form evidencing such subordination of this Lease to the lien of the mortgage or lease. Tenant hereby irrevocably agrees that if Tenant fails to execute and deliver such instrument or instruments within such ten (10) day period, Landlord may provide to Tenant a second written request with respect thereto, and that if Tenant fails to timely execute and deliver such instrument or instruments within three (3) days after the date of Landlord’s second written request therefor, Tenant hereby irrevocably authorizes Landlord to execute and deliver in the name of Tenant any such commercially reasonable instrument or instruments, provided that such authorization shall in no way relieve Tenant from the obligation of executing such instruments or certificates.

(b)If any mortgagee or lessor under a ground or underlying lease elects to have this Lease superior to its mortgage or lease and signifies its election in the instrument creating its lien or lease or by separate recorded instrument, then this Lease shall be superior to such mortgage or lease, as the case may be. The term “mortgage”, as used in this Lease, includes any deed of trust, deed to secure debt, or security

deed and any other instrument creating a lien in connection with any other method of financing or refinancing. The term “mortgagee”, as used in this Lease, refers to the holder(s) of the indebtedness secured by a mortgage.

(c)In the event any proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under, any mortgage covering the Premises or the Project, or in the event the interests of Landlord under this Lease shall be transferred by reason of deed in lieu of foreclosure or other legal proceedings, or in the event of termination of any lease under which Landlord may hold title, if elected by the transferee following such foreclosure or other transfer, and so long as such party recognizes and agrees to be bound by the Lease and to not disturb the Tenant’s quiet enjoyment thereof, Tenant shall attorn to the transferee or purchaser at foreclosure or under power of sale, or the lessor of Landlord upon such lease termination, as the case may be (sometimes hereinafter called “such person”), without any deductions or off set whatsoever, and shall recognize and be bound and obligated hereunder to such person as the Landlord under this Lease; provided, however, that no such person shall be (i) bound by any payment of Rent for more than one (1) month in advance, except prepayments in the nature of security for the performance by Tenant of its obligations under this Lease (and then only if such prepayments have been deposited with and are under the control of such person); (ii) bound by any amendment or modification of this Lease made without the express written consent of the mortgagee or lessor of the Landlord, as the case may be; (iii) obligated to cure any defaults under this Lease of any prior landlord (including Landlord); provided, however, that such person shall be responsible for ongoing maintenance and repair obligations of the Landlord; (iv) liable for any act or omission of any prior landlord (including Landlord); (v) subject to any offsets or defenses which Tenant might have against any prior landlord (including Landlord); or (vi) bound by any warranty or representation of any prior landlord (including Landlord) relating to work performed by any prior landlord (including Landlord) under this Lease. Tenant agrees to execute any attornment agreement not in conflict herewith requested by Landlord, the mortgagee or such person. Tenant’s obligation to attorn to such person shall survive the exercise of any such power of sale, foreclosure or other proceeding. Tenant agrees that the institution of any suit, action or other proceeding by any mortgagee to realize on Landlord’s interest in the Premises or the Building pursuant to the powers granted to a mortgagee under its mortgage, shall not, by operation of law or otherwise, result in the cancellation or termination of the obligations of the Tenant hereunder.

26.Estoppel Certificates.

Within ten (10) days after written request therefor from Landlord, Tenant agrees to execute and deliver to Landlord in recordable form an estoppel certificate addressed to Landlord, any mortgagee or assignee of Landlord’s interest in, or purchaser of, the Premises or the Project or any part thereof, which shall be substantially in the form of Exhibit H attached hereto or in such other commercially reasonable form as may be required by same. Such certificate shall also include such other information as may reasonably be required by such mortgagee, assignee, purchaser or Landlord. Any such certificate may be relied upon by Landlord, any mortgagee, proposed mortgagee, assignee, purchaser and any other party to whom such certificate is addressed. Tenant hereby irrevocably agrees that if Tenant fails to execute and deliver such certificate or within such ten (10) day period, Landlord may provide to Tenant a second written request with respect thereto and that failure of Tenant to timely execute and deliver such estoppel certificate or other instruments within three (3) days after the date of Landlord’s second written request therefor shall constitute an acceptance of the Premises and an acknowledgment by Tenant that statements included in the form of estoppel certificate delivered by Landlord are true and correct, without exception.

27.Cumulative Rights.

All rights, powers and privileges conferred hereunder upon the parties hereto shall be cumulative to, but not restrictive of, or in lieu of those conferred by law.

28.Holding Over.

If Tenant remains in possession after expiration or termination of the Lease Term with or without the Landlord’s written consent, Tenant shall become a tenant-at-sufferance, and there shall be no renewal or extension of this Lease by operation of law. During the period of any such holding over, all provisions of this Lease shall be and remain in effect except that the monthly rental shall be (i) one hundred fifty percent (150%) of the amount of Rent (including any adjustments as provided herein) payable for the last full calendar month of the Lease Term, including renewals or extensions, for the initial four (4) months of holdover and (ii) from and after the beginning of the fifth month of holdover one hundred seventy-five percent (175%) of the amount of Rent (including any adjustments as provided herein) payable for the last full calendar month of the Lease Term, including renewals or extensions. The inclusion of the preceding sentence in this Lease shall not be construed as the Landlord’s consent for Tenant to hold over. Landlord hereby expressly reserves the right to require Tenant to surrender possession of the Premises to Landlord as provided in this Lease upon the expiration or other termination of this Lease. The provisions of this Section 28 shall not be deemed to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or at law. If Tenant fails to surrender the Premises upon the termination or expiration of this Lease, in addition to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless from all loss, costs (including reasonable attorneys’ fees) and liability resulting from such failure, including, without limiting the generality of the foregoing, any claims made by any succeeding tenant founded upon such failure to surrender, any consequential damages and any lost profits resulting therefrom.

29.Surrender of the Premises.

Upon the expiration or other termination of this Lease, Tenant shall quit and surrender to Landlord the Premises and every part thereof, and any Alterations, broom clean and in good condition and state of repair, reasonable wear and tear and damage due to casualty or condemnation excepted. If Tenant is not then in default, Tenant shall remove all personalty and equipment not attached to the Premises that it has placed upon the Premises, and repair any damage caused by such removal. At Landlord’s option, Tenant shall also be responsible for the removal of any portion of the Tenant Improvements which Landlord reasonably concludes, and provides written notice thereof to Tenant not less than sixty (60) days prior to the end of the Lease Term, are not customary improvements for a first-class office building; provided that the removal of such Tenant Improvements shall be effected by Tenant without damage to the remainder of the Premises or the Building and without interference with the business or operations of Landlord or any other tenant of the Project. If Tenant shall fail or refuse to remove all of Tenant’s effects, personalty and equipment from the Premises upon the expiration or termination of this Lease for any cause whatsoever or upon the Tenant being dispossessed by process of law or otherwise, such effects, personalty and equipment shall be deemed conclusively to be abandoned and may be appropriated, sold, stored, destroyed or otherwise disposed of by Landlord without written notice to Tenant or any other party and without obligation to account for them. Tenant shall pay Landlord on demand any and all reasonable expenses incurred by Landlord in the removal of such property, including, without limitation, the cost of repairing any damage to the Building or Project caused by the removal of such property and storage charges (if Landlord elects to store such property). Tenant shall, at least sixty (60) days before the last day of the Lease Term, arrange to meet Landlord for a joint inspection of the Premises. In the event of Tenant’s failure to arrange such joint inspection, Landlord’s inspection at or after Tenant’s vacation of the Premises shall be deemed correct for purposes of determination of Tenant’s responsibility for repairs and restoration. The covenants and conditions of this Section 29 shall survive any expiration or termination of this Lease.

30.Notices.

All notices required or permitted to be given hereunder shall be in writing and may be delivered in person to either party or may be sent by nationally recognized overnight courier or by United States mail, certified, return receipt requested, postage prepaid. Any such notice shall be deemed received by the party to whom it was sent (i) in the case of personal delivery or courier delivery, on the date of delivery to such party, and (ii) in the case of certified mail, on the date receipt is acknowledged on the return receipt for such notice or, if delivery is rejected or refused or the U.S. Postal Service is unable to deliver same because of changed address of which no notice was given pursuant hereto, the first date of such rejection, refusal or inability to deliver. All such notices shall be addressed to Landlord or Tenant at their respective address set forth hereinabove in the Basic Lease Information or at such other address as either party shall have theretofore given to the other by notice as herein provided. If Tenant is notified in writing of the identity and address of the Landlord’s mortgagee or ground or underlying lessor, Tenant shall give to such mortgagee or ground or underlying lessor written notice of any default by Landlord under the terms of this Lease by registered or certified mail, and such mortgagee or ground or underlying lessor shall be given a reasonable opportunity to cure such default prior to Tenant’s exercising any remedy available to Tenant.

31.Damage or Theft of Personal Property.

As a material part of the consideration to Landlord, all personal property brought into Premises by Tenant, or Tenant’s employees or business visitors, shall be at the risk of Tenant only, and Landlord shall not be liable for theft thereof or any damage thereto occasioned by any act or omission of co-tenants, occupants, invitees or other users of the Building or any other person. Tenant acknowledges Landlord shall not be providing any security for the Premises, Building or Project. Landlord shall not at any time be liable for damage to any property in or upon the Premises which results from power surges or other deviations from the constancy of electrical service or from gas, smoke, water, or rain, which issues or leaks from or forms upon any part of the Building or from the pipes or plumbing work of the same, or from any other place whatsoever.

32.Eminent Domain.

(a)If all or part of the Premises is taken for any public or quasi public use by virtue of the exercise of the power of eminent domain or by private purchase in lieu thereof, this Lease shall terminate as to the part so taken as of the date of taking, and, in the case of a partial taking, either Landlord or Tenant shall have the right to terminate this Lease as to the balance of the Premises by written notice to the other within thirty (30) days after such date; provided, however, that a condition to the exercise by Tenant of such right to terminate shall be that the portion of the Premises taken shall be of such extent and nature as substantially to handicap, impede or impair Tenant’s use of the balance of the Premises. If title to so much of the Building is taken that a reasonable amount of reconstruction thereof will not in Landlord’s sole discretion result in the Building being a practical improvement and reasonably suitable for use for the purpose for which it is designed, then this Lease shall terminate on the date that the condemning authority actually takes possession of the part so condemned or purchased.

(b)If this Lease is terminated under the provisions of this Section 32, Rent shall be apportioned and adjusted as of the date of termination.

(c)If there is a partial taking of the Building and this Lease is not thereupon terminated under the provisions of this Section 32, then this Lease shall remain in full force and effect, and Landlord shall, within a reasonable time thereafter, repair or reconstruct the remaining portion of the Building to the extent necessary to make the same a complete architectural unit; provided that in complying with its obligations hereunder Landlord shall not be required to expend more than the net proceeds of the condemnation award which are paid to Landlord, and which the Landlord’s mortgagee permits Landlord to use for this purpose. In such case, the rent shall be proportionately abated based upon the square feet of the Premises taken as compared to the total square feet of the Premises originally.

(d)All compensation awarded or paid upon a total or partial taking of the Premises or the Building shall belong to and be the property of Landlord without any participation by Tenant. Nothing herein shall be construed to preclude Tenant from prosecuting any claim directly against the condemning authority for moving expenses, loss of business, for damage to, and cost of removal of, trade fixtures, furniture and other personal property belonging to Tenant, and for the unamortized cost of leasehold improvements to the extent same were installed at Tenant’s expense (and not with the proceeds of the Tenant Improvement Allowance); provided, however, that no such claim shall diminish or adversely affect Landlord’s award. In no event shall Tenant have or assert a claim for the value of any unexpired term of this Lease. Subject to the foregoing provisions of this Section 32, Tenant hereby assigns to Landlord any and all of its right, title and interest in or to any compensation awarded or paid for the fee as a result of any such taking.

(e)Notwithstanding anything to the contrary contained in this Section 32, if, during the Lease Term, the use or occupancy of any part of the Building or the Premises shall be taken or appropriated temporarily for a period of one hundred eighty (180) days or less for any public or quasi-public use under any governmental law, ordinance, or regulations, or by right of eminent domain, this Lease shall be and remain unaffected by such taking or appropriation and Tenant shall continue to pay in full all Rent payable hereunder by Tenant during the Lease Term. In the event of any such temporary appropriation or taking, Tenant shall be entitled to receive that portion of any award which represents compensation for the loss of use or occupancy of the Premises during the Lease Term, and Landlord shall be entitled to receive that portion of any award which represents the cost of restoration and compensation for the loss of use or occupancy of the Premises after the end of the Lease Term.

33.Parties.

The term “Landlord,” as used in this Lease, shall include Landlord and its assigns and successors. Should Landlord’s interest in the Premises cease to exist for any reason during the Lease Term, then notwithstanding the happening of such event, this Lease nevertheless shall remain in full force and effect, and Tenant hereby agrees to attorn to the then owner of the Premises. The term “Tenant” shall include Tenant and its heirs, legal representatives and successors, and shall also include Tenant’s assignees and sublessees, if this Lease shall be validly assigned or the Premises sublet for the balance of the Lease Term or any renewals or extensions thereof. Landlord’s right to transfer or assign Landlord’s interest in and to the Premises, or any part or parts thereof, shall be unrestricted; in the event of any such transfer or assignment by Landlord which includes the Premises, upon the assignee’s or transferee’s assumption of the obligations of Landlord arising after the effective date of the transfer, Landlord’s obligations to Tenant hereunder shall cease as of the date of transfer and assumption and Tenant shall look only and solely to Landlord’s assignee or transferee for performance thereof.

34.Liability of Tenant.

(a)Tenant hereby assumes all risk of damage to property and injury to persons, in, on, or about the Premises from any cause whatsoever including without limiting the generality of the foregoing, whether caused by water leakage of any character from the roof, walls, or other portion of the Premises or the Building, the Project, or caused by gas, fire, oil, electricity, or any cause whatsoever (other than the intentional or willful misconduct of Landlord and its agents and employees), in, on, or about the Premises, the Building, the Project or any part thereof and agrees that Landlord, and its partners, joint venturers, members, shareholders, lenders and mortgagees, and their respective officers, agents, property managers, servants, employees, and independent contractors (collectively, “Landlord Parties”) shall not be liable for, and are hereby released from any responsibility for, any damage to property or injury to persons or resulting from the loss of use thereof, which damage or injury is sustained by Tenant or by other persons claiming through Tenant.

(b)Tenant shall indemnify and hold the Landlord Parties harmless from and defend Landlord and the other Landlord Parties against any and all loss, cost, damage, injury, expense and liability, including, without limitation, court costs and reasonable attorneys’ fees (collectively, “Claims”): (i) incurred in connection with or arising from Tenant’s occupancy or use of, in or on the Premises (including, without limitation, Tenant’s installation, placement and removal of Tenant Improvements, Alterations, fixtures and/or equipment in, on or about the Premises); (ii) occurring in, on, or about any other portion of the Project to the extent such injury or damage shall be caused by the negligence or willful misconduct of Tenant or of the contractors, agents, servants, employees, licensees, invitees, guests or visitors of Tenant (collectively, the “Tenant Parties”) in, on or about the Premises, Building and Project; or (iii) arising from any breach of this Lease by Tenant. Tenant further agrees to indemnify and hold the Landlord Parties harmless from, and defend the Landlord Parties against, any and all Claims arising from the conduct of any work or business of Tenant Parties in or about the Project, including any release, discharge, storage or use of any Hazardous Substance, hazardous waste, toxic substance, oil, explosives, asbestos, or similar material. Notwithstanding anything contained herein to the contrary, Tenant’s indemnification obligations set forth herein shall not apply to any Claims arising out of or relating to any gross negligence, willful misconduct or breach of the Lease by any Landlord Parties. In the event of a discrepancy between the terms of this Section and the terms of Section 39(concerning Hazardous Substance liability), the latter shall control. Nothing in this Section 34is intended to nor shall it be deemed to override the provisions of Section 16.

35.Force Majeure.

Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, acts of war, terrorist acts, inability to obtain services, labor, or materials or reasonable substitutes therefor, governmental actions, civil commotions, moratorium, adverse weather, delays in receipt of permits, fire or other casualty, and other causes beyond the reasonable control of the party obligated to perform, except with respect to the obligations imposed with regard to Rent and other charges to be paid by Tenant pursuant to this Lease (collectively, a “Force Majeure”), notwithstanding anything to the contrary contained in this Lease, shall excuse the performance of such party for a period equal to any such prevention, delay or stoppage and, therefore, if this Lease specifies a time period for performance of an obligation of either party, that time period shall be extended by the period of any delay in such party’s performance caused by a Force Majeure. The foregoing shall in not any way eliminate or defer any obligation of Tenant to pay Rent for the period in which a Force Majeure event occurs, except to the extent set forth in Section 20 hereof.

36.Landlord’s Liability.

(a)Landlord and the Landlord Parties shall have no personal liability with respect to any of the provisions of this Lease. If Landlord is in default with respect to its obligations under this Lease, Tenant shall look solely to the equity of Landlord in and to the Project for satisfaction of Tenant’s remedies, if any. It is expressly understood and agreed that Landlord’s liability under the terms of this Lease shall in no event exceed the amount of its interest in and to said Project. In no event shall any of the Landlord Parties be personally liable with respect to any of the provisions of this Lease and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant. Under no circumstances shall Landlord or any of the Landlord Parties be liable for injury to Tenant’s business or for any loss of income or profit therefrom. All obligations of Landlord hereunder shall be construed as covenants, not conditions; and, except as may be otherwise expressly provided in this Lease, Tenant may not terminate this Lease for breach of Landlord’s obligations hereunder.

(b)Except to the extent caused by the negligence or willful misconduct of any Tenant Party, Landlord shall indemnify and hold Tenant harmless from and against any and all claims or liability for any injury or damage to any person or property including any reasonable attorney’s fees (but excluding any consequential damages or loss of business) occurring in, on, or about the Project to the extent such injury

or damage is caused by the intentional or willful misconduct of Landlord, its employees, its property manager, its contractors, its agents, or its property manager’s employees; provided, however, that the foregoing indemnity shall not include claims or liability to the extent waived by Tenant pursuant to Section 34. Further, (i) in the event of a discrepancy between the terms of this Section and the terms of Section 39 concerning Hazardous Substances liability, the latter shall control; and (ii) nothing in this Section 36(b) is intended to nor shall it be deemed to override the provisions of Section 16.

(c)Except as set forth in Section 28 of this Lease, neither party shall be liable to the other or to any other person for any consequential damages, special or punitive damages, or for loss of business, revenue, income or profits even if caused by the active or passive negligence, or intentional or willful misconduct, of any party, or any Tenant Party or Landlord Party, and each party hereby waives any and all claims for any such damages. The provisions of this Section 36 shall survive the expiration or sooner termination of this Lease.

37.Landlord’s Covenant of Quiet Enjoyment.

Provided Tenant performs the terms, conditions and covenants of this Lease, and subject to the terms and provisions hereof, including Landlord’s right to perform any Construction Work, and the rights of any mortgagees or ground lessors of the Project, Landlord covenants and agrees to take all necessary steps to secure and to maintain for the benefit of Tenant the quiet and peaceful possession of the Premises, for the Lease Term, without hindrance, claim or molestation by Landlord or any other person lawfully claiming under Landlord. The foregoing covenant is in lieu of any other covenant, express or implied.

38.Letter of Credit.

(a)Delivery of Letter of Credit. Concurrently with the execution and delivery of this Lease, Tenant shall deliver to Landlord, as protection for the full and faithful performance by Tenant of all of its obligations under this Lease and for all losses and damages Landlord may suffer (or which Landlord reasonably estimates that it may suffer) as a result of any breach or default by Tenant under this Lease, an irrevocable and unconditional negotiable standby letter of credit (the “Letter of Credit”) containing the terms required herein, running in favor of Landlord, issued by, a solvent, nationally recognized bank with a long term rating from Standard and Poor’s Professional Rating Service of A or a comparable rating from Moody’s Professional Rating Service or higher, under the supervision of the Superintendent of Banks of the State of California, or a national banking association (the “Bank”), and payable upon presentation to an operating retail branch located in San Francisco, California of such Approved Issuer, in an amount equal to One Million Thirty Thousand and No/100 Dollars ($1,030,000.00) (the “Letter of Credit Amount”). The Letter of Credit shall (a) be “callable” at sight, irrevocable and unconditional, (b) be maintained in effect, whether through renewal (pursuant to a so-called “evergreen provision”) or extension, for the period from the Lease Commencement Date and continuing until the date (the “LC Expiration Date”) that is one hundred twenty (120) days after the expiration of the Term, and Tenant shall deliver to Landlord a new Letter of Credit, certificate of renewal or extension amendment at least sixty (60) days prior to the expiration of the Letter of Credit then held by Landlord, without any action whatsoever on the part of Landlord, (c) be fully transferrable by Landlord, its successors and assigns, (d) permit partial draws and multiple presentations and drawings, and (e) be otherwise subject to the Uniform Customs and Practices for Documentary Credits (2007-Rev), International Chamber of Commerce Publication #600, or the International Standby Practices-ISP 98, International Chamber of Commerce Publication #590. In addition to the foregoing, the form and terms of the Letter of Credit (and the Bank issuing the same) shall be acceptable to Landlord, in Landlord’s reasonable discretion. If Landlord notifies Tenant in writing that the Bank which issued the Letter of Credit has become financially unacceptable because the above requirements are not met or the Bank has filed bankruptcy or reorganization proceedings or is placed into a receivership or conservatorship, or the financial condition of the Bank has changed in any other materially adverse way, then Tenant shall have thirty (30) days to provide

Landlord with a substitute Letter of Credit complying with all of the requirements of this Section 38. If Tenant does not so provide Landlord with a substitute Letter of Credit within such thirty (30) day period, then Landlord, or its then managing agent, shall have the right to draw upon the then current Letter of Credit. In addition to Landlord’s rights to draw upon the Letter of Credit in Section 38(d) below and as otherwise described in this Section 38, Landlord, or its then managing agent, shall have the right to draw down an amount up to the face amount of the Letter of Credit if any of the following shall have occurred or be applicable: (A) such amount is past-due beyond applicable notice and cure periods under the terms and conditions of this Lease; (B) Tenant has filed a voluntary petition under the U.S. Bankruptcy Code or any state bankruptcy code (collectively, “Bankruptcy Code”), (C) an involuntary petition has been filed against Tenant under the Bankruptcy Code, (D) the Bank has notified Landlord that the Letter of Credit will not be renewed or extended through the LC Expiration Date, or (E) Tenant has failed to deliver a new Letter of Credit or amendment to the existing Letter of Credit increasing the stated amount as required under the terms of this Lease. The Letter of Credit will be honored by the Bank regardless of whether Tenant disputes Landlord’s right to draw upon the Letter of Credit. Tenant shall be responsible for paying the Bank’s fees in connection with the issuance of any Letter of Credit, certificate of renewal or extension amendment.

(b)Transfer of Letter of Credit. The Letter of Credit shall provide that Landlord, its successors and assigns, may, at any time and without notice to Tenant and without first obtaining Tenant’s consent thereto, transfer (one or more times) all or any portion of its interest in and to the Letter of Credit to another party, person or entity as provided hereinbelow. In the event of a transfer of Landlord’s interest in the Building, Landlord shall transfer the Letter of Credit, in whole or in part, to the transferee and thereupon Landlord shall, without any further agreement between the parties, be released by Tenant from all liability therefor arising after such transfer, and it is agreed that the provisions hereof shall apply to every transfer or assignment of the whole or any portion of said Letter of Credit to a new landlord. In connection with any such transfer of the Letter of Credit by Landlord, Tenant shall, at Tenant’s sole cost and expense, execute and submit to the Bank such applications, documents and instruments as may be necessary to effectuate such transfer, and Tenant shall be responsible for paying the Bank’s transfer and processing fees in connection therewith.

(c)In General. If, for any reason, (a) the amount of the Letter of Credit becomes less than the Letter of Credit Amount, or (b) the Letter of Credit Amount is required to be increased due to an increase in the RSF of the Premises, Tenant shall, within five (5) business days thereafter with respect to clauses (a) and (c) above, or ten (10) business days thereafter with respect to clause (b) above, either provide Landlord with a cash security deposit equal to such difference or provide Landlord with additional letter(s) of credit in an amount equal to the deficiency (or a replacement letter of credit in the total Letter of Credit Amount), and any such additional (or replacement) letter of credit shall comply with all of the provisions of this Section 38, and if Tenant fails to comply with the foregoing, then, notwithstanding anything to the contrary contained in Section 17(a) above, the same shall constitute an incurable default by Tenant under this Lease (without the need for any additional notice and/or cure period). Tenant further covenants and warrants that it will neither assign nor encumber the Letter of Credit or any part thereof and that neither Landlord nor its successors or assigns will be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance. Without limiting the generality of the foregoing, if the Letter of Credit expires earlier than the LC Expiration Date, Landlord will accept a renewal thereof (such renewal letter of credit to be in effect and delivered to Landlord, as applicable, not later than sixty (60) days prior to the expiration of the Letter of Credit), which shall be irrevocable and automatically renewable as above provided through the LC Expiration Date upon the same terms as the expiring Letter of Credit or such other terms as may be acceptable to Landlord in its reasonable discretion. However, if the Letter of Credit is not timely renewed, or if Tenant fails to maintain the Letter of Credit in the amount and in accordance with the terms set forth in this Section 38, Landlord shall have the right to present the Letter of Credit to the Bank in accordance with the terms of this Section 38, and the proceeds of the Letter of Credit may be applied by

Landlord against any Rent payable by Tenant under this Lease that is not paid when due (subject to applicable notice and cure periods) and/or to pay for all losses and damages that Landlord has suffered or that Landlord reasonably estimates that it will suffer as a result of any breach or default by Tenant under this Lease (subject to applicable notice and cure periods), including, but not limited to, all damages or rent due upon termination of this Lease pursuant to Section 1951.2 of the California Civil Code. Any unused proceeds shall constitute the property of Landlord and need not be segregated from Landlord’s other assets. Landlord agrees to pay to Tenant within thirty (30) days after the LC Expiration Date the amount of any proceeds of the Letter of Credit received by Landlord and not applied against any Rent payable by Tenant under this Lease that was not paid when due or used to pay for any losses and/or damages suffered by Landlord (or reasonably estimated by Landlord that it will suffer) as a result of any breach or default by Tenant under this Lease (including, but not limited to, all damages or rent due upon termination of this Lease pursuant to Section 1951.2 of the California Civil Code); provided, however, that if prior to the LC Expiration Date a voluntary petition is filed by Tenant, or an involuntary petition is filed against Tenant by any of Tenant’s creditors, under the Bankruptcy Code, then Landlord shall not be obligated to make such payment in the amount of the unused Letter of Credit proceeds until either all preference issues relating to payments under this Lease have been resolved in such bankruptcy or reorganization case or such bankruptcy or reorganization case has been dismissed.

(d)Application of Letter of Credit. Tenant hereby acknowledges and agrees that Landlord is entering into this Lease in material reliance upon the ability of Landlord to draw upon the Letter of Credit upon the occurrence of any breach or default on the part of Tenant under this Lease. If Tenant shall breach any provision of this Lease or otherwise be in default hereunder, in each case beyond applicable notice and cure periods, Landlord may, but without obligation to do so, and without notice to Tenant, draw upon the Letter of Credit, in part or in whole, to cure any breach or default of Tenant and/or to compensate Landlord for any and all damages of any kind or nature sustained, or that Landlord reasonably estimates that it will sustain, resulting from Tenant’s breach or default, including, but not limited to, all damages or rent due upon termination of this Lease pursuant to Section 1951.2 of the California Civil Code. The use, application or retention of the Letter of Credit, or any portion thereof, by Landlord shall not prevent Landlord from exercising any other right or remedy provided by this Lease or by any Laws, it being intended that Landlord shall not first be required to proceed against the Letter of Credit, and the use, application or retention of the Letter of Credit shall not operate as a limitation on any recovery to which Landlord may otherwise be entitled. Tenant agrees not to interfere in any way with payment to Landlord of the proceeds of the Letter of Credit, either prior to or following a “draw” by Landlord of any portion of the Letter of Credit, regardless of whether any dispute exists between Tenant and Landlord as to Landlord’s right to draw upon the Letter of Credit. No condition or term of this Lease shall be deemed to render the Letter of Credit conditional to justify the issuer of the Letter of Credit in failing to honor a drawing upon such Letter of Credit in a timely manner. Tenant agrees and acknowledges that (i) the Letter of Credit constitutes a separate and independent contract between Landlord and the Bank, (ii) Tenant is not a third party beneficiary of such contract, (iii) Tenant has no property interest whatsoever in the Letter of Credit or the proceeds thereof, and (iv) in the event Tenant becomes a debtor under any chapter of the Bankruptcy Code, neither Tenant, any trustee, nor Tenant’s bankruptcy estate shall have any right to restrict or limit Landlord’s claim and/or rights to the Letter of Credit and/or the proceeds thereof by application of Section 502(b)(6) of the U.S. Bankruptcy Code or otherwise.

(e)Security Deposit. Any proceeds drawn under the Letter of Credit and not applied as set forth above shall be held by Landlord as a security deposit (the “Deposit”). No trust relationship is created herein between Landlord and Tenant with respect to the Deposit, and Landlord shall not be required to keep the Deposit separate from its general accounts. The Deposit shall be held by Landlord as security for the faithful performance by Tenant of all of the provisions of this Lease to be performed or observed by Tenant. If Tenant fails to pay any Rent, or otherwise defaults with respect to any provision of this Lease, Landlord may (but shall not be obligated to), and without prejudice to any other remedy available to Landlord, use,

apply or retain all or any portion of the Deposit for the payment of any Rent in default or for the payment of any other sum to which Landlord may become obligated by reason of Tenant’s default, or to compensate Landlord for any loss or damage which Landlord may suffer thereby, including, without limitation, prospective damages and damages recoverable pursuant to California Civil Code Section 1951.2. Tenant waives the provisions of California Civil Code Section 1950.7, or any similar or successor laws now or hereinafter in effect, that restrict Landlord’s use or application of the Deposit, or that provide specific time periods for return of the Deposit. Without limiting the generality of the foregoing, Tenant expressly agrees that if Landlord terminates this Lease due to an Event of Default or if Tenant terminates this Lease in a bankruptcy proceeding, Landlord shall be entitled to hold the Deposit until the amount of damages recoverable pursuant to California Civil Code Section 1951.2 is finally determined. If Landlord uses or applies all or any portion of the Deposit as provided above, Tenant shall within ten (10) days after demand therefor, deposit cash with Landlord in an amount sufficient to restore the Deposit to the full amount thereof, and Tenant’s failure to do so shall, at Landlord’s option, be an Event of Default under this Lease. At any time that Landlord is holding proceeds of the Letter of Credit pursuant to this Section 38, Tenant may deposit a Letter of Credit that complies with all requirements of this Section 38, in which event Landlord shall return the Deposit to Tenant within ten (10) days after receipt of the Letter of Credit. If Tenant performs all of Tenant’s obligations hereunder, the Deposit, or so much thereof as has not previously been applied by Landlord, shall be returned, without payment of interest or other increment for its use, to Tenant (or, at Landlord’s option, to the last assignee, if any, of Tenant’s interest hereunder) within one hundred twenty (120) days following the later of the expiration of the Term or Tenant’s vacation and surrender of the Premises in accordance with the requirements of this Lease. Landlord’s return of the Deposit or any part thereof shall not be construed as an admission that Tenant has performed all of its obligations under this Lease. Upon termination of Landlord’s interest in this Lease, if Landlord transfers the Deposit (or the amount of the Deposit remaining after any permitted deductions) to Landlord’s successor in interest, and thereafter notifies Tenant of such transfer and the name and address of the transferee, then Landlord shall be relieved of any further liability with respect to the Deposit. Thereafter, Tenant shall look solely to the new owner or lessor for the return of said Deposit. The Deposit shall not be mortgaged, assigned or encumbered by Tenant. In the event of a permitted assignment under this Lease by Tenant, the Deposit may be held by Landlord as a deposit made by the permitted assignee in which event the Landlord shall have no further liability with respect to the return of said Deposit to the original Tenant.

39.Hazardous Substances.

Tenant hereby covenants and agrees that Tenant shall not cause or permit any Hazardous Substances to be generated, placed, held, stored, used, located or disposed of at the Project or any part thereof, except for such Hazardous Substances as are commonly and legally used or stored as a consequence of using the Premises for general office and administrative purposes, but only so long as the use or storage thereof do not pose a threat to public health or to the environment or would necessitate a “response action”, as that term is defined in “CERCLA” (as hereinafter defined), and so long as Tenant strictly complies or causes compliance with all applicable governmental rules and regulations concerning the use, storage, production, transportation and disposal of such Hazardous Substances. Promptly upon receipt of Landlord’s request, Tenant shall submit to Landlord true and correct copies of any reports filed by Tenant with any governmental or quasi-governmental authority regarding the generation, placement, storage, use, treatment or disposal of Hazardous Substances on or about the Premises. For purposes of this Section 39, “Hazardous Substances” shall mean and include those elements or compounds which are contained in the list of Hazardous Substances adopted by the United States Environmental Protection Agency (“EPA”) or in any list of toxic pollutants designated by Congress or the EPA or which are defined as hazardous, toxic, pollutant, infectious or radioactive by any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or imposing liability (including, without limitation, strict liability) or standards of conduct concerning, any hazardous, toxic or dangerous waste, substance or material, as now or at any time

hereinafter in effect (collectively “Environmental Laws”). Tenant hereby agrees to indemnify Landlord and hold Landlord harmless from and against any and all losses, liabilities, including strict liability, damages, injuries, expenses, including reasonable attorneys’ fees, costs of settlement or judgment and claims of any and every kind whatsoever paid, incurred or suffered by, or asserted against, Landlord by any person, entity or governmental agency for, with respect to, or as a direct or indirect result of, the presence in, or the escape, leakage, spillage, discharge, emission or release from, the Premises of any Hazardous Substances during the Term including, without limitation, any losses, liabilities, including strict liability, damages, injuries, expenses, including reasonable attorneys’ fees, costs of any settlement or judgment or claims asserted or arising under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), any so called federal, state or local “Superfund” or “Superlien” laws or any other Environmental Law; provided, however that such indemnification obligations of Tenant shall not apply to any Hazardous Substances which escape, leak, spill, discharge, are emitted or released onto or from the Premises or the Project as a result of the act or omission of Landlord or any Landlord Parties. The obligations of Tenant under this Section shall survive any expiration or termination of this Lease.

40.Broker.

Newmark Cornish & Carey has represented Landlord in this transaction and CBRE has represented Tenant (collectively, “Brokers”). Landlord and Tenant represent and warrant to each other that (except with respect to the Brokers) no broker, agent, commission salesperson, or other person has represented Landlord or Tenant in the negotiations for and procurement of this Lease and of the Premises and that (except with respect to the Brokers) no commissions, fees, or compensation of any kind are due and payable in connection herewith to any broker, agent, commission salesperson, or other person as a result of any act or agreement of Landlord or Tenant. Landlord and Tenant agree to indemnify and hold each other harmless from all loss, liability, damage, claim, judgment, cost or expense (including reasonable attorneys’ fees and court costs) suffered or incurred by the other party as a result of a breach by Landlord or Tenant, as applicable, of the representation and warranty contained in the immediately preceding sentence or as a result of Landlord’s or Tenant’s failure to pay commissions, fees, or compensation due to any broker who represented Landlord or Tenant, whether or not disclosed, or as a result of any claim for any fee, commission or similar compensation with respect to this Lease made by any broker, agent or finder (other than the Brokers) claiming to have dealt with Landlord or Tenant, whether or not such claim is meritorious.

41.Signage.

(a)Tenant shall have the right to install signage on the monument sign for the Building and on the exterior or interior of the Building subject to the prior written approval of Landlord, which approval may be withheld in Landlord’s reasonable discretion. If Landlord approves of the installation of any signage, the graphics, materials, color, design, lettering, lighting, size, illumination, specifications and exact location of Tenant's signage shall be subject to the prior written approval of Landlord, which approval shall not be unreasonably withheld, conditioned or delayed, and shall be consistent and compatible with the quality and nature of the Project and Landlord's standard signage program. In addition, Tenant's signage shall be subject to Tenant's receipt of all required governmental permits and approvals and shall be subject to all applicable Laws and to any covenants, conditions and restrictions affecting the Project. Tenant shall be responsible, at its sole cost and expense, for all costs associated with the design, fabrication, permitting, installation, repair, maintenance, replacement, removal of all Tenant’s signs and the repair of any damage to the Building resulting from the removal of such signage. Any signage rights granted by Landlord are personal to the Original Tenant executing this Lease and may not be assigned, voluntarily or involuntarily, to any person or entity other than a Permitted Transferee; provided, however, that the name of such Permitted Transferee is not an Objectionable Name. The sign rights granted to the Original Tenant hereunder are not assignable separate and apart from the Lease, nor may any sign right granted herein be separated from the Lease in any manner,

either by reservation or otherwise without Landlord’s consent or as otherwise expressly permitted in this Lease. “Objectionable Name” shall mean any name which relates to an entity which is of a character or reputation, or is associated with a political orientation or faction, which is inconsistent with the quality of the Project, or which would otherwise reasonably offend landlords of Class “A” buildings in Mountain View.

(b)Any signs, notices, logos, pictures, names or advertisements which are installed outside of the Premises and that are not permitted by the terms of this Lease may be removed without notice by Landlord at the sole expense of Tenant.

(c)Notwithstanding anything herein to the contrary, Tenant is solely responsible for obtaining all approvals, consents and permits, if any, from the City of Mountain View and/or any other applicable governmental agency necessary for Tenant to install and/or construct Tenant’s signage on the Building or on any existing monument sign, and Landlord does not represent to Tenant that any signage will be permitted by the City of Mountain View and/or any other applicable governmental agency. Landlord shall at no cost or expense to Landlord, reasonably cooperate with Tenant in securing permits, variances, and all other necessary approvals for the purposes of installing such signage, including signage not permitted as of the date hereof but sought by Tenant.

(d)Tenant’s right to maintain the exterior signage granted hereunder is expressly conditioned upon Tenant (or a Permitted Transferee) occupying for the conduct of its business not less than the entirety (100%) of the Premises.

42.Attorney Fees.

In the event of any legal action or proceeding brought by either party against the other arising out of this Lease, the Prevailing Party in such action shall be entitled to recover from the non-Prevailing Party therein reasonable attorneys’ fees and costs incurred in such action (including, without limitation, all costs of appeal) and such amount shall be included in any judgment rendered in such proceeding. For purposes of this Lease a party shall be considered the “Prevailing Party” to the extent that (1) such party initiated the litigation and substantially obtained the relief which it sought whether by judgment, voluntary agreement or action of the other party, trial or alternative dispute resolution process, (2) such party did not initiate the litigation and did not receive judgment in its favor, but the party receiving the judgment did not substantially obtain the relief which it sought, or (3) the other party to the litigation withdrew its claim or action without having substantially received the relief which it was seeking. Notwithstanding the foregoing, however, Landlord shall be deemed the Prevailing Party in any unlawful detainer or other action or proceeding instituted by Landlord based upon any default or alleged default of Tenant hereunder if (i) judgment is entered in favor of Landlord, or (ii) prior to trial or judgment Tenant pays all or any portion of the rent claimed by Landlord, vacates the Premises, or otherwise cures the default claimed by Landlord. If Landlord becomes involved in any litigation or dispute, threatened or actual, by or against anyone not a party to this Lease, but arising by reason of or related to any act or omission of Tenant or any Tenant Party, Tenant agrees to pay Landlord’s reasonable attorneys’ fees and other costs incurred in connection with the litigation or dispute, regardless of whether a lawsuit is actually filed.

43.Rooftop Rights.

(a)During the Lease Term and any extension thereof, Tenant shall have the right to install (in accordance with Sections 12 and 13 of this Lease), operate and maintain one or more satellite dish, antenna or other communication device (individually and collectively, the “Dish/Antenna”) for its own internal use, subject to Landlord’s reasonable approval. Tenant shall be solely responsible for obtaining and maintaining, at its cost, all necessary governmental and regulatory approvals and any other third party approval and shall promptly provide a copy of the same to Landlord as a condition to Tenant’s right to install, maintain or remove any such equipment. Tenant shall be solely responsible for the cost of installing, operating, maintaining and removing the Dish/Antenna. The Dish/Antenna shall be removed from the Premises on or prior to the end

of the Lease Term and Tenant shall promptly take all necessary action to repair any damage caused by such removal and to otherwise restore the Building to the condition that existed prior to the installation of the Dish/Antenna, reasonable wear and tear excepted.

(b)The installing, maintaining and repairing of the Dish/Antenna shall be performed by Tenant or Tenant’s authorized representative or contractors, at Tenant’s sole cost and risk. Tenant agrees to be responsible for any damage caused to the roof or any other part of the Building arising from or related to the Dish/Antenna or appurtenances.

(c)Tenant shall, at its sole cost and expense, and at its sole risk, install, operate and maintain the Dish/Antenna in a good and workmanlike manner, and in compliance with all Laws and matters of record now in effect or hereafter promulgated, of the Federal Government, including, without limitation, the Federal Communications Commission (the “FCC”), the Federal Aviation Administration (“FAA”) or any successor agency of either the FCC or FAA having jurisdiction over radio or telecommunications. Under this Lease, the Landlord and its agents assume no responsibility for the licensing, operation and/or maintenance of Tenant's equipment. Neither Landlord nor any Landlord Party shall be liable to Tenant for any stoppages or shortages of electrical power furnished to the Dish/Antenna because of any act, omission or requirement of the public utility serving the Project and Tenant shall not be entitled to any rental abatement for any such stoppage or shortage of electrical power. Neither Landlord nor any Landlord Party shall have any responsibility or liability for the conduct or safety of any of Tenant's representatives, repair, maintenance and engineering personnel while in or on any part of the roof.

(d)All roof equipment, including utilities and the Dish/Antenna, shall be screened from view with an opaque screen or fence architecturally integrated with the Building reasonably approved by Landlord. Tenant shall not be permitted to locate any third-party equipment on the roof, including but not limited to, cellular communications equipment or wireless equipment for use by parties other than Tenant.

44.Terrace Rights.

Tenant's use of the balconies and terraces affixed to the Building (collectively, the “Terraces”) shall at all times be in compliance with applicable Laws, rules, regulations and requirements, and on the terms and conditions set forth herein. Tenant shall not make any improvements or alterations to the Terraces or affix or place graphics, signs and/or insignias, and/or the like, and/or furniture, fixtures, equipment or other items of any kind whatsoever on the Terraces (“Tenant Terrace Property”) without Landlord's consent, and subject to any terms and conditions Landlord may impose on the use and installation thereof, all in Landlord’s sole and absolute discretion. Any such Tenant Terrace Property shall comply with the load requirements of the Terraces (it being understood that Tenant shall not place a load upon either of the Terraces that exceeds seventy-five (75) pounds per square foot of area "live load"). Any such Tenant Terrace Property must be secured to each applicable Terrace, and the method by which any such items are secured to such Terrace shall be subject to Landlord's prior written approval. Notwithstanding Landlord's review and approval of the method by which the Tenant Terrace Property is secured, Tenant shall remain solely liable for any liability arising from Tenant's placement of Tenant Terrace Property on the Terraces, and Landlord shall have no liability in connection therewith. Landlord shall have in its sole discretion the right to access the Terraces, to landscape and display plants on the Terraces, to make use of the Terraces, to place furniture, fixtures and equipment thereon, and to make any desired alterations or modifications to the Terraces, including the right to construct staircases that connect the same to the ground floor. Tenant, at its sole cost and expense, shall keep the Terraces in a clean condition. Tenant shall remove any Tenant Terrace Property upon the expiration or earlier termination of this Lease, and shall return the affected portion of the Terraces to the condition that the Terraces would have been in had no such Tenant Terrace Property been placed or installed thereon.

45.Miscellaneous.

(a)Submission of Lease. The submission of this Lease for examination or execution does not constitute an offer to lease and this Lease shall be effective only upon execution and delivery hereof by Landlord and Tenant.

(b)Severability. If any clause or provision of this Lease is illegal, invalid or unenforceable under present or future laws, the remainder of this Lease shall not be affected thereby, and in lieu of each clause or provision of this Lease which is illegal, invalid or unenforceable, there shall be added as a part of this Lease a clause or provision as nearly identical to the said clause or provision as may be legal, valid and enforceable.

(c)Entire Agreement. This Lease contains the entire agreement of the parties with respect to the subject matter of this Lease, and no representations, inducements, promises or agreements, oral or otherwise, between the parties not embodied herein shall be of any force or effect. This Lease supersedes and cancels any and all previous negotiations, arrangements, brochures, agreements, and understandings, if any, between the parties hereto or displayed by Landlord to Tenant with respect to the subject matter thereof, and none thereof shall be used to interpret or construe this Lease. This Lease may not be altered, waived, amended or extended except by an instrument in writing signed by Landlord and Tenant. This Lease is not in recordable form, and Tenant agrees not to record or cause to be recorded this Lease or any short form or memorandum thereof.

(d)Headings. The use of headings herein is solely for the convenience of indexing the various paragraphs hereof and shall in no event be considered in construing or interpreting any provision of this Lease.

(e)Governing Law. The laws of the State of California shall govern the validity, performance and enforcement of this Lease.

(f)Authority. If Tenant executes this Lease as a corporation, each of the persons executing this Lease on behalf of Tenant does hereby personally represent and warrant that Tenant is a duly incorporated or a duly qualified (if a foreign corporation) corporation and is fully authorized and qualified to do business in the State of California, that the corporation has full right and authority to enter into this Lease, and that each person signing on behalf of the corporation is an officer of the corporation and is authorized to sign on behalf of the corporation. If Tenant signs as a partnership, joint venture, or sole proprietorship or other business entity (each being herein called “Entity”), each of the persons executing on behalf of Tenant does hereby covenant and warrant that Tenant is a duly authorized and existing Entity, that Tenant has full right and authority to enter into this Lease, that all persons executing this Lease on behalf of the Entity are authorized to do so on behalf of the Entity, and that such execution is fully binding upon the Entity and its partners, joint venturers, members or principals, as the case may be. Upon the request of Landlord, Tenant shall deliver to Landlord documentation satisfactory to Landlord evidencing Tenant’s compliance with this Section 45(f), and Tenant agrees to promptly execute all necessary and reasonable applications or documents as reasonably requested by Landlord or required by the jurisdiction in which the Premises is located, to permit the issuance of necessary permits and certificates for Tenant’s use and occupancy of the Premises.

(g)Financial Statements. Upon Landlord’s written request therefor, but not more often than twice per year, Tenant shall promptly furnish to Landlord its financial statement with respect to Tenant for its most recent fiscal year prepared in accordance with generally accepted accounting principles and certified by a firm of nationally recognized certified public accountants as fairly presenting the financial condition of Tenant and the results of its operations for the previous twelve (12) months, which statement Landlord agrees to keep confidential and not use except in connection with Landlord’s administration and monitoring of this Lease and any proposed sale, loan or other transactions related to the Project. Notwithstanding the foregoing, for so long as Tenant’s (but not any Affiliate of Tenant) stock is

publicly traded on a nationally recognized stock exchange and Tenant’s financial statements are publicly filed, the foregoing requirement shall be inapplicable to Tenant.

(h)Joint and Several Liability. If Tenant comprises more than one person, corporation, partnership or other entity, the liability hereunder of all such persons, corporations, partnerships or other entities shall be joint and several.

(i)Non-Waiver. No waiver of any provision of this Lease shall be implied by any failure of Landlord or Tenant to enforce any remedy on account of the violation of such provision, even if such violation shall continue or be repeated subsequently. Any waiver by Landlord or Tenant of any provision of this Lease may only be in writing, and no express waiver shall affect any provision other than the one specified in such waiver and that one only for the time and in the manner specifically stated. No receipt of monies by Landlord from Tenant after the termination of this Lease shall in any way alter the length of the Lease Term or of Tenant’s right of possession hereunder or after the giving of any notice shall reinstate, continue or extend the Lease Term or affect any notice given Tenant prior to the receipt of such monies, it being agreed that after the service of notice or the commencement of a suit or after final judgment for possession of the Premises, Landlord may receive and collect any Rent due, and the payment of said Rent shall not waive or affect said notice, suit or judgment.

(j)Landlord’s Right to Cure Default and Payments by Tenant

(i)All covenants and agreements to be kept or performed by Tenant under this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any reduction of Rent. If Tenant shall fail to perform any of its performance obligations under this Lease, within a reasonable time after such performance is required by the terms of this Lease, Landlord may, but shall not be obligated to, after reasonable prior notice to Tenant, make any such payment or perform any such act on Tenant’s part without waiving its right based upon any default of Tenant and without releasing Tenant from any obligations hereunder.

(ii)Except as may be specifically provided to the contrary in this Lease, Tenant shall pay to Landlord, within fifteen (15) days after delivery by Landlord to Tenant of statements therefor: (i) sums equal to expenditures reasonably made and obligations incurred by Landlord in connection with the remedying by Landlord of Tenant’s defaults pursuant to the provisions of this Section 45(j); (ii) sums equal to all losses, costs, liabilities, damages and expenses referred to in Sections 15 and 34 of this Lease; and (iii) sums equal to all expenditures made and obligations incurred by Landlord in collecting or attempting to collect the Rent that is past due or in enforcing or attempting to enforce any rights of Landlord under this Lease or pursuant to law, including, without limitation, all legal fees and other amounts so expended. Tenant’s obligations under this Section shall survive the expiration or sooner termination of the Lease Term.

(k)Terms. The necessary grammatical changes required to make the provisions hereof apply either to corporations, partnerships, limited liability companies, individuals, men or women, as the case may require, shall in all cases be assumed as though in each case fully expressed.

(l)Relationship of Parties. Nothing contained in this Lease shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent, partnership, joint venture or any association between Landlord and Tenant, it being expressly understood and agreed that neither the method of computation of Rent nor any act of the parties hereto shall be deemed to create any relationship between Landlord and Tenant other than the relationship of landlord and tenant.

(m)Application of Payments. Landlord shall have the right to apply payments received from Tenant pursuant to this Lease, regardless of Tenant’s designation of such payments, to satisfy any obligations of Tenant hereunder, in such order and amounts as Landlord, in its sole discretion, may elect.

(n)Building Name and Signage. Landlord shall have the right at any time to change the name of the Project and to install, affix and maintain any and all signs on the exterior of any portion of the Project (other than the Building) as Landlord may, in Landlord’s sole discretion, desire. Tenant shall not use the name of the Building or Project or use pictures or illustrations of the Building or Project in advertising or other publicity, without the prior written consent of Landlord.

(o)Exhibits. Exhibits and any other attachments specified in the Basic Lease Information, are attached to and made a part of this Lease and incorporated into this Lease by this reference.

(p)Transportation Management. Tenant shall fully comply with all present or future programs intended to manage parking, transportation or traffic in and around the Project, and in connection therewith, Tenant shall take responsible action for the transportation planning and management of all employees located at the Premises by working directly with Landlord, any governmental transportation management organization or any other transportation-related committees or entities. Such programs may include, without limitation: (i) restrictions on the number of peak-hour vehicle trips generated by Tenant; (ii) increased vehicle occupancy; (iii) implementation of an in-house ridesharing program and an employee transportation coordinator; (iv) working with employees and any Project or area-wide ridesharing program manager; (v) instituting employer-sponsored incentives (financial or in-kind) to encourage employees to rideshare; and (vi) utilizing flexible work shifts for employees. Landlord shall use commercially reasonable efforts to obtain shuttle or similar transportation services (which may include joining an existing shuttle route) in order to provide transportation between the Project and the Mountain View Caltrain station (“Shuttle Services”). If Landlord obtains Shuttle Services, then, to the extent that such Shuttle Services service the entire Project on a non-exclusive basis, the cost thereof shall be an Operating Expense pursuant to Sections 6 and 7 hereof. If, on the other hand, such Transportation Services are exclusive to Tenant, Tenant shall be solely responsible for the entire cost thereof, payable within thirty (30) days of receipt of invoice therefor. Except as expressly set forth hereinabove, Landlord shall be under no obligation to implement any other such program or to provide any transportation or other services to or from the Premises.

(q)Parking. Tenant is entitled to the non-exclusive use of the parking facilities, as they exist from time to time and subject Landlord’s rules and regulations regarding the same, including, initially, the right to use 3.2 parking spaces per 1,000 RSF of the Premises. The foregoing shall not be deemed to provide Tenant with an exclusive right to any parking spaces or any guaranty of the availability of any particular parking spaces or any specific number of parking spaces throughout the Term. Tenant shall not, at any time, park or permit to be parked any recreational vehicles, inoperative vehicles or equipment in the Common Areas or on any portion of the Project. Landlord may at its election upon ten (10) days’ written notice to Tenant designate the locations within the Project in which Tenant and Tenant’s employees and visitors may park so long as the number of available parking spaces is not reduced. Landlord shall be permitted to install and utilize a valet parking system to satisfy Tenant’s parking requirements hereunder. Tenant agrees to notify its employees and invitees of the parking provisions contained herein. If Tenant or its employees park any vehicle within the Project in violation of these provisions, then Landlord may, upon prior written notice to Tenant giving Tenant one (1) day to remove such vehicle(s), deliver a second written notice giving Tenant two (2) business days to remove such vehicle(s), and after such two (2) business day period, Landlord may charge Tenant, as Additional Rental, and Tenant agrees to pay, as Additional Rental, One Hundred Dollars ($100) per day for each day that each such vehicle is so parked within the Project, in addition to any other remedies Landlord may have under this Lease. Landlord reserves the right to grant easements and access rights to others for use of the parking areas on the Project. Tenant shall have the option, upon not less than sixty (60) days’ prior written notice to Landlord, to license, on a month-to-month basis (which such month-to-month periods shall coincide with calendar months), additional parking spaces from Landlord subject to the terms and conditions hereof at a cost of Twenty Dollars ($20.00) per space per month, which shall be paid monthly in advance as Additional Rental to Landlord; provided, however, that Tenant’s ability to license additional parking spaces shall be subject to and contingent upon (1) the availability of such

additional parking spaces at the Project, and Tenant hereby acknowledges and agrees that any given time during the Lease Term there may be no additional parking spaces available for license hereunder, and (2) Landlord’s right, upon not less than thirty (30) days’ prior written notice to Tenant (the “Parking Termination Period”), to terminate Tenant’s license of any such additional parking spaces without any further liability or responsibility to Tenant therefor, such termination to be effective as of the first (1st) day of the calendar month immediately following the month in which the Parking Termination Period ends.

(r)Outdoor Amenities. Tenant acknowledges that Landlord may make available at the Project certain furniture, equipment, playgrounds, sport courts and other outdoor amenities (“Outdoor Amenities”) and that Landlord may require any and all persons, including any Tenant Parties, to sign a waiver or release on a form provided by Landlord in connection with the use of such Outdoor Amenities. Tenant shall indemnify and hold the Landlord Parties harmless from and defend Landlord and the other Landlord Parties against any and all Claims incurred in connection with the use of the Outdoor Amenities by Tenant and/or any Tenant Parties.

(s)Intentionally Omitted.

(t)Access Control. Tenant shall be solely responsible to provide access control services for the Building on a 24 hours a day, 7 days a week and 365 days a year basis. Tenant recognizes that Landlord shall not be providing any access control services at the Building or Project and under no circumstances shall Landlord be responsible for, and Tenant waives any rights with respect to, providing security or other protection for Tenant or its employees, invitees or property in or about the Premises or the Project. Landlord shall not be liable to Tenant, and Tenant hereby waives any claim against Landlord, for, and expressly assumes the risk of (i) any unauthorized or criminal entry of third parties into the Premises or the Project, (ii) any damage to persons in or about the Premises or the Project, or (iii) any loss of property in and about the Premises or the Project, by or from any unauthorized or criminal acts of third parties, regardless of any action, inaction, failure, breakdown, malfunction and/or insufficiency of the security services provided by Landlord or any actual or alleged passive or active negligence of Landlord. Tenant shall promptly provide Landlord with copies of all keys, keycards, codes and other access devices (and any updates thereto) necessary to permit Landlord to exercise its rights of access and entry to the Premises in accordance with Section 14 hereof, and shall ensure that Landlord has access to the Premises in accordance with its rights hereunder.

(u)Business Days. As used herein, the term “Business Day” shall mean a day that is not a Saturday, Sunday or legal holiday in the State of California. In the event that the date for the performance of any covenant or obligation under this Lease shall fall on a Saturday, Sunday or legal holiday under the laws of the State of California, the date for performance thereof shall be extended to the next Business Day.

(v)Construction. Tenant acknowledges that Landlord may during the Lease Term renovate, improve, alter, or modify the Building, the Project and/or construct additional buildings and improvements at the Project or any adjacent property whether now or hereafter owned by Landlord or its Affiliate (“Construction Work”). Such Construction Work shall be done at Landlord’s sole discretion and may include, without limitation, the temporary relocation, restriping, or reconfiguration of the parking areas, the replacement and installation of landscaping and hardscaping, application for building permits and other development approvals, parcelization, lot combination or merger, or lot line adjustment of the Project, as well as any modifications to the exterior of the Building desired by Landlord, including without limitation the replacement of all exterior glass and windows and affixing art, graphics, designs and lighting to the Building exterior. In connection with such Construction Work, Landlord may, among other things, erect scaffolding or other necessary structures outside the Building or elsewhere on the Project, temporarily limiting or eliminating access to portions of the Project, including portions of the Common Areas, or perform work on the Project, which work may create noise in the Premises or leave dust or debris on the Project; provided, that Landlord shall not materially restrict Tenant’s access to the Premises. Tenant hereby agrees that such Construction Work and Landlord’s actions in connection with such Construction Work shall in no way

constitute a breach of the covenant of quiet enjoyment, a constructive eviction of Tenant nor entitle Tenant to any abatement of Rent. Tenant agrees to execute such reasonable documents and take such actions as reasonably necessary to assist Landlord with such efforts and actions, including without limitation executing any necessary amendments following parcelization, lot combination, merger or lot line adjustment to conform the descriptions of the Project, the Common Areas and the Land to any such parcelization, lot combination, merger or lot line adjustment. Provided that Tenant shall at all times retain access to the Premises, Landlord shall have no responsibility or for any reason be liable to Tenant for any direct or indirect injury to or interference with Tenant’s business arising from the Construction Work, nor shall Tenant be entitled to any compensation or damages from Landlord for loss of the use of the whole or any part of the Premises or the Project or of Tenant’s personal property or improvements resulting from the Construction Work or Landlord’s actions in connection with such Construction Work, or for any inconvenience or annoyance occasioned by such Construction Work or Landlord’s actions in connection with such Construction Work.

(w)Sustainability. Tenant acknowledges that Landlord may voluntarily cooperate with the efforts of governmental agencies and/or utility suppliers in reducing energy or other resource consumption within the Project. Tenant shall not be entitled to terminate this Lease or to any reduction in or abatement of rent by reason of such cooperation. Tenant agrees at all times to cooperate fully with Landlord and to abide by all rules established by Landlord (i) in order to maximize the efficient operation of the electrical, heating, ventilating and air conditioning systems and all other energy or other resource consumption systems with the Project and/or (ii) in order to comply with the recommendations of utility suppliers and governmental agencies regulating the consumption of energy and/or other resources. Tenant further acknowledges that Landlord may submit the Building for certification under the Leadership in Energy and Environmental Design (“LEED”) or other similar rating system and that Landlord may adopt rules and regulations in accordance with such rating system and any applicable Laws for operation of the Premises, the Building, and/or the balance of the Project so as to minimize environmental impact and waste, reduce energy and water consumption and carbon footprint, and implement sustainable practices. Such measures may include, without limitation, the installation of energy-efficient glass and windows, electric vehicle charging stations and energy-efficient (i.e. LED) lighting systems. Tenant agrees to cooperate with all such efforts and to assist with Landlord’s efforts to comply with any such rating system or applicable law. In addition to the foregoing, Landlord may in its sole discretion require Tenant to sort and separate its waste and debris for recycling in accordance with rules and regulations adopted by Landlord, LEED standards or applicable law.

(x)OFAC. Tenant, and all beneficial owners of Tenant, are currently (a) in compliance with and shall at all times during the Lease Term remain in compliance with the regulations of the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of Treasury and any statute, executive order, or regulation relating thereto (collectively, the “OFAC Rules”), (b) not listed on, and shall not during the term of this Lease be listed on, the Specially Designated Nationals and Blocked Persons List maintained by OFAC and/or on any other similar list maintained by OFAC or other governmental authority pursuant to any authorizing statute, executive order, or regulation, and (c) not a person or entity with whom a U.S. person is prohibited from conducting business under the OFAC Rules.

(y)Counterparts. This Lease may be executed in one or more counterparts, including electronic “pdf” counterparts, each of which shall be deemed an original but all of which, taken together, shall constitute one and the same Lease. Each party may rely upon a “pdf” counterpart of this Lease signed by the other party with the same effect as if such party had received an original counterpart signed by such other party, and electronic or scanned signatures to this Lease shall be binding upon the parties hereto.

(z)Certified Access Specialist. Tenant acknowledges that Landlord has not engaged a Certified Access Specialist, as such term is defined in California Civil Code Section 55.52, to inspect the Project.

(aa)Confidentiality. Except as expressly permitted in this Section 45(aa), neither Landlord, Tenant nor their respective agents, servants, employees, invitees and contractors will, without the prior written consent of the other party, disclose the terms of this Lease, which such terms, but not the mere existence of this Lease, shall be deemed confidential. The terms and conditions of this Lease will cease being confidential if, and only to the extent that, they become publicly known, except through a breach of this Lease by the receiving party. Each party will secure and protect the terms of this Lease in a manner consistent with the steps taken to protect its own trade secrets and confidential information, but not less than a reasonable degree of care. Either party may disclose the terms of this Lease where: (A) the disclosure is required by Law or by an order of a court or other governmental body having jurisdiction after giving reasonable notice to the other party with adequate time for such other party to seek a protective order; (B) if in the opinion of counsel for such party, disclosure is advisable under any applicable securities laws regarding public disclosure of business information; (C) the disclosure is reasonably necessary and is to that party’s or its affiliates’ employees, officers, directors, attorneys, accountants, investors, proposed lenders, proposed purchasers, consultants and other advisors, or to Landlord’s mortgage lender and its counsel, or the disclosure is otherwise necessary for a party to exercise its rights and perform its obligations under this Lease, so long as in all cases the disclosure is no broader than necessary and the party who receives the disclosure agrees prior to receiving the disclosure to keep the information confidential; or (D) the disclosure is reasonably necessary for a party to conclude a business transaction (including, without limitation, a sale of the Building or the Project or a Transfer of Tenant’s interest in the Lease). Each party is responsible for ensuring that the terms of this Lease are kept confidential by the person receiving the disclosure. Without limiting the generality of this Section 45(aa), neither Landlord nor Tenant may use, including, without limitation, as part of the issuance of any press releases or similar communications, Tenant's or Landlord's, as applicable, trademarks, trade names or other proprietary identifying symbols without the prior written approval of the applicable party, which approval shall be granted or withheld in the applicable party's sole and absolute discretion; provided, however, that (i) Landlord and its Affiliates and managers shall at all times have the right to use photographs and other images of the Building in any manner Landlord or the Landlord Parties deem appropriate or desirable (whether or not Tenant’s name or signage on the Building is visible therein), and (ii) the terms of this Section 45(aa) shall not be interpreted to prevent Landlord from marketing the Building or the Project (either in connection with leasing space in, or the sale of, the Building or the Project) or from listing the Building or the Project and Tenant’s name in other reports, disclosures and collateral materials (including on any website of any Landlord Parties) in a manner which is consistent with normal practices for other buildings owned by Landlord or its Affiliates. Solely as an example of the foregoing, Landlord’s marketing materials may include Tenant’s name listed as a tenant of the Building.

[Signatures are on the next page]

IN WITNESS WHEREOF, the parties have executed this Lease as of the date first above written.

LANDLORD:

MV CAMPUS OWNER, LLC,

a Delaware limited liability company

By:/s/ Walter P. Schmidt

Name:Walter P. Schmidt

Its:President

TENANT:

LIFELOCK, INC.,

a Delaware corporation

By:/s/ Chris Power

Name:Chris Power

Its:Chief Financial Officer

EX-10.2

LIFELOCK, INC.

EXECUTIVE PERFORMANCE BONUS PLAN

Effective January 1, 2016

ESTABLISHMENT AND PURPOSE

1.1 Purpose. LifeLock, Inc. hereby establishes the LifeLock, Inc. Executive Performance Bonus Plan (the “Plan”). The Plan is intended to increase stockholder value and the success of the Company by motivating eligible executives to achieve the Company’s financial, strategic and operating objectives. The Plan provides executives with the ability to earn incentive awards for the achievement of goals relating to the performance of the Company and its business units. The Plan is intended to permit the payment of bonuses that qualify as performance-based compensation under Code Section 162(m).

1.2 Effective Date. The Plan is effective as of January 1, 2016 (the “Effective Date”), subject to the approval of a majority of the shares of the Company’s common stock who are present in person or by proxy and entitled to vote at the 2016 Annual Meeting of Stockholders.

SECTION 2

DEFINITIONS

The following words and phrases shall have the following meanings unless a different meaning is explicitly assigned to them for a particular section or the Plan:

2.1 “Actual Award” means as to any Performance Period, the actual amount (if any) payable to a Participant for the Performance Period. Each Actual Award is determined by the Payout Formula for the Performance Period, subject to the Committee’s authority under Section 3.6 to eliminate or reduce the award otherwise determined by the Payout Formula.

2.2 “Affiliate” means any corporation or other entity (including, but not limited to, partnerships and joint ventures) controlled by the Company.

2.3 “Base Salary” means as to any Performance Period, 100% of the Participant’s annual salary rate on the last day of the Performance Period. Base Salary shall be determined without regard to deductions for taxes or other items and before any deferrals of compensation under any Company or Affiliate sponsored plan.

2.4 “Board” means the Company’s Board of Directors.

2.5 “Brand Metrics” means objective and measurable goals for maintaining and enhancing the image, reputation or standing of the Company and/or its products, (including but not limited to) marketing effectiveness and efficiency.

2.6 “Code” means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

2.7 “Committee” means the committee appointed by the Board (pursuant to Section 5.1) to administer the Plan. As of the Effective Date and until otherwise determined by the Board, the Compensation Committee of the Board shall serve as the Committee.

2.8 “Company” means LifeLock, Inc., a Delaware corporation.

2.9 “Determination Date” means the latest possible date that is intended to not jeopardize a Target Award or Actual Award’s qualification as performance-based compensation under Section 162(m) of the Code.

1

2.10 “Disability” means a permanent and total disability determined in accordance with standards adopted by the Committee from time to time.

2.11 “Earnings” means income.

2.12 “Fiscal Quarter” means a fiscal quarter within a Fiscal Year of the Company.

2.13 “Fiscal Year” means the fiscal year of the Company.

2.14 “Maximum Award” means as to any Participant for all Performance Periods ending during a Fiscal Year, $5 million. The Maximum Award is the maximum amount which may be earned by a Participant for all Performance Periods ending during that Fiscal Year.

2.15 “Member Metrics” means objective and measurable goals that relate to the acquisition, retention and/or satisfaction of members or customers of the Company’s products or services.

2.16 “Participant” means as to any Performance Period, an executive of the Company or of an Affiliate who has been selected by the Committee for participation in the Plan for that Performance Period.

2.17 “Payout Formula” means as to any Performance Period, the formula or payout matrix established by the Committee pursuant to Section 3.4 in order to determine the Actual Awards, if any, to be paid to Participants. The formula or matrix may differ from Participant to Participant.

2.18 “Performance Goals” means the goal(s) (or combined goal(s)) determined by the Committee, in its discretion, to be applicable to a Participant for a Performance Period. As determined by the Committee (in its discretion), the Performance Goals applicable to each Participant shall provide for a targeted level or levels of achievement using one or more of the following measures: (a) Brand Metrics, (b) Earnings, (c) Member Metrics, (d) Revenue, and (e) Total Shareholder Return. Any Performance Goal used may be measured (1) in absolute terms, (2) in combination with another Performance Goal or Goals (for example, but not by way of limitation, as a ratio or matrix), (3) in relative terms (including, but not limited to, as compared to results for other periods of time, against other objective metrics, and/or against another company, companies or an index or indices), (4) with respect to equity, assets or human resources of the Company, (including, for example, on a per-share or per-capita basis), (5) against the performance of the Company as a whole or a specific business unit(s) (including acquired business units), business segment(s) or product(s) of the Company, (6) on a pre-tax or after-tax basis and/or (7) on a GAAP (generally accepted accounting principles) or non-GAAP basis. For example, but not by way of limitation, the Committee could determine that bonuses will be earned for a Performance Period for the achievement of goals for Earnings calculated before interest, taxes, depreciation and amortization (in other words, EBITDA). As another example, the Committee could determine that bonuses will be earned for a Performance Period for the achievement of goals for Earnings divided by the number of shares of Company common stock that are outstanding (in other words, earnings per share or EPS). Prior to the Determination Date, the Committee, in its discretion, will determine whether any significant element(s) or item(s) will be included in or excluded from the calculation of any Performance Goal with respect to any Participants (for example, but not by way of limitation, the effect of mergers, acquisitions and/or dispositions). As determined in the discretion of the Committee prior to the Determination Date, achievement of Performance Goals for a particular Award may be calculated in accordance with the Company’s financial statements, prepared in accordance with generally accepted accounting principles, or as adjusted for certain costs, expenses, gains and losses to provide non-GAAP measures of operating results.

2.19 “Performance Period” means any period of not shorter than a consecutive Fiscal Quarter or longer than three Fiscal Years (or twelve (12) consecutive Fiscal Quarters), as determined by the Committee in its sole discretion.

2.20 “Product Metrics” means objective and measurable goals for the design, creation or introduction of products, for example (but not by way of limitation), with respect to design specifications or requirements, market penetration and/or that do not exceed specified defect levels.

2

2.21 “Revenue” means net revenue.

2.22 “Section 16 Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

2.23 “Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended and the regulations and guidance thereunder, as they may be amended or modified from time to time.

2.24 “Target Award” means the target award payable under the Plan to a Participant for the Performance Period, expressed as a percentage of his or her Base Salary, a dollar amount, or a result of a formula or formulas, as determined by the Committee in accordance with Section 3.3.

2.25 “Termination of Employment” means a cessation of the employee-employer relationship between an executive and the Company or an Affiliate for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, retirement, or the disaffiliation of an Affiliate, but excluding any such termination where there is a simultaneous reemployment by the Company or an Affiliate.

2.26 “Total Shareholder Return” means the total return (change in share price, including treatment of dividends as determined by the Committee) of a share of the Company’s common stock.

SECTION 3 OF PARTICIPANTS AND DETERMINATION OF AWARDS

3.1 Selection of Participants. The Committee, in its sole discretion, shall select the executives of the Company who shall be Participants for the Performance Period. The Committee, in its sole discretion, also may designate as Participants one or more individuals (by name or position) who are expected to become executives during a Performance Period. Participation in the Plan is in the sole discretion of the Committee, and on a Performance Period by Performance Period basis. Accordingly, an executive who is a Participant for a given Performance Period in no way is guaranteed or assured of being selected for participation in any subsequent Performance Period.

3.2 Determination of Performance Goals. The Committee, in its sole discretion, shall establish the Performance Goal(s) for the Participants for the Performance Period. Each Participant’s Performance Goal(s) shall be determined by the Committee and set forth in writing. The Committee, in its discretion, may adjust any Performance Goal (or actual performance versus the Performance Goal) for the effects of charges for restructurings, discontinued operations, extraordinary items and all items of gain, loss or expense determined to be extraordinary or unusual in nature or related to the disposal of a segment of a business or related to a change in accounting principle, asset write-downs, litigation, claims, judgments or settlements, the effect of changes in tax law or other such laws or provisions affecting reported results, accruals for reorganization and restructuring programs, provided that any such adjustment is intended not to jeopardize the qualification of an Actual Award as performance-based compensation under Code Section 162(m).

3.3 Determination of Target Awards. The Committee, in its sole discretion, shall establish a Target Award for each Participant. Each Participant’s Target Award shall be determined by the Committee in its sole discretion, and each Target Award shall be set forth in writing.

3.4 Determination of Payout Formula. The Committee, in its sole discretion, shall establish a Payout Formula for purposes of determining the Actual Award, if any, payable to each Participant. Each Payout Formula shall (a) be in writing, (b) be based on a comparison of actual performance to the Performance Goals, (c) provide for the payment of a Participant’s Target Award if the Performance Goals for the Performance Period are achieved, and (d) to the extent determined by the Committee, provide for an Actual Award greater than or less than the Participant’s Target Award, depending upon the extent to which actual performance exceeds or falls below the Performance Goals. Notwithstanding the preceding, in no event shall a Participant’s Actual Award(s) under the Plan exceed his or her Maximum Award for the applicable Fiscal Year.

3.5 Date for Determinations. The Committee shall make all determinations under Sections 3.1 through 3.4 on or

3

before the Determination Date.

3.6 Determination of Actual Awards. After the end of each Performance Period, the Committee shall certify in writing (for example, in its meeting minutes) the extent to which the Performance Goals applicable to each Participant for the Performance Period were achieved or exceeded, as determined by the Committee. The Actual Award for each Participant shall be determined by applying the Payout Formula to the level of actual performance that has been certified by the Committee, subject to the following. Notwithstanding any contrary provision of the Plan, the Committee, in its sole discretion, may (a) eliminate or reduce (but not increase) the Actual Award payable to any Participant below the amount that otherwise would be payable under the Payout Formula, and (b) determine whether or not a Participant will receive an Actual Award in the event the Participant incurs a Termination of Employment prior to the date the Actual Award is to be paid pursuant Section 4.2 below.

SECTION 4

PAYMENT OF AWARDS

4.1 Right to Receive Payment. Each Actual Award that may become payable under the Plan shall be paid solely from the general assets of the Company. Nothing in this Plan shall be construed to create a trust or to establish or evidence any Participant’s claim of any right other than as an unsecured general creditor with respect to any payment to which he or she may be entitled.

4.2 Timing of Payment. Payment of each Actual Award shall be made after the end of the Performance Period during which the Actual Award was earned but no later than sixty (60) days after the end of the Fiscal Year in which such Performance Period ended. Notwithstanding the preceding, if it is impossible or infeasible for the Committee to certify the results for a Performance Period under Section 3.6 before the standard payment deadline described in the preceding sentence (for example, but not by way of limitation, due to the unavailability of financial information), the payment deadline shall be extended until thirty (30) days after certification, subject to the following: (a) the Company and the Committee must have used their good faith reasonable efforts to cause certification to occur before the standard payment deadline, (b) the Committee must certify the results as soon as administratively practicable, and (c) payment will be made only to Participants who do not incur a Termination of Employment before the date on which the Actual Award is paid.

4.3 Form of Payment. Each Actual Award shall be paid in cash (or its equivalent) in a single lump sum.

4.4 Payment in the Event of Death or Disability. If a Participant dies, or is determined to have a Disability, prior to the payment of an Actual Award that was scheduled to be paid to him or her prior to death, or the determination of a Disability, for a prior Performance Period, the Award shall be paid, in the case of death, to his or her estate, and in the case of Disability, to the Participant or any other person authorized under applicable law.

4.5 Compensation Recovery Policy. The Committee, in its sole discretion, may require Participant to forfeit, return or reimburse to the Company all or a portion of any Actual Award received in accordance with any then-effective Company compensation clawback or recovery policy, as may be established or amended from time to time. Any such policy generally shall be intended to apply substantially equally to all officers of the Company, except as the Committee (or the Board or a committee of the Board, as determined by the Board), in its discretion, determines is reasonably necessary or appropriate to comply with applicable laws.

SECTION 5

ADMINISTRATION

5.1 Committee is the Administrator. The Plan shall be administered by the Committee. The Committee shall consist of not less than two (2) members of the Board. The members of the Committee shall be appointed from time to time by, and serve at the pleasure of, the Board. Each member of the Committee shall qualify as an “outside director” under Section 162(m) of the Code. If it is later determined that one or more members of the Committee do not so qualify, actions taken by the Committee prior to such determination shall be valid despite such failure to qualify.

4

5.2 Committee Authority. It shall be the duty of the Committee to administer the Plan in accordance with the Plan’s provisions. The Committee shall have all powers and discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited to, the power to (a) determine which executives shall be granted awards, (b) prescribe the terms and conditions of awards, (c) interpret the Plan and the awards, (d) adopt such procedures and subplans as are necessary or appropriate to permit participation in the Plan by executives who are foreign nationals or employed outside of the United States, (e) adopt rules for the administration, interpretation and application of the Plan as are consistent therewith, and (f) interpret, amend or revoke any such rules.

5.3 Decisions Binding. All interpretations, determinations and decisions made by the Committee, the Board, and any delegate of the Committee pursuant to the provisions of the Plan shall be final, conclusive, and binding on all persons, and shall be given the maximum deference permitted by law.

5.4 Delegation by the Committee. The Committee, in its sole discretion and on such terms and conditions as it may provide, may delegate all or part of its authority and powers under the Plan to one or more directors and/or officers of the Company; provided, however, that the Committee may delegate its authority and powers only to the extent that the delegation would not jeopardize the qualification of an Actual Award as performance-based compensation under Code Section 162(m).

5.5 Tax Withholding. The Company shall withhold all applicable taxes and any other required amounts from any payment, including (but not limited to) any federal, Federal Insurance Contributions Act (FICA), state, and local taxes.

SECTION 6

GENERAL PROVISIONS

6.1 No Effect on Employment. Nothing in the Plan shall interfere with or limit in any way the right of the Company or an Affiliate, as applicable, to terminate any Participant’s employment or service at any time, with or without cause. For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Affiliates (or between Affiliates) shall not be deemed a termination of employment. Employment with the Company and its Affiliates is on an at-will basis only. The Company expressly reserves the right, which may be exercised at any time and without regard to when during or after a Performance Period such exercise occurs, to terminate any individual’s employment with or without cause, and to treat him or her without regard to the effect which such treatment might have upon him or her as a Participant.

6.2 Section 409A. It is intended that all bonuses payable under this Plan will be exempt from the requirements of Section 409A pursuant to the “short-term deferral” exemption or, in the alternative, will comply with the requirements of Section 409A so that none of the payments and benefits to be provided under this Plan will be subject to the additional tax imposed under Section 409A, and any ambiguities or ambiguous terms herein shall be interpreted to so comply or be exempt. Each payment and benefit payable under this Plan is intended to constitute a separate payment for purposes of Section 1.4092(b)(2) of the Treasury Regulations. The Company may, in good faith and without the consent of any Participant, make any amendments to this Plan and take such reasonable actions which it deems necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition under Section 409A prior to actual payment to the Participant. However, unless explicitly determined otherwise in writing by the Committee, in no event will the Company or any Affiliate pay or reimburse any Participant for any taxes or other costs that may be imposed on the Participant as a result of Section 409A or any other section of the Code or other tax rule or regulation.

6.3 Participation. No individual shall have the right to be selected to receive an award under this Plan, or, having been so selected, to be selected to receive a future award.

6.4 Successors. All obligations of the Company and any Affiliate under the Plan, with respect to awards granted hereunder, shall be binding on any successor to the Company and/or such Affiliate, whether the existence of such successor is the result of a direct or indirect purchase, merger, sale, consolidation, or otherwise, of all or substantially all of the business or assets of the Company or such Affiliate.

5

6.5 Nonassignability. A Participant shall have no right to assign or transfer any interest under this Plan.

6.6 Nontransferability of Awards. No award granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or trust, by the laws of descent and distribution. All rights with respect to an award granted to a Participant shall be available during his or her lifetime only to the Participant.

6.7 Deferrals. The Committee, in its sole discretion, may permit a Participant to defer receipt of the payment of cash that would otherwise be delivered to a Participant under the Plan. Any such deferral elections shall be subject to such rules and procedures as shall be determined by the Committee in its sole discretion and, unless otherwise expressly determined by the Committee, shall comply with the requirements of Section 409A.

6.8 Governing Law. The Plan and all award agreements shall be construed in accordance with and governed by the laws of the State of Delaware, excluding its conflicts of laws provisions.

SECTION 7

AMENDMENT AND TERMINATION

7.1 Amendment and Termination. The Board may amend or terminate the Plan at any time and for any reason; provided, however, that unless otherwise explicitly determined by the Committee, any amendment that is expected to negatively affect the Plan’s intended qualification under Code Section 162(m) shall be subject to stockholder approval.

6

EX-10.3

May 16, 2016

To: LifeLock, Inc.

60 East Rio Salado Parkway, Suite 500

Tempe, Arizona 85281

Attn:        Chris Power, Chief Financial Officer

Telephone:    480-457-2129

Facsimile:    480-457-5927

From: Bank of America, N.A.

c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated

Bank of America Tower at One Bryant Park

New York, NY 10036

Attn: Gary Rosenblum, Associate General Counsel

Telephone: 646-855-3684

Facsimile: 646-834-9809

Re: Issuer Forward Repurchase Transaction

(BofAML Reference Number: 1681483593)

Ladies and Gentlemen:

The purpose of this communication (this “Confirmation”) is to confirm the terms and conditions of the Transaction entered into between Bank of America, N.A. (“Dealer”) and LifeLock, Inc., a Delaware corporation (“Counterparty”), on the Trade Date specified below (the “Transaction”). The terms of the Transaction shall be set forth in this Confirmation. This Confirmation shall constitute a “Confirmation” as referred to in the ISDA Master Agreement specified below.

1.    This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (including the Annex thereto) (the “2006 Definitions”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together with the 2006 Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ISDA”). In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern.

This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the 2002 ISDA Master Agreement (the “ISDA Form”) as if Dealer and Counterparty had executed an agreement in such form, without any Schedule but with the elections set forth in this Confirmation, including:

(i)    The election of New York law as the governing law (without reference to its choice of law provisions).

(ii)     The election that subparagraph (ii) of Section 2(c) will not apply to the Transactions.

(iii)    The election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Dealer, with a “Threshold Amount” of 3% of shareholders’ equity Bank of America Corporation (provided that (a) the phrase “, or becoming capable at such time of being declared,” shall be deleted from clause (1) of such Section 5(a)(vi) of the Agreement, (b) and (b) the following sentence shall be added to the end thereof: “Notwithstanding the foregoing, an Event of Default shall not occur under either (1) or (2) above if (a) the event or condition referred to in (1) or the failure to pay referred to in (2) is caused by an error or omission of an administrative or operational nature, (b) funds were available to Dealer to enable it to make the relevant payment when due, (c) such payment is made within three Local Business Days after notice of such failure is given by Counterparty, and (d) the definition of “Specified Indebtedness” will have the meaning specified in Section 14, except that such term shall not include obligations in respect of deposits received in the ordinary course of Dealer’s banking business”.

The Transaction shall be the sole Transaction under the Agreement. If there exists any ISDA Master Agreement between Dealer and Counterparty or any confirmation or other agreement between Dealer and Counterparty pursuant to which an ISDA

Master Agreement is deemed to exist between Dealer and Counterparty, then notwithstanding anything to the contrary in such ISDA Master Agreement, such confirmation or agreement or any other agreement to which Dealer and Counterparty are parties, the Transaction shall not be considered Transaction under, or otherwise governed by, such existing or deemed ISDA Master Agreement, and the occurrence of any Event of Default or Termination Event under the Agreement with respect to either party or the Transaction shall not, by itself, give rise to any right or obligation under any such other agreement or deemed agreement. Notwithstanding anything to the contrary in any other agreement between the parties or their Affiliates, the Transaction shall not be a “Specified Transaction” (or similarly treated) under any other agreement between the parties or their Affiliates.

All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern. The Transaction is a Share Forward Transaction within the meaning set forth in the Equity Definitions.

2.    The terms of the particular Transaction to which this Confirmation relates are as follows:

General Terms:

Trade Date: May 16, 2016

Seller: Dealer

Buyer: Counterparty

Shares: The common stock of Counterparty, par value USD 0.001 per share (Ticker Symbol: “LOCK”) (“Common Stock”)

Prepayment: Applicable

Prepayment Amount: As provided in Annex B to this Confirmation.

Prepayment Date: The first Exchange Business Day following the Trade Date.

Exchange: New York Stock Exchange.

Related Exchange(s): All Exchanges; provided that Section 1.26 of the Equity Definitions shall be amended to add the words “United States” before the word “exchange” in the tenth line of that Section.

Calculation Agent: Bank of America, N.A.; provided that following the occurrence and during the continuance of an Event of Default of the type described in Section 5(a)(vii) of the Agreement with respect to which Bank of America, N.A. is the sole Defaulting Party, if the Calculation Agent fails to timely make any calculation, adjustment or determination required to be made by the Calculation Agent hereunder and such failure continues for five Exchange Business Days following notice to the Calculation Agent by Counterparty of such failure, Counterparty shall have the right to designate a nationally recognized third-party dealer in over-the-counter corporate equity derivatives to act, during the period commencing on the first date the Calculation Agent fails to timely make such calculation, adjustment or determination or to perform such obligation, as the case may be, and ending on the earlier of the Early Termination Date with respect to such Event of Default and the date on which such Event of Default is no longer continuing, as the Calculation Agent.

All calculations and determinations by the Calculation Agent shall be made in good faith and in a commercially reasonable manner. Following any calculation by the Calculation Agent hereunder, upon written request by Counterparty, the Calculation Agent will provide to Counterparty by email to the email address provided by Counterparty in such written request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such calculation; provided, however, that in not event will Bank of America, N.A. be obligated to share with Counterparty any proprietary or confidential data or information or any proprietary or confidential models used by it.

Valuation Terms:

Averaging Dates: Each of the consecutive Exchange Business Days commencing on, and including, the Exchange Business Day immediately following the Trade Date and ending on, and including, the Final Averaging Date.

Final Averaging Date: The Scheduled Final Averaging Date; provided that in no event shall the Scheduled Final Averaging Date be postponed to a date later than the Final Date; provided further that Dealer shall have the right, in its absolute discretion, at any time to accelerate (“Acceleration”) the Final Averaging Date, in whole or in part, to any date that is on or after the Scheduled Earliest Acceleration Date by written notice to Counterparty no later than 8:00 P.M., New York City time, on the Exchange Business Day immediately following the accelerated Final Averaging Date; provided, however, that Dealer may elect to declare an Acceleration in part if the portion of the Transaction subject to the Acceleration is in an amount of at least USD 12,500,000 or such lesser amount that is the entirety of the remaining Prepayment Amount.

In the case of any acceleration of the Final Averaging Date in part (a “Partial Acceleration”), Dealer shall specify in its written notice to Counterparty accelerating the Final Averaging Date the corresponding percentage of the Prepayment Amount that is subject to valuation on the related Valuation Date, and Calculation Agent shall adjust the terms of the Transaction as it deems appropriate, in a commercially reasonable manner, in order to take into account the occurrence of such Partial Acceleration (including cumulative adjustments to take into account all Partial Accelerations that occur during the term of the Transaction).

Scheduled Final Averaging Date: As provided in Annex B to this Confirmation.

Final Date: As provided in Annex B to this Confirmation.

Scheduled Earliest Acceleration

Date: As provided in Annex B to this Confirmation.

Valuation Date: The Final Averaging Date.

Averaging Date Disruption: Modified Postponement, provided that notwithstanding anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Averaging Date, the Calculation Agent may, if appropriate in light of market conditions or regulatory considerations applicable to accelerated share repurchase transactions generally and consistently applied for these types of transactions, take one of the following actions: (i) postpone the Scheduled Final Averaging Date in accordance with Modified Postponement (as modified herein) or (ii) determine that such Averaging Date is a Disrupted Day only in part, in which case the Calculation Agent shall determine in a good faith commercially reasonable manner (x) the VWAP Price for such Disrupted Day based on Rule 10b-18 eligible transactions in the Shares on such Disrupted Day taking into account the nature and duration of such Market Disruption Event and (y) the Settlement Price based on an appropriately weighted average instead of the arithmetic average described under “Settlement Price” below. Any Exchange Business Day on which, as of the date hereof, the Exchange is scheduled to close prior to its normal close of trading shall be deemed not to be an Exchange Business Day; if a closure of the Exchange prior to its normal close of trading on any Exchange Business Day is scheduled following the date hereof, then such Exchange Business Day shall be deemed to be a Disrupted Day in full. Section 6.6(a) of the Equity Definitions is hereby amended by replacing the word “shall” in the fifth line thereof with the word “may,” and by deleting clause (i) thereof, and Section 6.7(c)(iii)(A) of the Equity Definitions is hereby amended by replacing the word “shall” in the sixth and eighth line thereof with the word “may.”

Market Disruption Events: Section 6.3(a) of the Equity Definitions is hereby amended (A) by deleting the words “during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be” in clause (ii) thereof, and (B) by replacing the words “or (iii) an Early Closure.” therein with “(iii) an Early Closure, or (iv) a Regulatory Disruption.”

Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof.

Regulatory Disruption: In the event that Dealer determines, in its good faith, reasonable judgment, based on the advice of counsel, that it is appropriate with regard to any legal, regulatory or self-regulatory requirements or related policies and procedures applicable to accelerated share repurchase transactions (provided that such requirements, policies and procedures relate to regulatory issues and are generally applicable in similar situations and are applied in a consistent manner in similar transactions) for Dealer to refrain from or decrease any market activity in connection with the Transaction on any Averaging Date prior to the Final Averaging Date; provided that Calculation Agent, in making any adjustment to the terms of the Transaction as a result of a Regulatory Disruption, shall make any such adjustment by reference of such event on Dealer assuming Dealer maintains a commercially reasonable Hedge Position. Dealer shall notify Counterparty as soon as reasonably practicable that a Regulatory Disruption has occurred and the reasons for such Regulatory Disruption and the Averaging Dates affected by it.

Settlement Terms:

Initial Share Delivery: On the Initial Share Delivery Date, Dealer shall deliver to Counterparty the Initial Shares.

Initial Share Delivery Date: The first Exchange Business Day following the Trade Date.

Initial Shares: As provided in Annex B to this Confirmation.

Settlement Date: The date that falls one Settlement Cycle following the Valuation Date.

Settlement: On the Settlement Date, Dealer shall deliver to Counterparty the Number of Shares to be Delivered, if a positive number. If the Number of Shares to be Delivered is a negative number, the Counterparty Settlement Provisions in Annex A shall apply.

Number of Shares to be Delivered: A number of Shares equal to (a) the Prepayment Amount divided by (b) (i) the Settlement Price minus (ii) the Price Adjustment Amount; provided that the Number of Shares to be Delivered as so determined shall be reduced by the number of Shares delivered on the Initial Share Delivery Date.

Settlement Price: The arithmetic average of the VWAP Prices for all Averaging Dates.

VWAP Price: For any Averaging Date, the Rule 10b-18 dollar volume weighted average price per Share for such day based on transactions executed during such day (excluding, for the avoidance of doubt, (i) trades that do not settle regular way, (ii) opening (regular way) reported trades in the consolidated system on such Averaging Day, (iii) trades that occur in the last ten minutes before the scheduled close of trading on the Exchange on such Averaging Day and ten minutes before the scheduled close of the primary trading in the market where the trade is effected, and (iv) trades on such Averaging Day that do not satisfy the requirements of Rule 10b-18(b)(3) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as reported on Bloomberg Page “LOCK <Equity> AQR SEC” (or any successor thereto) or, in the event such price is not so reported on such day for any reason or is manifestly incorrect, as reasonably determined in good faith and in a commercially reasonable manner by the Calculation Agent using a volume weighted method.

Price Adjustment Amount: As provided in Annex B to this Confirmation.

Excess Dividend Amount: For the avoidance of doubt, all references to the Excess Dividend Amount in Section 9.2(a)(iii) of the Equity Definitions shall be deleted.

Other Applicable Provisions: To the extent either party is obligated to deliver Shares hereunder, the provisions of the last sentence of Section 9.2 and Sections 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a

result of the fact that Counterparty is the Issuer of the Shares) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.

Dividends:

Dividend: Any dividend or distribution on the Shares other than any dividend or distribution of the type described in Sections 11.2(e)(i), 11.2(e)(ii)(A) or 11.2(e)(ii)(B) of the Equity Definitions; provided that, the adoption of a shareholders rights plan by the Issuer during the term of the Transaction shall not constitute a “Dividend”.

Share Adjustments:

Method of Adjustment: Calculation Agent Adjustment; provided that the declaration or payment of Dividends shall not be a Potential Adjustment Event; provided further that the parties agree (1) that any Share repurchases by Counterparty pursuant to that certain Rule 10b5-1 Stock Purchase Plan Engagement Agreement (“Stock Purchase Agreement”) between the Counterparty and Merrill Lynch, Pierce, Fenner & Smith Incorporated, an affiliate of Dealer, as broker under such Stock Purchase Agreement shall not be considered a Potential Adjustment Event and (2) that any repurchase of Shares pursuant to this Transaction shall not be considered a Potential Adjustment Event.

It shall constitute an additional Potential Adjustment Event if the Scheduled Final Averaging Date is postponed pursuant to “Averaging Date Disruption” above, in which case the Calculation Agent may, in its commercially reasonable discretion, adjust any relevant terms of the Transaction as the Calculation Agent determines appropriate to preserve the fair value of the Transaction of such postponement.

Extraordinary Events:

Consequences of Merger Events:    

(a) Share-for-Share: Modified Calculation Agent Adjustment

(b) Share-for-Other: Cancellation and Payment

(c) Share-for-Combined: Cancellation and Payment

Tender Offer: Applicable; provided that Section 12.1(d) of the Equity Definitions shall be amended by replacing “10%” in the third line thereof with “20%”; provided further that references to “Tender Offer Date” shall be replaced by references to “Announcement Date.” If the Calculation Agent makes any adjustment to the terms of the Transaction upon the public announcement of a Tender Offer, then the Calculation Agent may, in good faith and in a commercially reasonable manner, make a further adjustment to the terms of the Transaction upon any public announcement regarding the abandonment of any such offer.

Consequences of Tender Offers:    

(a) Share-for-Share: Modified Calculation Agent Adjustment

(b) Share-for-Other: Modified Calculation Agent Adjustment

(c) Share-for-Combined: Modified Calculation Agent Adjustment

Composition of Combined

Consideration: Not Applicable

New Shares: In the definition of New Shares in Section 12.1(i) of the Equity Definitions, the text in clause (i) thereof shall be deleted in its entirety (including the word “and” following such clause (i)) and replaced with “publicly quoted, traded or listed on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors)”.

Nationalization, Insolvency or

Delisting: Cancellation and Payment (Calculation Agent Determination); provided that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock

Exchange, The NASDAQ Global Market or The NASDAQ Global Select Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.

Additional Disruption Events:    

Change in Law: Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by immediately following the word “Transaction” in clause (X) thereof, adding the phrase “in the manner contemplated by the Hedging Party on the Trade Date”.

Failure to Deliver: Applicable

Insolvency Filing: Applicable

Loss of Stock Borrow: Applicable

Maximum Stock Loan Rate: As provided in Annex B to this Confirmation.

Increased Cost of Stock Borrow: Applicable

Initial Stock Loan Rate: As provided in Annex B to this Confirmation.

Hedging Party: For all applicable Potential Adjustment Events and Extraordinary Events, Dealer

Determining Party: For all Extraordinary Events, Dealer

Non-Reliance: Applicable

Agreements and Acknowledgments

Regarding Hedging Activities: Applicable

Additional Acknowledgments: Applicable

3.    Account Details:

(a) Account for payments to Counterparty:    

Silicon Valley Bank

3003 Tasman Drive

Santa Clara, CA 95054

SWIFT: SVBKUS6S

Bank Routing: 121-140-399

Account Name: LifeLock, Inc. Deposit Acct.

Account No: 3300629933

(b) Account for payments to Dealer:    

Bank of America

New York, NY

SWIFT: BOFAUS3N

Bank Routing: 026-009-593

Account Name: Bank of America

Account No.: 0012334-61892

4.    Offices:

(a) The Office of Counterparty for the Transaction is: Inapplicable; Counterparty is not a Multibranch Party.

(b) The Office of Dealer for the Transaction is: New York

5.    Notices: For purposes of this Confirmation:

(a) Address for notices or communications to Counterparty:

LifeLock, Inc.

60 East Rio Salado Parkway, Suite 500

Tempe, Arizona 85281

Attn: Chris Power, Chief Financial Officer

Telephone: 480-457-2129

Facsimile: 480-457-5927

(b) Address for notices or communications to Dealer:

Bank of America, N.A.

c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated

Bank of America Tower at One Bryant Park

New York, NY 10036

Attn: Gary Rosenblum, Associate General Counsel

Telephone: 646-855-3684

Facsimile: 646-834-9809

6.    Additional Provisions Relating to Transactions in the Shares.

(a)    Counterparty acknowledges and agrees that the Initial Shares delivered on the Initial Share Delivery Date may be sold short to Counterparty. Counterparty further acknowledges and agrees that Dealer may, during (i) the period from the date hereof to the Valuation Date or, if later, the Scheduled Earliest Acceleration Date without regard to any adjustment thereof pursuant to “Special Provisions regarding Transaction Announcements” below, and (ii) the period from and including the first Settlement Valuation Date to and including the last Settlement Valuation Date, if any (together, the “Relevant Period”), purchase Shares in connection with the Transaction, which Shares may be used to cover all or a portion of such short sale or may be delivered to Counterparty. Such purchases will be conducted independently of Counterparty. The timing of such purchases by Dealer, the number of Shares purchased by Dealer on any day, the price paid per Share pursuant to such purchases and the manner in which such purchases are made, including without limitation whether such purchases are made on any securities exchange or privately, shall be within the absolute discretion of Dealer. It is the intent of the parties that the Transaction comply with the requirements of Rule 10b5-1(c)(1)(i)(B) of the Exchange Act, and the parties agree that this Confirmation shall be interpreted to comply with the requirements of Rule 10b5-1(c), and Counterparty shall not take any action that results in the Transaction not so complying with such requirements. Without limiting the generality of the preceding sentence, Counterparty acknowledges and agrees that (A) Counterparty does not have, and shall not attempt to exercise, any influence over how, when or whether Dealer effects any purchases of Shares in connection with the Transaction, (B) during the period beginning on (but excluding) the date of this Confirmation and ending on (and including) the last day of the Relevant Period, neither Counterparty nor its officers or employees shall, directly or indirectly, communicate any information regarding Counterparty or the Shares to any employee of Dealer or its Affiliates responsible for trading the Shares in connection with the transactions contemplated hereby, (C) Counterparty is entering into the Transaction in good faith and not as part of a plan or scheme to evade compliance with federal securities laws including, without limitation, Rule 10b‑5 promulgated under the Exchange Act and (D) Counterparty will not alter or deviate from this Confirmation or enter into or alter a corresponding hedging transaction with respect to the Shares. Counterparty also acknowledges and agrees that any amendment, modification, waiver or termination of this Confirmation must be effected in accordance with the requirements for the amendment or termination of a “plan” as defined in Rule 10b5-1(c) under the Exchange Act. Without limiting the generality of the foregoing, any such amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 under the Exchange Act, and no such amendment, modification or waiver shall be made at any time at which Counterparty or any officer or director of Counterparty is aware of any material nonpublic information regarding Counterparty or the Shares.

(b)    Counterparty agrees that neither Counterparty nor any of its Affiliates or agents that it controls shall take any action that would result in the Shares being subject to a “restricted period” (as defined in Regulation M under the Exchange Act) (excluding for the purposes of this provision any issuances by the Counterparty of securities or undertaking of activities exempted from Regulation M by means of Rule 102(b), (c) or (d) of Regulation M (the “Regulation M Exemptions”)), or any security for which the Shares are a reference security (as defined in Regulation M) being subject to a restricted period (excluding for the purposes of this provision any issuances by the Counterparty of securities or undertaking of activities pursuant to the Regulation M Exemptions) during the Relevant Period.

(c)    Counterparty shall, at least one day prior to the first day of the Relevant Period, notify Dealer of the total number of Shares purchased in Rule 10b-18 purchases of blocks pursuant to the once-a-week block exception contained in Rule 10b-18(b)(4) by or for Counterparty or any of its affiliated purchasers during each of the four calendar weeks preceding the first day of

the Relevant Period and during the calendar week in which the first day of the Relevant Period occurs (“Rule 10b-18 purchase”, “blocks” and “affiliated purchaser” each being used as defined in Rule 10b-18).

(d)    During the Relevant Period, Counterparty shall (i) notify Dealer prior to the opening of trading in the Shares on any day on which Counterparty makes, or expects to be made, any public announcement (as defined in Rule 165(f) under the Securities Act of 1933, as amended (the “Securities Act”)) of any Merger Transaction, (ii) promptly notify Dealer following any such public announcement of the Merger Transaction that such announcement has been made, and (iii) promptly deliver to Dealer following the making of any such announcement a certificate indicating (A) Counterparty’s average daily Rule 10b-18 purchases (as defined in Rule 10b-18) during the three full calendar months preceding the date of the announcement of such transaction and (B) Counterparty’s block purchases (as defined in Rule 10b-18) effected pursuant to paragraph (b)(4) of Rule 10b-18 during the three full calendar months preceding the date of the announcement of such transaction. In addition, Counterparty shall promptly notify Dealer of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders. Counterparty acknowledges that any such public announcement of a Merger Transaction may be determined by Dealer to be a Regulatory Disruption, and, as a result, may cause the Relevant Period to be suspended. Accordingly, Counterparty acknowledges that its actions in relation to any such announcement or transaction must comply with the standards set forth in Section 6(a) above.

“Merger Transaction” means any merger, acquisition or similar transaction involving a recapitalization as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act pursuant to which Counterparty would be limited in purchasing Shares during the term of the Transaction under Rule 10b-18 in the same manner that Rule 10b-18 would limit Counterparty from purchasing Shares under Rule 10b-18, other than, solely for purposes of this Section 6, any such transaction in which the consideration consists solely of cash and there is no valuation period.

Any adjustment to the terms of the Transaction as a result of the Transaction being treated as a Regulatory Disruption by Dealer shall be made without duplication in respect of any prior adjustment hereunder (including, without limitation, any prior adjustment pursuant to Section 9 below).

(e)    Without the prior written consent of Dealer, Counterparty shall not, and shall cause its Affiliates and affiliated purchasers (each as defined in Rule 10b-18) not to, directly or indirectly (including, without limitation, by means of a cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable for Shares during the Relevant Period other than any purchase of Shares by Counterparty through an affiliate of Dealer pursuant to the Stock Purchase Agreement.

Notwithstanding the immediately preceding paragraph or anything herein to the contrary (i) an agent independent of Counterparty may purchase Shares effected by or for an issuer plan Counterparty in accordance with the requirements of Section 10b-18(a)(13)(ii) under the Exchange Act (with “issuer plan” and “agent independent of Counterparty” each being used herein as defined in Rule 10b-18), and (ii) Counterparty or any “affiliated purchaser” may purchase Shares in (x) unsolicited transactions or (y) privately negotiated (off-market) transactions, in each case, that are not “Rule 10b-18 purchases” (as defined in Rule 10b-18), in each case, without Dealer’s consent.

Nothing in this Section 6(e) will (i) limit the Counterparty’s ability, pursuant to its employee incentive plans or dividend reinvestment program, to reacquire Shares in connection with the related equity transactions, (ii) limit Counterparty’s ability to reacquire Shares in connection with the related equity transactions, or (iii) limit Counterparty’s ability to grant stock, restricted stock units and options to “affiliated partners” (as defined in Rule 10b-18) or the ability of such affiliated purchasers to acquire such stock or options, in connection with the Counterparty’s compensation policies for directors, officers or employees of any entities that are acquisition targets of Counterparty, and in connection with such purchase Counterparty will be deemed to represent to Dealer that such purchase does not constitute a “Rule 10b-18 Purchase” (as defined in Rule 10b-18).

7.    Representations, Warranties and Agreements.

(a)    In addition to the representations, warranties and agreements in the Agreement and those contained elsewhere herein, Counterparty represents and warrants to and for the benefit of, and agrees with, Dealer as follows:

(i)    As of the Trade Date, and as of the date of any election by Counterparty of the Share Termination Alternative under (and as defined in) Section 10(a) below, (A) none of Counterparty and its officers and directors is aware of any material nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Exchange Act when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not

contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.

(ii)    Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260, Earnings Per Share, ASC Topic 815, Derivatives and Hedging, or ASC Topic 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity (or any successor issue statements) or under FASB’s Liabilities & Equity Project.

(iii)    Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.

(iv)    Prior to the Trade Date, Counterparty shall deliver to Dealer a resolution of Counterparty’s board of directors (or an authorized committee of the Board of Directors) authorizing the Transaction. Counterparty has publicly disclosed its intention to institute a program for the acquisition of Shares.

(v)    Counterparty is not entering into this Confirmation to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) to manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act, and will not engage in any other securities or derivative transaction to such ends.

(vi)    Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

(vii)    On the Trade Date, the Prepayment Date, the Initial Share Delivery Date and the Settlement Date, Counterparty is not, or will not be, “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)) and Counterparty would be able to purchase the Shares hereunder in compliance with the corporate laws of the jurisdiction of its incorporation.

(viii)    No state or local (including non-U.S. jurisdictions) law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.

(ix)    Counterparty shall not declare or pay any Dividend (as defined above) to holders of record as of any date occurring prior to the Settlement Date or, if the provisions of Annex A apply, the Cash Settlement Payment Date.

(x)    Counterparty understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any affiliate of Dealer or any governmental agency.

(xi)    Counterparty is (i) a corporation for U.S. federal income tax purposes and is organized under the laws of Delaware and (ii) a “U.S. person” (as that term is used in section 1.1441-4(a)(3)(ii) of United States Treasury Regulations) for U.S. federal income tax purposes.

(b)    Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended.

(c)    Each party acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act, by virtue of Section 4(a)(2) thereof. Accordingly, each party represents and warrants to the other party that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof, and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.

(d)    Counterparty agrees and acknowledges that Dealer is a “financial institution,” “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and acknowledge that it is the intent of the parties that (A) this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the

Bankruptcy Code and a “settlement payment,” within the meaning of Section 546 of the Bankruptcy Code and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “payment or other transfer of property” within the meaning of Sections 362 and 546 of the Bankruptcy Code, and (B) Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17), 362(o), 546(e), 546(g), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

(e)    In addition to the representations, warranties and covenants in this Agreement, Dealer represents, warrants and covenants to Counterparty that:

(i)    Dealer agrees to use commercially reasonable efforts, during the Relevant Period for the Transaction, to purchase Shares in connection with such Transaction in a manner that would comply with the limitations set forth in clauses (b)(2), (b)(3) and (b)(4) of Rule 10b-18, as if such rule were applicable to such purchases and taking into account any applicable Securities and Exchange Commission no-action letters or interpretations, as appropriate, and subject to any delays between the execution and reporting of a trade of the Shares on the Exchange and other circumstances beyond Dealer’s control; provided that, during the Relevant Period, the foregoing agreement shall not apply to purchases made to dynamically hedge the optionality arising under the Transaction (including, for the avoidance of doubt, timing optionality); provided further that, without limiting the generality of the first sentence of this Section 6(c)(i), Dealer shall not be responsible for any failure to comply with Rule 10b-18(b)(3) to the extent any transaction executed (or deemed to be executed) by or on behalf of Counterparty or an “affiliated purchaser” (as defined under Rule 10b-18) pursuant to a separate agreement is not deemed to be an “independent bid” or an “independent transaction” for purposes of Rule 10b-18(b)(3).

(ii)    Dealer has implemented policies and procedures, taking into consideration the nature of its business, reasonably designed to ensure that (A) individuals making investment decisions on behalf of Dealer related to the Transaction do not have access to material nonpublic information regarding the Issuer or the Shares and (B) individuals of Dealer that are in possession of material nonpublic information regarding the Issuer or the Shares have not, while in possession of such material nonpublic information, participated in any offsetting transaction(s) in respect of such Transaction.

(iii)    Within one Exchange Business Day of purchasing any Shares on behalf of Counterparty pursuant to the once-a-week block exception set forth in paragraph (b)(4) of Rule 10b-18, Dealer shall notify Counterparty of the total number of Shares so purchased.

(iv)    On Wednesday of each week (or, if such date is not an Exchange Business Day, the following Exchange Business Day) during the Relevant Period, Dealer shall provide a weekly report (“Weekly Report”) in connection with such Transaction to the Counterparty and to such other persons or agents of the Counterparty as the Counterparty shall reasonably designate in writing, by electronic mail to the Counterparty or its designee. Each Weekly Report shall include the ADTV of the Shares for each Exchange Business Day during the immediately preceding week (as defined and determined in accordance with Rule 10b-18, as defined herein), the VWAP Price for each such Exchange Business Day and the high and low price of the Shares on each such Exchange Business Day. For the avoidance of doubt and notwithstanding anything to the contrary herein, the VWAP Price for purposes of this Confirmation shall be determined pursuant the language opposite the caption “VWAP Price” in Section 2 of this Confirmation under the heading “Settlement Terms” and not on the basis of, or by reference to, the VWAP Price set forth in any Weekly Report.

8.    Agreements and Acknowledgements Regarding Hedging.

Counterparty acknowledges and agrees that:

(a)     During the Relevant Period, Dealer and its Affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction;

(b)     Dealer and its Affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction;

(c)     Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in Counterparty’s securities shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Settlement Price and/or the VWAP Price; and

(d)     Any market activities of Dealer and its Affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Settlement Price and/or the VWAP Price, each in a manner that may be adverse to Counterparty.

9.    Special Provisions regarding Transaction Announcements.

(a)    If a Transaction Announcement occurs on or prior to the Settlement Date, then the Calculation Agent shall have the right to make an adjustment at such time or multiple times in a commercially reasonable manner to the Price Adjustment Amount as the Calculation Agent determines reasonably appropriate to account for the economic effect of the Transaction Announcement (and, for the avoidance of doubt, in such event the Number of Shares to be Delivered may be reduced as a result of the adjustment to the Price Adjustment Amount, including to below zero, pursuant to the proviso to the definition of Number of Shares to be Delivered). If a Transaction Announcement occurs after the Trade Date but prior to the Scheduled Earliest Acceleration Date, the Scheduled Earliest Acceleration Date shall be adjusted to be the date of such Transaction Announcement.

(b)    “Transaction Announcement” means (i) the announcement of an Acquisition Transaction, (ii) an announcement that Counterparty or any of its subsidiaries has entered into an agreement, a letter of intent or an understanding to enter into an Acquisition Transaction, (iii) the announcement by the Counterparty, its officers, directors, affiliates or any of its subsidiaries of an intention to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, an Acquisition Transaction or (iv) the announcement by a bona fide person of such person’s intention to pursue an Acquisition Transaction that, in the good faith commercially reasonable judgment of the Calculation Agent, may result in an Acquisition Transaction; provided that the Calculation Agent shall in good faith determine whether any such person is a bona fide person.

“Acquisition Transaction” means (i) any Merger Event (and for purposes of this definition the definition of Merger Event shall be read with the references therein to “100%” being replaced by “20%” and to “50%” by “85%” and as if the clause beginning immediately following the definition of Reverse Merger therein to the end of such definition were deleted) or Tender Offer, or any other transaction involving the merger of Counterparty with or into any third party, (ii) the sale or transfer of all or substantially all of the assets of Counterparty, (iii) a recapitalization, reclassification, binding share exchange or other similar transaction, (iv) any acquisition, lease, exchange, transfer, disposition (including by way of spin-off or distribution) of assets (including any capital stock or other ownership interests in subsidiaries) or other similar event by Counterparty or any of its subsidiaries where the aggregate consideration transferable or receivable by or to Counterparty or its subsidiaries exceeds 20% of the market capitalization of Counterparty and (v) any transaction in which Counterparty or its board of directors has a legal obligation to make a recommendation to its shareholders in respect of such transaction (whether pursuant to Rule 14e-2 under the Exchange Act or otherwise).

Any adjustment to the terms of the Transaction hereunder as a result of an Transaction Announcement shall be made without duplication in respect of any prior adjustment hereunder (including, without limitation, any prior adjustment pursuant to Section 6(d) above).

10.    Other Provisions.

(a)    Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events. If either party would owe the other party any amount pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “Payment Obligation”), Counterparty shall have the right, in its sole discretion, to satisfy or to require Dealer to satisfy, as the case may be, any such Payment Obligation, in whole or in part, by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 9:30 A.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of an Extraordinary Event, as applicable (“Notice of Share Termination”); provided that Counterparty shall not have the right to so elect (but, for the avoidance of doubt, Dealer shall have the right to so elect) in the event of (i) an Insolvency, a Nationalization, a Merger Event or a Tender Offer, in each case, in which the consideration or proceeds to be paid to all, but not less than all, holders of Shares consists solely of cash or (ii) an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party, which Event of Default or Termination Event resulted from an event or events within Counterparty’s control. Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of an Extraordinary Event, as applicable, with respect to the Payment Obligation or such portion of the Payment Obligation for which the Share Termination Alternative has been elected (the “Applicable Portion”):

Share Termination Alternative: Applicable and means, if delivery pursuant to the Share Termination Alternative is owed by Dealer, that Dealer shall deliver to Counterparty the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to Section 12.7

or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, or such later date as the Calculation Agent may reasonably determine (the “Share Termination Payment Date”), in satisfaction of the Payment Obligation or the Applicable Portion, as the case may be. If delivery pursuant to the Share Termination Alternative is owed by Counterparty, paragraphs 2 through 5 of Annex A shall apply as if such delivery were a settlement of the Transaction to which Net Share Settlement (as defined in Annex A) applied, the Cash Settlement Payment Date were the Early Termination Date, the Forward Cash Settlement Amount were zero (0) minus the Payment Obligation (or the Applicable Portion, as the case may be) owed by Counterparty, and “Shares” as used in Annex A were replaced by “Share Termination Delivery Units.”

Share Termination Delivery

Property: A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation (or the Applicable Portion, as the case may be) divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.

Share Termination Unit Price: The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to the parties at the time of notification of the Payment Obligation.

Share Termination Delivery Unit: In the case of a Termination Event, Event of Default, Delisting or Additional Disruption Event, one Share or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, one Share or a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.

Failure to Deliver: Applicable

Other applicable provisions: If Share Termination Alternative is applicable, the provisions of Sections 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the issuer of the Shares or any portion of the Share Termination Delivery Units) and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units”.

(b)    Equity Rights. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Counterparty’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Counterparty’s bankruptcy to any claim arising as a result of a breach by Counterparty of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Counterparty herein under or pursuant to any other agreement.

(c)    Reserved.

(d)    Staggered Settlement. If Dealer would owe Counterparty any Shares pursuant to the “Settlement Terms” above, Dealer may, by notice to Counterparty on or prior to the Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares deliverable on such Nominal Settlement Date on two or more dates (each, a “Staggered Settlement Date”) or at two or more times on the Nominal Settlement Date as follows: (i) in such notice, Dealer will specify to Counterparty the related Staggered

Settlement Dates (each of which will be on or prior to such Nominal Settlement Date) or delivery times and how it will allocate the Shares it is required to deliver under “Settlement Terms” above among the Staggered Settlement Dates or delivery times; and (ii) the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date.

(e)    Adjustments. For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.

(f)    Transfer and Assignment. Without the consent of the Counterparty, Dealer may transfer or assign its rights and obligations hereunder and under the Agreement, in whole or in part, to any of its Affiliates (i) that has a long-term issuer rating that is equal to or better than Dealer’s credit rating at the time of such assignment, or (ii) whose obligations hereunder will be guaranteed, pursuant to the terms of a customary guarantee in a form used generally for similar transactions, by Bank of America Corporation; provided that, at the time of such assignment (i) Counterparty will not be required to pay (including a payment in kind) to the transferee any amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) of the Agreement (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e) of the Agreement) greater than the amount in respect of which Counterparty would have been required to pay to Dealer in the absence of such transfer; and (ii) Counterparty will not receive any payment (including a payment in kind) from which an amount had been withheld or deducted, on account of a Tax under Section 2(d)(i) of the Agreement (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e) of the Agreement), in excess of that which Dealer would have been required to so withhold or deduct in the absence of such transfer, except to the extent that the transferee will be required to make additional payments pursuant to Section 2(d)(i)(4) of the Agreement in respect of such excess.

(g)    Additional Termination Event. It shall constitute an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole Affected Party and Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement if, at any time during the Relevant Period, the price per Share on the Exchange, as determined by the Calculation Agent, is at or below the Threshold Price (as provided in Annex B to this Confirmation).

(h)    Amendments to Equity Definitions. The following amendments shall be made to the Equity Definitions:

(i)     Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative effect on the theoretical value of the relevant Shares” and replacing them with the words “a material economic effect on the relevant Transaction”;

(ii)    The first sentence of Section 11.2(c) of the Equity Definitions, prior to clause (A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent Adjustment” is specified as the Method of Adjustment in the related Confirmation of a Share Option Transaction or Share Forward Transaction, then following the announcement or occurrence of any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has a material economic effect on the Transaction and, if so, will (i) make appropriate adjustment(s), if any, to any one or more of:’ and the portion of such sentence immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting or concentrative” and the words “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing such latter phrase with the words “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, stock loan rate or liquidity relative to the relevant Shares)”;

(iii)     Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “diluting or concentrative effect on the theoretical value of the relevant Shares” and replacing them with the words “material economic effect on the relevant Transaction”;

(iv)     Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that issuer”;

(v)    Section 12.9(b)(iv) of the Equity Definitions is hereby amended by (A) deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); and (B) deleting the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares in the amount of the Hedging Shares or” in the penultimate sentence; and

(vi)    Section 12.9(b)(v) of the Equity Definitions is hereby amended by (A) adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and (B)(1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C) and (3) replacing in the penultimate sentence the words “either party” with “the Hedging Party” and (4) deleting clause (X) in the final sentence.

(i)    No Netting and Set-off. Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.

(j)    Disclosure. Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.

(k)    Designation by Dealer. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Dealer (the “Designator”) may designate any of its Affiliates (the “Designee”) to deliver or take delivery, as the case may be, and otherwise perform its obligations to deliver, if any, or take delivery of, as the case may be, any such Shares or other securities in respect of the Transaction, and the Designee may assume such obligations, if any. Such designation shall not relieve the Designator of any of its obligations, if any, hereunder. Notwithstanding the previous sentence, if the Designee shall have performed the obligations, if any, of the Designator hereunder, then the Designator shall be discharged of its obligations, if any, to Counterparty to the extent of such performance.

(l)    Termination Currency. The Termination Currency shall be USD.

(m)    Wall Street Transparency and Accountability Act of 2010.  The parties hereby agree that none of (i) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (the “WSTAA”), (ii) any similar legal certainty provision included in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (iii) the enactment of the WSTAA or any regulation under the WSTAA, (iv) any requirement under the WSTAA or (v) any amendment made by the WSTAA shall limit or otherwise impair either party’s right to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased cost, regulatory change or similar event under this Confirmation, the Equity Definitions or the Agreement (including, but not limited to, any right arising from any Change in Law, Hedging Disruption, Increased Cost of Hedging or Illegality).

(n)    Delivery of Cash. For the avoidance of doubt, other than payment of the Prepayment Amount by Counterparty, nothing in this Confirmation shall be interpreted as requiring Counterparty to cash settle the Transaction hereunder, except in circumstances where cash settlement is within Counterparty’s control (including, without limitation, where Counterparty elects to deliver or receive cash, where Counterparty fails timely to elect to deliver Shares pursuant Annex A hereof in settlement of the Transaction hereunder or to deliver or receive Share Termination Delivery Units, or where Counterparty has made settlement by delivery of Restricted Settlement Shares in accordance with Annex A hereof unavailable due to the occurrence of events within its control) or in those circumstances in which all, but not less than all, holders of the Shares would also receive cash.

(o)    Tax Matters

(i) Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “FATCA Withholding Tax”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.

(ii) HIRE Act.  “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any tax imposed on payments treated as dividends from sources within the United States under Section 871(m) of the Code or any regulations issued thereunder.

(iii) Tax documentation. Counterparty and Dealer shall provide to each other a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided has become obsolete or incorrect. Additionally, Counterparty and Dealer shall, promptly upon request by Dealer, provide such other tax forms and documents requested by Dealer or Counterparty, as applicable.

(o)    Waiver of Trial by Jury. Each of Counterparty and DEALER hereby irrevocably waives (on its own behalf and, to the extent permitted by applicable law, on behalf of its stockholders) all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to the Transaction or the actions of DEALER or its affiliates in the negotiation, performance or enforcement hereof.

(p)    Governing Law; Jurisdiction. THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

[Signature Page Follows]

Please confirm your agreement to be bound by the terms stated herein by executing the copy of this Confirmation enclosed for that purpose and returning it to us by mail or facsimile transmission to the address for Notices indicated above.

Yours sincerely,

BANK OF AMERICA, N.A.

By: /S/ Jake Mendelsohn

Name: Jake Mendelsohn

Title: Managing Director

Confirmed as of the date first above written:

LIFELOCK, INC.

By: /s/ Chris Power

Name: Chris Power

Title: Chief Financial Officer

ANNEX A

COUNTERPARTY SETTLEMENT PROVISIONS

1.    The following Counterparty Settlement Provisions shall apply to the extent indicated under the Confirmation:

Settlement Currency: USD

Settlement Method Election: Applicable; provided that (i) Section 7.1 of the Equity Definitions is hereby amended by deleting the word “Physical” in the sixth line thereof and replacing it with the words “Net Share” and (ii) the Electing Party may make a settlement method election only if the Electing Party represents and warrants to Dealer in writing on the date it notifies Dealer of its election that, as of such date, (A) none of Counterparty and its officers and directors is aware of any material nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Exchange Act when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.

Electing Party: Counterparty

Settlement Method

Election Date: The date that is the earlier of (i) 3 Exchange Business Days prior to the Scheduled Final Averaging Date and (ii) the second Exchange Business Day immediately following the Valuation Date.

Default Settlement Method: Net Share Settlement

Special Settlement: Either (i) a settlement to which this Annex A applies that follows the occurrence of a Transaction Announcement to which Section 9 of this Confirmation applies or (ii) any settlement to which paragraphs 2 through 5 of this Annex A apply that follows a termination or cancellation of the Transaction pursuant to Section 6 of the Agreement or Article 12 of the Equity Definitions to which Section 10(a) of this Confirmation applies.

Forward Cash Settlement

Amount: The Number of Shares to be Delivered multiplied by the Settlement Valuation Price.

Settlement Valuation Price: The arithmetic average of the VWAP Prices for all Settlement Valuation Dates, subject to Averaging Date Disruption, determined as if each Settlement Valuation Date were an Averaging Date (with Averaging Date Disruption applying as if the last Settlement Valuation Date were the Final Averaging Date and the Settlement Valuation Price were the Settlement Price).

Settlement Valuation Dates: A number of Scheduled Trading Days selected by Dealer in its reasonable discretion, beginning on the Scheduled Trading Day immediately following the later of the Settlement Method Election Date and the Final Averaging Date.

Cash Settlement: If Cash Settlement is applicable, then Counterparty shall pay to Dealer the absolute value of the Forward Cash Settlement Amount on the Cash Settlement Payment Date.

Cash Settlement

Payment Date: The date one Settlement Cycle following the last Settlement Valuation Date.

Net Share Settlement

Procedures: If Net Share Settlement is applicable, Net Share Settlement shall be made in accordance with paragraphs 2 through 5 below.

2.    Net Share Settlement shall be made by delivery on the Settlement Date of a number of Shares equal to the product of (i) the absolute value of the Number of Shares to be Delivered and (ii) 100%, plus a commercially reasonable amount determined by Dealer to account for the fact that such Shares will not be registered for resale; provided that in the case of a Special Settlement, Net Share Settlement shall be made (i) by delivery on the Cash Settlement Payment Date (such date, the “Net Share Settlement Date”) of a number of Shares (the “Restricted Payment Shares”) with a value equal to the absolute value of the Forward Cash Settlement Amount, with such Shares’ value based on the realizable market value thereof to Dealer (which value shall take into account an illiquidity discount resulting from the fact that the Restricted Payment Shares will not be registered for resale), as determined by the Calculation Agent in a good faith commercially reasonable manner (the “Restricted Share Value”), and paragraph 3 of this Annex A shall apply to such Restricted Payment Shares, and (ii) by delivery of the Make-Whole Payment Shares as described in paragraph 4 below.

3.    (a)    All Restricted Payment Shares and Make-Whole Payment Shares shall be delivered to Dealer (or any affiliate of Dealer designated by Dealer) pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(2) thereof.

(b)    As of or prior to the date of delivery, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Dealer or any affiliate of Dealer designated by Dealer shall be afforded a commercially reasonable opportunity to conduct a due diligence investigation with respect to Counterparty customary in scope for private placements of equity securities for companies of a similar size (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them), subject to customary confidential agreement(s) between the parties.

(c)    As of the date of delivery, Counterparty shall use good faith commercially reasonable efforts to enter into an agreement (a “Private Placement Agreement”) with Dealer (or any affiliate of Dealer designated by Dealer) in connection with the private placement of such Shares by Counterparty to Dealer (or any such affiliate) and the private resale of such Shares by Dealer (or any such affiliate), substantially similar to private placement purchase agreements customary for private placements of equity securities for companies of a similar size, in form and substance commercially reasonably satisfactory to Dealer, which Private Placement Agreement shall include, without limitation, provisions substantially similar to those contained in such private placement purchase agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its affiliates, and shall provide for the payment by Counterparty of all commercially reasonable fees and expenses in connection with such resale specified in writing in sufficient detail, including all commercially reasonable fees and expenses of counsel for Dealer, and shall contain representations, warranties and agreements of Counterparty reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resales.

(d)    Counterparty shall not take or cause to be taken any action that would make unavailable either (i) the exemption set forth in Section 4(2) of the Securities Act for the sale of any Restricted Payment Shares or Make-Whole Payment Shares by Counterparty to Dealer or (ii) an exemption from the registration requirements of the Securities Act reasonably acceptable to Dealer for resales of Restricted Payment Shares and Make-Whole Payment Shares by the Dealer (or an affiliate of Dealer).

(e)    Counterparty expressly agrees and acknowledges that the public disclosure of all material information relating to Counterparty is within Counterparty’s control.

4.    If Restricted Payment Shares are delivered in accordance with paragraph 3 above, on the last Settlement Valuation Date, a balance (the “Settlement Balance”) shall be established with an initial balance equal to the absolute value of the Forward Cash Settlement Amount. Following the delivery of Restricted Payment Shares or any Make-Whole Payment Shares, Dealer shall sell all such Restricted Payment Shares or Make-Whole Payment Shares in a commercially reasonable manner. At the end of each Exchange Business Day upon which sales have been made, the Settlement Balance shall be reduced by an amount equal to the aggregate proceeds received by Dealer or its affiliate upon the sale of such Restricted Payment Shares or Make-Whole Payment Shares, less a customary and commercially reasonable private placement fee for private placements of common stock by issuers of a similar size. If, on any Exchange Business Day, all Restricted Payment Shares and Make-Whole Payment Shares have been sold and the Settlement Balance has not been reduced to zero, Counterparty shall at its election (i) deliver to Dealer or as directed by Dealer one Settlement Cycle following such Exchange Business Day an additional number of Shares (the “Make-Whole Payment Shares” and, together with the Restricted Payment Shares, the “Payment Shares”) equal to (x) the Settlement Balance as of such Exchange Business Day divided by (y) the Restricted Share Value of the Make-Whole Payment Shares as of such Exchange Business Day or (ii) promptly deliver to Dealer cash in an amount equal to the then remaining Settlement Balance. This provision shall be applied successively until either the Settlement Balance is reduced to zero or the aggregate number of Restricted Payment Shares and Make-Whole Payment Shares equals the Maximum Deliverable Number. If on any Exchange Business Day, Restricted Payment Shares and Make-Whole Payment Shares remain unsold and the Settlement Balance has been reduced to zero, Dealer shall promptly return such unsold Restricted Payment Shares or Make-Whole Payment Shares.

5.    Notwithstanding the foregoing, in no event shall Counterparty be required to deliver more than the Maximum Deliverable Number of Shares hereunder. “Maximum Deliverable Number” means the number of Shares set forth as such in Annex B to this Confirmation. Counterparty represents and warrants to Dealer (which representation and warranty shall be deemed to be repeated on each day from the date hereof to the Settlement Date or, if Counterparty has elected to deliver any Payment Shares hereunder in connection with a Special Settlement, to the date on which resale of such Payment Shares is completed (the “Final Resale Date”)) that the Maximum Deliverable Number is equal to or less than the number of authorized but unissued Shares of Counterparty that are not reserved for future issuance in connection with transactions in such Shares (other than the transactions under this Confirmation) on the date of the determination of the Maximum Deliverable Number (such Shares, the “Available Shares”). In the event Counterparty shall not have delivered the full number of Shares otherwise deliverable as a result of this paragraph 5 (the resulting deficit, the “Deficit Shares”), Counterparty shall be continually obligated to deliver, from time to time until the full number of Deficit Shares have been delivered pursuant to this paragraph, Shares when, and to the extent that, (i) Shares are repurchased, acquired or otherwise received by Counterparty or any of its subsidiaries after the date hereof (whether or not in exchange for cash, fair value or any other consideration), (ii) authorized and unissued Shares reserved for issuance in respect of other transactions prior to such date which prior to the relevant date become no longer so reserved or (iii) Counterparty additionally authorizes any unissued Shares that are not reserved for other transactions. Counterparty shall immediately notify Dealer of the occurrence of any of the foregoing events (including the number of Shares subject to clause (i), (ii) or (iii) and the corresponding number of Shares to be delivered) and promptly deliver such Shares thereafter.

ANNEX B

Prepayment Amount:            USD 48,077,107.87

Scheduled Final Averaging Date: July 29, 2016 (or if such date is not an Exchange Business Day, the next following Exchange Business Day).

Final Date October 29, 2016

Scheduled Earliest Acceleration

Date: June 13, 2016 (or if such date is not an Exchange Business Day, the next following Exchange Business Day).

Initial Shares: 3,541,208 Shares; provided that if, in connection with the Transaction, Dealer is unable to borrow or otherwise acquire a number of Shares equal to the Initial Shares for delivery to Counterparty on the Initial Share Delivery Date, the Initial Shares delivered on the Initial Share Delivery Date shall be reduced to such number of Shares that Dealer is able to so borrow or otherwise acquire and Dealer shall use reasonable good faith efforts to borrow at a cost equal to or less than the Initial Stock Loan Rate or otherwise acquire a number of Shares equal to the shortfall in the Initial Share Delivery and to deliver such additional Shares as soon as reasonably practicable. The aggregate of all Shares delivered to Counterparty in respect of the Transaction pursuant to this paragraph shall be the “Initial Shares” for purposes of “Number of Shares to be Delivered” in the Confirmation.

Price Adjustment Amount: USD 0.0550

Maximum Stock Loan Rate: 200 basis points

Initial Stock Loan Rate: 75 basis points

Threshold Price: USD 5.00

Maximum Deliverable Number: 10,000,000 Shares

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Hilary Schneider, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date:	August 9, 2016	/s/ Hilary Schneider
		Hilary Schneider
		Chief Executive Officer and President
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Chris Power, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date:	August 9, 2016	/s/ Chris Power
		Chris Power
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATIONS OF

CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Hilary Schneider, Chief Executive Officer and President of LifeLock, Inc. (“LifeLock”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that LifeLock’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in LifeLock’s Quarterly Report on Form 10-Q fairly presents in all material respects LifeLock’s financial condition and results of operations.

/s/ Hilary Schneider

Hilary Schneider

Chief Executive Officer and President

(Principal Executive Officer)

August 9, 2016

I, Chris Power, Chief Financial Officer of LifeLock, Inc. (“LifeLock”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that LifeLock’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in LifeLock’s Quarterly Report on Form 10-Q fairly presents in all material respects LifeLock’s financial condition and results of operations

/s/ Chris Power

Chris Power

Chief Financial Officer

(Principal Financial and Accounting Officer)

August 9, 2016

This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any LifeLock, Inc. filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Quarterly Report on Form 10-Q), irrespective of any general incorporation language contained in such filing.

A signed original of these written statements required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to LifeLock, Inc. and will be retained by LifeLock, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 05, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Trading Symbol	LOCK
Entity Registrant Name	LIFELOCK, INC.
Entity Central Index Key	0001383871
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		92,592,112

XML

Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 29,672	$ 50,239
Marketable securities	126,265	196,474
Trade and other receivables, net	16,295	13,974
Prepaid expenses and other current assets	12,977	12,303
Total current assets	185,209	272,990
Property and equipment, net	43,882	30,485
Goodwill	172,087	172,087
Intangible assets, net	23,811	30,174
Deferred tax assets, net	89,691	77,363
Other non-current assets	14,119	9,710
Total assets	528,799	592,809
Current liabilities:
Accounts payable	7,672	24,747
Accrued expenses and other liabilities	85,712	76,226
Deferred revenue	196,776	166,403
Total current liabilities	290,160	267,376
Other non-current liabilities	18,172	7,367
Total liabilities	308,332	274,743
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value, 300,000,000 authorized at June 30, 2016 and December 31, 2015; 99,220,559 and 95,877,947 shares issued and 91,717,769 and 95,832,238 outstanding at June 30, 2016 and December 31, 2015, respectively	99	96
Preferred stock, $0.001 par value, 10,000,000 shares authorized and no shares issued and outstanding at June 30, 2016 and December 31, 2015	0	0
Treasury stock, at cost; 7,502,790 shares and no shares held at June 30, 2016 and December 31, 2015, respectively	(79,824)	0
Additional paid-in capital	533,069	532,388
Accumulated other comprehensive loss	(30)	(361)
Accumulated deficit	(232,847)	(214,057)
Total stockholders’ equity	220,467	318,066
Total liabilities and stockholders’ equity	$ 528,799	$ 592,809

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common stock par value (in dollars per share)	$ 0.001	$ 0.001
Common stock shares authorized (in shares)	300,000,000	300,000,000
Common stock shares issued (in shares)	99,220,559	95,877,947
Common stock shares outstanding (in shares)	91,717,769	95,832,238
Preferred stock par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Treasury stock, shares held (in shares)	7,502,790	0

XML

Condensed Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenue:
External customers	$ 164,443	$ 144,957	$ 323,712	$ 279,365
Total revenue	164,443	144,957	323,712	279,365
Cost of services	43,642	34,926	83,628	69,482
Gross profit	120,801	110,031	240,084	209,883
Costs and expenses:
Sales and marketing	82,372	69,541	172,076	146,620
Technology and development	19,908	16,666	41,130	33,532
General and administrative	27,596	20,876	51,818	39,831
Amortization of acquired intangible assets	3,320	2,083	6,362	4,167
Total costs and expenses	133,196	109,166	271,386	224,150
Income (loss) from operations	(12,395)	865	(31,302)	(14,267)
Other income (expense):
Interest expense	(181)	(87)	(292)	(176)
Interest income	304	162	603	279
Other, net	(124)	(103)	(129)	(183)
Total other income (expense)	(1)	(28)	182	(80)
Income (loss) before income taxes	(12,396)	837	(31,120)	(14,347)
Income tax expense (benefit)	(4,830)	317	(12,328)	(5,709)
Net income (loss)	$ (7,566)	$ 520	$ (18,792)	$ (8,638)
Net income (loss) per share
Earnings per share, basic (in dollars per share)	$ (0.08)	$ 0.01	$ (0.20)	$ (0.09)
Earnings per share, diluted (in dollars per share)	$ (0.08)	$ 0.01	$ (0.20)	$ (0.09)
Weighted-average common shares outstanding used in computing net income (loss) per share:
Weighted average number of shares outstanding, basic (in shares)	92,385,195	94,592,297	93,566,920	94,314,192
Weighted average number of shares outstanding, diluted (in shares)	92,385,195	100,288,872	93,566,920	94,314,192
Consumer
Revenue:
External customers	$ 156,659	$ 138,329	$ 308,589	$ 266,530
Costs and expenses:
Income (loss) from operations	(8,279)	4,548	(21,756)	(6,208)
Enterprise
Revenue:
External customers	7,784	6,628	15,123	12,835
Costs and expenses:
Income (loss) from operations	$ (4,116)	$ (3,683)	$ (9,546)	$ (8,059)

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (7,566)	$ 520	$ (18,792)	$ (8,638)
Other comprehensive gain (loss), net of tax
Unrealized gain (loss) on marketable securities	62	(119)	332	(78)
Comprehensive income (loss)	$ (7,504)	$ 401	$ (18,460)	$ (8,716)

XML

Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Operating activities
Net loss	$ (18,792)	$ (8,638)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	12,025	8,860
Share-based compensation	16,897	12,424
Provision for doubtful accounts	309	45
Amortization of premiums on marketable securities	1,161	1,498
Deferred income tax benefit	(12,328)	(5,709)
Other	213	82
Change in operating assets and liabilities:
Trade and other receivables	(2,818)	(2,655)
Prepaid expenses and other current assets	(673)	(653)
Other non-current assets	(280)	304
Accounts payable	(15,629)	7,229
Accrued expenses and other liabilities	10,117	7,284
Deferred revenue	30,374	34,450
Other non-current liabilities	58	376
Net cash provided by operating activities	20,634	54,897
Investing activities
Acquisition of property and equipment, including capitalization of internal use software	(9,337)	(4,973)
Purchases of marketable securities	(38,400)	(115,274)
Sales and maturities of marketable securities	107,986	72,345
Premiums paid for company-owned life insurance policies	4,337	4,337
Net cash provided by (used in) investing activities	55,912	(52,239)
Financing activities
Proceeds from stock-based compensation plans	5,469	8,032
Payments related to the repurchases of common stock	(100,000)	0
Payments for employee tax withholdings related to restricted stock units and awards	(2,582)	(1,230)
Net cash provided by (used in) financing activities	(97,113)	6,802
Net increase (decrease) in cash and cash equivalents	(20,567)	9,460
Cash and cash equivalents at beginning of period	50,239	146,569
Cash and cash equivalents at end of period	29,672	156,029
Supplemental cash flow information:
Building in progress - leased facility acquired under financing obligation	$ 10,746	$ 0

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP), and applicable Securities and Exchange Commission, or SEC, rules and regulations regarding interim financial reporting. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, or fiscal 2015 Form 10-K.

The condensed consolidated balance sheet as of December 31, 2015 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by U.S. GAAP.

The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the anticipated results of operations for the entire year ending December 31, 2016 or any future period.

Basis of Consolidation

The condensed consolidated financial statements include our accounts and those of our wholly and indirectly owned subsidiaries. We eliminate all intercompany balances and transactions, including intercompany profits, in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make certain estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We continually evaluate our estimates, including those related to the allocation of the purchase price associated with acquisitions; the carrying value of long-lived assets; the amortization period of long-lived assets; the carrying value, capitalization, and amortization of software and website development costs; the carrying value of goodwill and other intangible assets; the amortization period of intangible assets; the provision for income taxes and related deferred tax accounts, and realizability of deferred tax assets; certain accrued expenses; contingencies, litigation, and related legal accruals; and the value attributed to employee stock options and other stock-based awards. We base our estimates on historical experience, current business factors, and various other assumptions that we believe are necessary to consider to form a basis for making judgments. Actual results could be materially different from these estimates.

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Leases

We lease office space and data centers in various locations under operating leases with original lease periods up to 11 years. Rent expense is recognized on a straight-line basis from the day we take possession of the premises through the end of the lease term. Rent abatements and rent escalation provisions are considered in determining the straight-line rent expense with any difference between rent expense and rent payable recorded as an increase or decrease in deferred rent. Tenant improvement allowances are recorded as leasehold improvements within property and equipment and within deferred rent.

In April 2016, we entered into a lease with MV Campus Owners, LLC to lease approximately 60,000 of office space located in Mountain View, CA. We record assets and liabilities for the present value of estimated constructions costs incurred under build-to-suite lease arrangements to the extent we are involved in the construction of structural improvements or take substantially all of the construction period risk prior to commencement of a lease. Ground rents are imputed and accrued for during the construction period, and are recorded in rent expense. At completion of a construction project, we perform an analysis to determine if the transfer to the owner/lessor meets the requirements for sale-leaseback treatment. If we maintain significant continuing involvement, we will continue to carry the construction costs and corresponding financing obligation on our balance sheet until the involvement or the term of the lease ends. If it is determined that we will not maintain significant continuing involvement, we record a sale of the premises back to the owner/lessor, and remove the construction costs and financing obligation from our consolidated balance sheet.

There have been no other material changes to our significant accounting policies from those disclosed in our fiscal 2015 Form 10-K.

Recently Issued Accounting Standards

In February 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update (ASU) 2016-02, Leases, which requires lessees to recognize the assets and liabilities on their balance sheet for the rights and obligations created by operating leases and will also require disclosures designed to give users of financial statements information on the amount, timing, and uncertainty of cash flows arising from leases. The guidance provided by ASU 2016-02 is effective for annual periods beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the effect of ASU 2016-06 on our consolidated financial statements and do not plan to early adopt this guidance.

In May 2014, the FASB, issued ASU 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which defers the effective date of ASU 2014-09 for all entities for one year. Consequently, the guidance provided in ASU 2014-09 will be effective for us in the first quarter of our fiscal year ending December 31, 2018. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The guidance permits the use of either the retrospective or cumulative effect transition method. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations. ASU 2016-08 is effective the same date as ASU 2014-09, Revenue from Contracts with Customers. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies the guidance related to identifying performance obligations and licensing implementation guidance. ASU 2016-10 reduces the cost and complexity of applying certain aspects of the guidance both at implementation and on an ongoing basis. The effective date for ASU 2016-10 is the same as ASU 2014-09. We are currently in the process of evaluating the impact of the adoption of this guidance on our consolidated financial statements and have not yet selected a transition method.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting, which require all income tax effects of awards to be recognized in the income statement when the awards vest or are settled, as well as revising guidance around classification of awards as either equity or liabilities, forfeitures and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the effect of ASU 2016-09 on our consolidated financial statements and do not plan to early adopt this guidance.

XML

Marketable Securities

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Marketable Securities

Marketable Securities

The following is a summary of marketable securities designated as available-for-sale as of June 30, 2016 and December 31, 2015:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
June 30, 2016
Corporate bonds	$	87,638	$	13	$	(45	)	$	87,606
Municipal bonds	9,964		—		(2		)	9,962
Government securities	9,694		19		—			9,713
Commercial paper	10,472		—		—			10,472
Agency securities	7,261		3		—			7,264
Certificates of deposit	1,248		—		—			1,248
Total marketable securities	$	126,277	$	35	$	(47	)	$	126,265
December 31, 2015
Corporate bonds	$	125,132	$	1	$	(304	)	$	124,829
Commercial paper	37,236		—		—			37,236
Municipal bonds	16,228		2		(6		)	16,224
Government securities	8,704		1		(17		)	8,688
Agency securities	7,273		—		(20		)	7,253
Certificates of deposit	2,244		—		—			2,244
Total marketable securities	$	196,817	$	4	$	(347	)	$	196,474

We classify all marketable securities as current regardless of contractual maturity dates because we consider such investments to represent cash available for current operations.

As of June 30, 2016 and December 31, 2015, we did not consider any of our marketable securities to be other-than-temporarily impaired.  When evaluating our investments for other-than-temporary impairment, we review factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer, our ability and intent to hold the security, and whether it is more likely than not that we will be required to sell the investment before recovery of its cost basis.

The following is a summary of amortized cost and estimated fair value of marketable securities as of June 30, 2016 and December 31, 2015, by maturity:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
June 30, 2016
Due in one year or less	$	116,006	$	18	$	(40	)	$	115,984
Due after one year	10,271		17		(7		)	10,281
Total marketable securities	$	126,277	$	35	$	(47	)	$	126,265
December 31, 2015
Due in one year or less	$	164,147	$	2	$	(221	)	$	163,928
Due after one year	32,670		2		(126		)	32,546
Total marketable securities	$	196,817	$	4	$	(347	)	$	196,474

XML

Fair Value Measurements

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

As of June 30, 2016 and December 31, 2015, the fair value of our financial assets was as follows:

	Level 1		Level 2		Level 3		Total
	(in thousands)
June 30, 2016
Assets:
Money market funds (1)	$	9,296	$	—	$	—	$	9,296
Corporate bonds (2)	—		87,606		—		87,606
Municipal bonds (2)	—		9,962		—		9,962
Government securities (2)	—		9,713		—		9,713
Commercial paper (2)	—		10,472		—		10,472
Agency securities (2)	—		7,264		—		7,264
Certificates of deposit (2)	—		1,248		—		1,248
Total assets measured at fair value	$	9,296	$	126,265	$	—	$	135,561
December 31, 2015
Assets:
Money market funds (1)	$	18,114	$	—	$	—	$	18,114
Corporate bonds (2)	—		124,829		—		124,829
Municipal bonds (2)	—		16,223		—		16,223
Commercial paper (3)	—		47,294		—		47,294
Government securities (2)	—		8,688		—		8,688
Agency securities (2)	—		7,253		—		7,253
Certificates of deposit (2)	—		2,244		—		2,244
Total assets measured at fair value	$	18,114	$	206,531	$	—	$	224,645

⁽¹⁾  Classified in cash and cash equivalents

⁽²⁾  Classified in marketable securities.

⁽³⁾  Includes commercial paper with maturities of three months or less at time of purchase of $10.1 million classified in cash and cash equivalents and commercial paper with maturities of greater than three months of $37.2 million classified in marketable securities.

XML

Financing Arrangements

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Financing Arrangements

Financing Arrangements

There have been no changes in our Credit Agreement and related documents with Bank of America, which we refer to as our Senior Credit Facility, from the disclosure in our fiscal 2015 Form 10-K. At June 30, 2016 and December 31, 2015 we were in compliance with all the covenants of the Senior Credit Facility.

As of June 30, 2016, we had outstanding letters of credit in the amount of $1.3 million.

XML

Leases

6 Months Ended

Jun. 30, 2016

Leases [Abstract]

Operating Leases

Leases

In April 2016, we entered into a lease agreement for approximately 60,000 rentable square feet of office space located in Mountain View, CA. The office space rented is for the total office space available in the building, which is currently under construction. As a result of our involvement during the construction period, we're deemed to be the owner of the construction project for accounting purposes. Accordingly, we recorded a $10.7 million construction in process asset in property and equipment, net, representing the total fair value of the building paid by the lessor including estimated construction period costs to date and a corresponding noncurrent financing obligation liability in our condensed consolidated balance sheet. Upon completion of the construction period, we will analyze our continuing involvement in the premises and determine if the transfer to the landlord meets the requirements for sale-leaseback treatment. If we do meet the requirements for sale-leaseback treatment, we will record the sale of the premises back to the owner/lessor and remove the construction in process asset and corresponding noncurrent financing obligation liability from our consolidated balance and the lease will be accounted for as an operating lease where we expect to recognize rent expense of approximately $4.0 million per year during the term of the lease. If we are unable to meet the requirements for sale-leaseback treatment, the lease will be treated as a financing obligation and we will continue to carry the value of the building and construction costs on our balance sheet. Rent payments will be treated as principal and interest payments on the financing obligation, with an amount recorded as estimated ground lease expense each period. The capitalized costs of the building will be depreciated over an estimated useful life of 30 years.

The following summarizes the future minimum lease payments for all outstanding lease agreements as of June 30, 2016:

				Financing
				Obligation,
				Building in
	Operating			Progress -
	Leases			Leased Facility
Remaining 2016	$	3,915		$	—
2017	7,429			1,717
2018	6,751			4,222
2019	6,355			4,349
2020	4,773			4,480
Thereafter	14,151			27,605
Gross future minimum lease payments	43,374			42,373
Less: expected proceeds from sublease rentals	(858		)
Net future minimum lease payments	$	42,516		$	42,373

Rent expense for the three- and six-months ended June 30, 2016 was $1.9 million and $4.0 million, respectively, net of sublease income. Rent expense for the three- and six-months ended June 30, 2015 was $1.6 million and $2.9 million, respectively.

XML

Stockholders' Equity

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Stock Repurchases

In November 2015, we announced that our Board of Directors approved the repurchase of up to $100 million of our common stock, representing approximately 7% of our outstanding common stock. The repurchase program was completed in the second quarter of 2016, with the final settlement of shares completed in the third quarter 2016. Repurchases under the program were made through open market and privately negotiated transactions as described below.

In February 2016, we entered into an issuer forward repurchase transaction confirmation (the ASR Agreement) with Bank of America, N.A. to repurchase common stock as part of the approved $100 million share repurchase program. Under the ASR Agreement, we paid Bank of America, N.A. $50 million and received an initial delivery of 4.2 million shares of common stock. The total number of shares purchased was determined based on the volume weighted average price of our common stock during the term of the ASR Agreement. In the second quarter 2016, Bank of America, N.A. delivered approximately 76,000 shares for the final settlement of the ASR Agreement.

We accounted for the ASR Agreement as two separate transactions (i) approximately 4.2 million shares of common stock initially delivered which represented approximately $42.5 million was accounted for as a treasury stock transaction and (ii) the remaining $7.5 million unsettled portion of the ASR Agreement was determined to be a forward contract indexed to our common stock. The initial repurchase of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted net income (loss) per share on the delivery date. We determined that the forward contract indexed to our common stock met all of the applicable criteria for equity classification, and therefore the contract was not accounted for as a derivative. We recorded the $7.5 million unsettled portion of the ASR Agreement, which represents the implied value of the forward contract, in additional paid-in capital on the condensed consolidated balance sheet upon execution of the ASR Agreement. Upon the final delivery of shares of the ASR Agreement, the forward contract was reclassified from additional paid-in capital to treasury stock for the value of the additional shares received, which amounted to approximately $1.0 million.

In May 2016, we entered into a second issuer forward repurchase transaction confirmation (the Second ASR Agreement) with Bank of America, N.A. to repurchase common stock as the final part of our approved $100 million share repurchase program. Under the Second ASR Agreement, we paid Bank of America, N.A. approximately $48.1 million and received and initial delivery of 3.5 million shares of common stock. The total number of shares purchased was determined based on the volume weighted average price of our common stock during the term of the Second ASR Agreement (the Valuation Period). In July 2016, we returned approximately 0.3 million shares to Merill Lynch, Pierce, Fenner & Smith pursuant to the Second ASR Agreement as a result of the increase in our stock price during the Valuation Period.

We accounted for the Second ASR Agreement as two separate transactions (i) approximately 3.5 million shares of common stock initially delivered which represented approximately $40.9 million was accounted for as a treasury stock transaction and (ii) the remaining $7.2 million unsettled portion of the Second ASR Agreement was determined to be a forward contract indexed to our common stock. The initial repurchase of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted net income (loss) per share on the delivery date. We determined that the forward contract indexed to our common stock met all of the applicable criteria for equity classification, and therefore the contract was not accounted for as a derivative. We recorded the $7.2 million unsettled portion of the Second ASR Agreement, which represents the implied value of the forward contract, in additional paid-in capital on the condensed consolidated balance sheet as of June 30, 2016. Upon final settlement of the Second ASR Agreement in August 2016, the value of the shares delivered to Merill Lynch, Pierce, Fenner & Smith was reclassified to additional paid-in capital from treasury stock for approximately $4.8 million.

We were authorized pursuant to the $100 million share repurchase program to repurchase shares of common stock in the open market pursuant to trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934. During the six-month period endedJune 30, 2016, we repurchased 0.2 million shares of common stock at an average price of $10.49 per share under such trading plans. In connection with the Second ASR Agreement, we terminated our trading plans.

Share-Based Compensation

We issue share-based awards to our employees in the form of stock options, restricted stock units, and restricted stock. We also have an Employee Stock Purchase Plan, or ESPP. The following table summarizes the components of share-based compensation expense included in our condensed consolidated statements of operations:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016		2015
	(in thousands)
Cost of services	$	462	$	465	$	959	$	837
Sales and marketing	1,503		1,215		3,121		2,147
Technology and development	2,526		2,003		5,319		3,712
General and administrative	3,754		3,371		7,498		5,728
Total share-based compensation	$	8,245	$	7,054	$	16,897	$	12,424

Unrecognized share-based compensation expenses totaled $78.5 million as of June 30, 2016, which we expect to recognize over a weighted-average time period of 3.0 years.

Stock Warrants

During the six-month period endedJune 30, 2016, warrants to purchase common shares of 2,334,044 were net exercised for a total of 2,210,335 shares. There are no warrants outstanding as of June 30, 2016.

XML

Net Income (Loss) Per Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Net Income (Loss) Per Share

Net Income (Loss) Per Share

We compute basic net income (loss) per share by dividing net income (loss) by the weighted-average number of common shares outstanding for the period. We compute diluted net income (loss) per share giving effect to all potential dilutive common stock, including awards granted under our equity compensation plans and warrants to acquire common stock.

The following table sets forth the computation of basic and diluted net income (loss):

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2016			2015		2016			2015
	(in thousands, except share and per share data)
Net income (loss)	$	(7,566	)	$	520	(18,792		)	(8,638		)
Denominator (basic):
Weighted average common shares outstanding	92,385,195			94,592,297		93,566,920			94,314,192
Denominator (diluted):
Weighted average common shares outstanding	92,385,195			94,592,297		93,566,920			94,314,192
Dilutive stock options outstanding	—			3,050,106		—			—
Dilutive restricted stock units and awards	—			411,066		—			—
Dilutive shares purchased under ESPP	—			7,017		—			—
Weighted average common shares from warrants	—			2,228,386		—			—
Net weighted average common shares outstanding	92,385,195			100,288,872		93,566,920			94,314,192
Net income (loss) per share
Basic	$	(0.08	)	$	0.01	$	(0.20	)	$	(0.09	)
Diluted	$	(0.08	)	$	0.01	$	(0.20	)	$	(0.09	)

Potentially dilutive securities, including common equivalent shares in which the exercise price together with other assumed proceeds exceed the average market price of common stock for the applicable period, were not included in the calculation of diluted net income (loss) per share as their impact would be anti-dilutive. The following weighted-average number of outstanding employee stock options, restricted stock units and restricted stock awards, warrants to purchase common stock, and shares purchased under our ESPP were excluded from the computation of diluted net income (loss) per share:

	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2016	2015	2016	2015
Stock options outstanding	9,648,039	4,651,910	9,379,323	7,436,319
Restricted stock units and restricted stock awards	2,546,119	327,405	2,656,439	718,507
Common equivalent shares from stock warrants	—	—	462,480	2,224,271
Shares purchased under ESPP	—	—	5,806	9,443
	12,194,158	4,979,315	12,504,048	10,388,540

XML

Income Taxes

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income taxes for the interim periods presented have been included in the accompanying condensed consolidated financial statements on the basis of an estimated annual effective tax rate. Based on an estimated annual effective tax rate and discrete items, the estimated income tax benefit for the three-month period ended June 30, 2016 was $4.8 million and the estimated income tax expense for the three-month period ended June 30, 2015 was $0.3 million. For the six-month periods ended June 30, 2016 and 2015, the estimated income tax benefit was $12.3 million and $5.7 million, respectively. The determination of the interim period income tax provision utilizes the effective tax rate method, which requires us to estimate certain annualized components of the calculation of the income tax provision, including the annual effective tax rate by entity and jurisdiction.

We continually evaluate all positive and negative information to determine if our deferred tax assets are realizable in accordance with ASC 740-10-30, which states that "all available evidence shall be considered in determining whether a valuation allowance for deferred tax assets is needed". In December 2015, the proposed comprehensive settlement agreements resolving outstanding litigation relating to our past marketing representations and information security programs were approved by the Federal Trade Commission, (FTC), the representatives of the Ebarle class action (as described in more detail in Note 11), and were preliminarily approved by the court presiding over such class action. As a result of these settlements, we paid $100 million in December 2015, resulting in a remaining cumulative accrual of $16 million. Based on the reserves of $96 million and $20 million recorded in the years ended December 31, 2015 and 2014, respectively, we have three years of cumulative pretax net losses. We reviewed the cumulative settlement of $116 million and determined that it was non-recurring in nature, not indicative of future performance, and, as such, would not materially affect our ability to generate taxable income in the future. In addition to excluding the impact of the non-recurring settlement amounts, we have seen improving pre-tax book income over the past 5 years and we are forecasting to continue generating pre-tax book income. As a result of the consideration of the factors discussed above, we believe that it is more likely than not that we will be able to realize our net deferred tax assets not currently subject to a valuation allowance.

XML

Segment Reporting

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

We operate our business and our Chief Operating Decision Maker, or CODM, who is our Chief Executive Officer and President, reviews and assesses our operating performance using two reportable segments: our consumer segment and our enterprise segment. In our consumer segment, we offer proactive identity theft protection services to consumers on an annual or monthly subscription basis. In our enterprise segment, we offer consumer risk management services to our enterprise customers.

Revenue and loss from operations by operating segment for the three-month period ended June 30, 2016 and goodwill and total assets by operating segment as of June 30, 2016 was as follows:

	Consumer			Enterprise			Eliminations			Total
	(in thousands)
Revenue
External customers	$	156,659		$	7,784		$	—		$	164,443
Intersegment revenue	—			(2,326		)	2,326			—
Loss from operations	(8,279		)	(4,116		)	—			(12,395		)
Goodwill	112,550			59,537			—			172,087
Total assets	436,359			93,229			(789		)	528,799

Revenue and loss from operations by operating segment for the six-month period ended June 30, 2016 was as follows:

	Consumer			Enterprise			Eliminations		Total
	(in thousands)
Revenue
External customers	$	308,589		$	15,123		$	—	$	323,712
Intersegment revenue	—			(4,612		)	4,612		—
Loss from operations	(21,756		)	(9,546		)	—		(31,302		)

Revenue and loss from operations by operating segment for the three-month period ended June 30, 2015 and goodwill and total assets by operating segment as of December 31, 2015 was as follows:

	Consumer		Enterprise			Eliminations			Total
	(in thousands)
Revenue
External customers	$	138,329	$	6,628		$	—		$	144,957
Intersegment revenue	—		2,109			(2,109		)	—
Income (loss) from operations	4,548		(3,683		)	—			865
Goodwill	112,550		59,537			—			172,087
Total assets	492,796		100,753			(740		)	592,809

Revenue and loss from operations by operating segment for the six-month period ended June 30, 2015 was as follows:

	Consumer			Enterprise			Eliminations			Total
	(in thousands)
Revenue
External customers	$	266,530		$	12,835		$	—		$	279,365
Intersegment revenue	—			4,164			(4,164		)	—
Loss from operations	(6,208		)	(8,059		)	—			(14,267		)

We derive all of our revenue from sales in the United States, and substantially all of our long-lived assets are located in the United States.

XML

Contingencies

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

As part of our consumer services, we offer comprehensive member service support. If a member’s identity has been compromised, our member service team and remediation specialists will assist the member with its resolution. This includes our $1 million service guarantee, which is backed by an identity theft insurance policy, under which we will spend up to $1 million to cover certain third-party costs and expenses incurred in connection with the remediation, such as legal and investigatory fees, subject to certain terms and conditions. This insurance also covers certain out-of-pocket expenses, such as loss of income, replacement of fraudulent withdrawals, and costs associated with child and elderly care, travel, stolen purse/wallet, and replacement of documents, subject to certain terms and conditions. While we have reimbursed members for claims under this guarantee, the amounts in aggregate for the six-month periods ended June 30, 2016 and 2015 were not material.

On July 21, 2015 the FTC lodged, under seal, in the United States District Court for the District of Arizona, a motion seeking to hold us in contempt of the consent decree we entered into with the FTC in 2010 (the FTC Order). On December 17, 2015, we entered into a comprehensive settlement agreement with the FTC, pursuant to which we resolved all matters related to the FTC Contempt Action and provided a mechanism to fund a settlement of the Ebarle Class Action described below. Under the terms of the settlement, $100 million was placed into the registry of the court overseeing the FTC Contempt Action, $68 million of which was authorized to be distributed to fund the consumer redress contemplated by the Ebarle Class Action settlement. Those funds have been transferred to the supervision of the court overseeing the Ebarle Class Action Settlement and are awaiting final approval of the settlement and distribution to the class members. The remaining $32 million of the settlement remains in the registry of the Arizona court.

On January 19, 2015, plaintiffs Napoleon Ebarle and Jeanne Stamm filed a nationwide putative consumer class action lawsuit against us in the United States District Court for the Northern District of California. The plaintiffs alleged that we engaged in deceptive marketing and sales practices in connection with our membership plans in violation of the Arizona Consumer Fraud Act and seek declaratory judgment under the Federal Declaratory Judgment Act. On January 20, 2016, the court overseeing the Ebarle Class Action granted the plaintiffs’ motion for preliminary approval conditionally approving the parties’ proposed settlement agreement. On February 11, 2016, the court overseeing the FTC Action entered an order allowing the $68 million to be transferred from the court's registry to the court-ordered settlement administrator in the Ebarle Class Action to fund the settlement. Notice has been sent to the class members. The deadline for class members to object was April 14, 2016, and the deadline for class members to submit claims was April 29, 2016. A hearing on final approval was held on June 23, 2016, and we are awaiting the court's final ruling. As of June 30, 2016 we have $13.0 million accrued for settlement of this claim, which was not included within the $100 million settlement paid to the court registry in connection with the settlement of the FTC Contempt Action and nationwide class action claims. In addition, we have $3.0 million accrued for a potential settlement with states attorneys general for related claims.

On August 1, 2014, our subsidiaries Lemon and Lemon Argentina, S.R.L. (Lemon Argentina, and together, the Lemon Entities) filed a lawsuit in Santa Clara Superior Court in San Jose, California, against Wenceslao Casares, former General Manager of Lemon, Cynthia McAdam, former General Counsel of Lemon, and Federico Murrone, Martin Apesteguia and Fabian Cuesta, each a former employee and former member of the Board of Directors of Lemon Argentina (the Argentine Executives). The complaint alleges breaches of employment-related contracts and breaches of fiduciary duties involving each named individual’s work for third-party Xapo, Inc. and/or Xapo, Ltd. during their employment by the applicable Lemon Entity.  On January 30, 2015, the Lemon Entities filed a second amended complaint alleging breaches of employment-related contracts, breaches of fiduciary duties, and fraud, and seeking declaratory relief against Mr. Casares, Ms. McAdam, and the Argentine Executives.  The Argentine Executives entered their appearances in the litigation on July 24, 2015 and filed a motion to dismiss for inconvenient forum on September 8, 2015. That motion was heard on December 4, 2015 and granted on January 4, 2016, with an order staying the action in its entirety. The Lemon Entities filed a notice of appeal on March 1, 2016.

Mr. Casares filed a cross-claim against us and Lemon, Inc. (now Lemon, LLC) on July 24, 2015, for breach of contract, breach of the implied covenant of good faith and fair dealing, conversion, unjust enrichment, and declaratory relief, all arising from the termination of his employment.  Because of the January 4, 2016 order staying the case in its entirety, the court did not rule on the motion to dismiss. Mr. Casares filed a separate complaint against us, Lemon, LLC, and Shareholder Representative Services LLC (SRS) in Delaware Chancery Court on October 7, 2015 for breach of contract and seeking a declaratory judgment.  The action concerns a December 12, 2014 settlement agreement that resolved certain disputes against other former shareholders of Lemon, Inc. arising out of our December 11, 2013 Lemon acquisition.  We, along with Lemon, LLC, moved to dismiss the complaint on October 28, 2015.  Mr. Casares responded by filing an amended complaint on January 8, 2016. LifeLock, Inc. and Lemon, LLC moved to dismiss the amended complaint. Briefing is complete and the matter is set for argument on September 27, 2016.

On July 22, 2015, Miguel Avila, representing himself and seeking to represent a class of persons who acquired our securities from July 30, 2014 to July 20, 2015, inclusive, filed a class action complaint in the United States District Court for the District of Arizona. His complaint alleges that Todd Davis, Christopher Power, and we violated Sections 10(b) and 20(a) of the Securities Exchange Act by making materially false or misleading statements, or failing to disclose material facts about our business, operations, and prospects, including with regard to our information security program, advertising, recordkeeping, and our compliance with the FTC Order. The complaint seeks certification as a class action, compensatory damages, and attorney’s fees and costs. On September 21, 2015, four other Company stockholders, Oklahoma Police Pension and Retirement System, Oklahoma Firefighters Pension and Retirement System, Larisa Gassel, and Donna Thompson, and their respective attorneys all filed motions seeking to be appointed the lead plaintiff and lead counsel in this class action. Lead plaintiffs moved to lift the discovery stay imposed by the Private Securities Litigation Reform Act on January 21, 2016. We, along with Mr. Davis and Mr. Power, opposed that motion on February 8, 2016. On April 22, 2016, the Court denied lead plaintiffs’ motion. We, along with Mr. Davis and Mr. Power, moved to dismiss the amended complaint on January 29, 2016. On August 3, 2016 the Court granted our motion to dismiss and granted lead plaintiffs twenty-one days to seek leave to amend their complaint.

On March 3, 2014, and March 10, 2014, two securities class action complaints were filed in the United States District Court for the District of Arizona, against us, Mr. Davis, and Mr. Power. On June 16, 2014, the court consolidated the complaints into a single action captioned In re LifeLock, Inc. Securities Litigation and appointed a lead plaintiff and lead counsel. On August 15, 2014, the lead plaintiff filed the Consolidated Amended Class Action Complaint (the Consolidated Amended Complaint), seeking to represent a class of persons who acquired our securities from February 26, 2013 to May 16, 2014, inclusive (the Class Period). The Consolidated Amended Complaint alleged that we, along with Mr. Davis, Mr. Power, and Ms. Schneider, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, by making materially false or misleading statements, or failing to disclose material facts regarding certain of our business, operational, and compliance policies, including with regard to certain of our services, our data security program, and Mr. Davis’ compliance with the FTC Order. The Consolidated Amended Complaint alleged that, as a result, certain of our financial statements issued during the Class Period and certain public statements made by Ms. Schneider, Mr. Davis, and Mr. Power during the Class Period, were false and misleading. The Consolidated Amended Complaint sought certification as a class action, compensatory damages, and attorneys’ fees and costs. On September 15, 2014, we, along with Ms. Schneider, Mr. Davis, and Mr. Power, filed a motion to dismiss the Consolidated Amended Complaint. On December 17, 2014, the court dismissed the Consolidated Amended Complaint and gave the lead plaintiff 21 days to seek leave to amend. On January 16, 2015, lead plaintiff filed his Second Consolidated Amended Complaint which contained similar allegations, but no longer named Ms. Schneider as a defendant. On January 30, 2015, we, along with Mr. Davis and Mr. Power, filed a motion to dismiss the Second Consolidated Amended Complaint. On July 21, 2015, the court granted the motion to dismiss, without leave to amend, and entered judgment in our favor. On August 18, 2015, the lead plaintiff along with another shareholder, City of Hallandale Beach Police and Firefighters’ Personnel Retirement Fund, moved to vacate the judgment on the grounds that the FTC’s July 21, 2015 motion seeking to hold us in contempt of the FTC Order constituted surprise and newly discovered evidence. Plaintiffs also sought permission to file a Third Consolidated Amended Complaint. We, Mr. Davis, and Mr. Power opposed plaintiffs’ motion. On September 18, 2015, the court denied plaintiffs’ motion to vacate the July 21, 2015 judgment and plaintiffs’ request to file another complaint. On September 21, 2015, plaintiffs filed a notice of appeal with the Ninth Circuit Court of Appeals. Plaintiffs appeal from the lower court’s July 21, 2015 order dismissing the Second Consolidated Amended Complaint and entering judgment in our favor, and the court’s September 18, 2015 order denying plaintiffs’ motion to vacate that judgment. Briefing of the appeal has been completed, but oral argument on the appeal has not been set by the Ninth Circuit.

On September 23, 2015, LifeLock stockholder Sridhar Manthangodu, filed a derivative complaint captioned Manthangodu v. Davis, et al., in the Superior Court of the State of Arizona, Maricopa County (Arizona Superior Court). The complaint alleged that certain of our directors (the Director Defendants) violated their fiduciary duties to LifeLock stockholders by, among other things, failing to ensure that we complied with the FTC Order. The complaint seeks unspecified monetary damages, a return to the company of all personal compensation received by the Director Defendants, unspecified corporate governance reforms, and attorney’s fees.  On December 24, 2015, the Arizona Superior Court issued an Order appointing plaintiff Manthangodu lead plaintiff and his counsel lead counsel.   

Following the filing of the Manthangodu action, additional substantively similar stockholder derivative actions were purportedly filed on our behalf against certain of our current and former directors and officers, seeking similar relief as the Manthangodu complaint.  Specifically, on October 28, 2015, a stockholder derivative complaint captioned Gassel v. Davis, et al., was filed in the United States District Court for the District Arizona (the “Arizona Federal District Court”); on November 19, 2015 and November 25, 2015, two stockholders derivative complaints captioned Stein v. Davis, et al. and John L. Munson Revocable Trust v. Davis, et al., respectively, were filed in the Delaware Court of Chancery; and on January 22, 2016, January 26, 2016, and February 1, 2016, three stockholders derivative complaints captioned, City of Pontiac General Employees’ Retirement Sys. v. Guthrie, et al.; Jiawei v. Davis, et al.; and Sprouse v. Davis, et al., respectively, were filed in the Arizona Superior Court. The plaintiffs in the Stein and Munson actions later voluntarily dismissed their actions, and on March 23, 2016, jointly filed a derivative complaint captioned, Stein and Munson v. Davis et al., in the Arizona Superior Court.  In the Arizona Superior Court actions, from February to April 2016, the Court issued separate orders consolidating the Sprouse, City of Pontiac, Jiawei, and the Stein and the Munson actions with the Manthangodu action.  The consolidated action is captioned In re: LifeLock, Inc. Derivative Litigation, with plaintiff Manthangodu as the lead plaintiff in the consolidated action.  In the Gassel action, on April 13, 2016, on our motion, the Arizona Federal District Court granted a non-indefinite stay of that action and directed us to file a status update on the Manthangodu action, which we and the individual defendants filed on July 12, 2016. 

On June 30, 2016, we and the Director Defendants entered into a proposed settlement stipulation with lead plaintiff Manthangodu.  In the proposed settlement stipulation, the lead plaintiff agreed to the dismissal, with prejudice, of the Manthangodu action as well as a release of any and all related stockholder claims against LifeLock and its current and former directors, officers, employees, and agents.  In exchange, we and the Director Defendants agreed to continue and/or implement certain corporate governance measures and to pay attorney’s fees in the amount of $6 million. On July 1, 2016, lead plaintiff filed an unopposed motion for preliminary approval of the proposed settlement stipulation. On July 8, 2016, the Court preliminarily approved the proposed settlement stipulation and set a final approval hearing for August 30, 2016, at which hearing the Court will determine whether to finally approve the proposed settlement stipulation and all of its terms.  The Court also set August 16, 2016, as the deadline for stockholders to object to the terms of the proposed settlement stipulation. If the Court approves the proposed settlement stipulation, we anticipate filing motions, as necessary, to effectuate the release of any pending related stockholder claims against LifeLock and its current and former directors or officers.  However, there is no assurance that the proposed settlement stipulation and all of its terms will be approved by the Court.

We are subject to other legal proceedings and claims that have arisen in the ordinary course of business. Although there can be no assurance as to the ultimate disposition of these matters, we believe, based upon the information available at this time, that, except as disclosed above, a material adverse outcome related to the matters is neither probable nor estimable.

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Basis of accounting, policy

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP), and applicable Securities and Exchange Commission, or SEC, rules and regulations regarding interim financial reporting. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, or fiscal 2015 Form 10-K.

The condensed consolidated balance sheet as of December 31, 2015 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by U.S. GAAP.

The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the anticipated results of operations for the entire year ending December 31, 2016 or any future period.

Consolidation, policy

The condensed consolidated financial statements include our accounts and those of our wholly and indirectly owned subsidiaries. We eliminate all intercompany balances and transactions, including intercompany profits, in consolidation.

Use of estimates, policy

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make certain estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We continually evaluate our estimates, including those related to the allocation of the purchase price associated with acquisitions; the carrying value of long-lived assets; the amortization period of long-lived assets; the carrying value, capitalization, and amortization of software and website development costs; the carrying value of goodwill and other intangible assets; the amortization period of intangible assets; the provision for income taxes and related deferred tax accounts, and realizability of deferred tax assets; certain accrued expenses; contingencies, litigation, and related legal accruals; and the value attributed to employee stock options and other stock-based awards. We base our estimates on historical experience, current business factors, and various other assumptions that we believe are necessary to consider to form a basis for making judgments. Actual results could be materially different from these estimates.

Recently issued accounting standards

In February 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update (ASU) 2016-02, Leases, which requires lessees to recognize the assets and liabilities on their balance sheet for the rights and obligations created by operating leases and will also require disclosures designed to give users of financial statements information on the amount, timing, and uncertainty of cash flows arising from leases. The guidance provided by ASU 2016-02 is effective for annual periods beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the effect of ASU 2016-06 on our consolidated financial statements and do not plan to early adopt this guidance.

In May 2014, the FASB, issued ASU 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which defers the effective date of ASU 2014-09 for all entities for one year. Consequently, the guidance provided in ASU 2014-09 will be effective for us in the first quarter of our fiscal year ending December 31, 2018. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The guidance permits the use of either the retrospective or cumulative effect transition method. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations. ASU 2016-08 is effective the same date as ASU 2014-09, Revenue from Contracts with Customers. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies the guidance related to identifying performance obligations and licensing implementation guidance. ASU 2016-10 reduces the cost and complexity of applying certain aspects of the guidance both at implementation and on an ongoing basis. The effective date for ASU 2016-10 is the same as ASU 2014-09. We are currently in the process of evaluating the impact of the adoption of this guidance on our consolidated financial statements and have not yet selected a transition method.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting, which require all income tax effects of awards to be recognized in the income statement when the awards vest or are settled, as well as revising guidance around classification of awards as either equity or liabilities, forfeitures and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the effect of ASU 2016-09 on our consolidated financial statements and do not plan to early adopt this guidance.

XML

Marketable Securities (Tables)

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Summary of marketable securities designated as available-for-sale

The following is a summary of marketable securities designated as available-for-sale as of June 30, 2016 and December 31, 2015:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
June 30, 2016
Corporate bonds	$	87,638	$	13	$	(45	)	$	87,606
Municipal bonds	9,964		—		(2		)	9,962
Government securities	9,694		19		—			9,713
Commercial paper	10,472		—		—			10,472
Agency securities	7,261		3		—			7,264
Certificates of deposit	1,248		—		—			1,248
Total marketable securities	$	126,277	$	35	$	(47	)	$	126,265
December 31, 2015
Corporate bonds	$	125,132	$	1	$	(304	)	$	124,829
Commercial paper	37,236		—		—			37,236
Municipal bonds	16,228		2		(6		)	16,224
Government securities	8,704		1		(17		)	8,688
Agency securities	7,273		—		(20		)	7,253
Certificates of deposit	2,244		—		—			2,244
Total marketable securities	$	196,817	$	4	$	(347	)	$	196,474

Summary of amortized cost and estimated fair value of marketable securities by maturity

The following is a summary of amortized cost and estimated fair value of marketable securities as of June 30, 2016 and December 31, 2015, by maturity:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
June 30, 2016
Due in one year or less	$	116,006	$	18	$	(40	)	$	115,984
Due after one year	10,271		17		(7		)	10,281
Total marketable securities	$	126,277	$	35	$	(47	)	$	126,265
December 31, 2015
Due in one year or less	$	164,147	$	2	$	(221	)	$	163,928
Due after one year	32,670		2		(126		)	32,546
Total marketable securities	$	196,817	$	4	$	(347	)	$	196,474

XML

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair value of financial assets and liabilities

As of June 30, 2016 and December 31, 2015, the fair value of our financial assets was as follows:

	Level 1		Level 2		Level 3		Total
	(in thousands)
June 30, 2016
Assets:
Money market funds (1)	$	9,296	$	—	$	—	$	9,296
Corporate bonds (2)	—		87,606		—		87,606
Municipal bonds (2)	—		9,962		—		9,962
Government securities (2)	—		9,713		—		9,713
Commercial paper (2)	—		10,472		—		10,472
Agency securities (2)	—		7,264		—		7,264
Certificates of deposit (2)	—		1,248		—		1,248
Total assets measured at fair value	$	9,296	$	126,265	$	—	$	135,561
December 31, 2015
Assets:
Money market funds (1)	$	18,114	$	—	$	—	$	18,114
Corporate bonds (2)	—		124,829		—		124,829
Municipal bonds (2)	—		16,223		—		16,223
Commercial paper (3)	—		47,294		—		47,294
Government securities (2)	—		8,688		—		8,688
Agency securities (2)	—		7,253		—		7,253
Certificates of deposit (2)	—		2,244		—		2,244
Total assets measured at fair value	$	18,114	$	206,531	$	—	$	224,645

⁽¹⁾  Classified in cash and cash equivalents

⁽²⁾  Classified in marketable securities.

⁽³⁾  Includes commercial paper with maturities of three months or less at time of purchase of $10.1 million classified in cash and cash equivalents and commercial paper with maturities of greater than three months of $37.2 million classified in marketable securities.

XML

Leases (Tables)

6 Months Ended

Jun. 30, 2016

Leases [Abstract]

Schedule of future minimum lease payments for all outstanding lease agreements

The following summarizes the future minimum lease payments for all outstanding lease agreements as of June 30, 2016:

				Financing
				Obligation,
				Building in
	Operating			Progress -
	Leases			Leased Facility
Remaining 2016	$	3,915		$	—
2017	7,429			1,717
2018	6,751			4,222
2019	6,355			4,349
2020	4,773			4,480
Thereafter	14,151			27,605
Gross future minimum lease payments	43,374			42,373
Less: expected proceeds from sublease rentals	(858		)
Net future minimum lease payments	$	42,516		$	42,373

XML

Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Schedule of share-based compensation components

The following table summarizes the components of share-based compensation expense included in our condensed consolidated statements of operations:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016		2015
	(in thousands)
Cost of services	$	462	$	465	$	959	$	837
Sales and marketing	1,503		1,215		3,121		2,147
Technology and development	2,526		2,003		5,319		3,712
General and administrative	3,754		3,371		7,498		5,728
Total share-based compensation	$	8,245	$	7,054	$	16,897	$	12,424

XML

Net Income (Loss) Per Share (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Basic and diluted net Income (loss) per share attributable to common stockholders

The following table sets forth the computation of basic and diluted net income (loss):

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2016			2015		2016			2015
	(in thousands, except share and per share data)
Net income (loss)	$	(7,566	)	$	520	(18,792		)	(8,638		)
Denominator (basic):
Weighted average common shares outstanding	92,385,195			94,592,297		93,566,920			94,314,192
Denominator (diluted):
Weighted average common shares outstanding	92,385,195			94,592,297		93,566,920			94,314,192
Dilutive stock options outstanding	—			3,050,106		—			—
Dilutive restricted stock units and awards	—			411,066		—			—
Dilutive shares purchased under ESPP	—			7,017		—			—
Weighted average common shares from warrants	—			2,228,386		—			—
Net weighted average common shares outstanding	92,385,195			100,288,872		93,566,920			94,314,192
Net income (loss) per share
Basic	$	(0.08	)	$	0.01	$	(0.20	)	$	(0.09	)
Diluted	$	(0.08	)	$	0.01	$	(0.20	)	$	(0.09	)

Stock options, warrants to purchase common and preferred stock and convertible redeemable preferred stock excluded from computation of diluted net income (loss) per share

The following weighted-average number of outstanding employee stock options, restricted stock units and restricted stock awards, warrants to purchase common stock, and shares purchased under our ESPP were excluded from the computation of diluted net income (loss) per share:

	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2016	2015	2016	2015
Stock options outstanding	9,648,039	4,651,910	9,379,323	7,436,319
Restricted stock units and restricted stock awards	2,546,119	327,405	2,656,439	718,507
Common equivalent shares from stock warrants	—	—	462,480	2,224,271
Shares purchased under ESPP	—	—	5,806	9,443
	12,194,158	4,979,315	12,504,048	10,388,540

XML

Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Financial information of segments

segment for the three-month period ended June 30, 2016 and goodwill and total assets by operating segment as of June 30, 2016 was as follows:

	Consumer			Enterprise			Eliminations			Total
	(in thousands)
Revenue
External customers	$	156,659		$	7,784		$	—		$	164,443
Intersegment revenue	—			(2,326		)	2,326			—
Loss from operations	(8,279		)	(4,116		)	—			(12,395		)
Goodwill	112,550			59,537			—			172,087
Total assets	436,359			93,229			(789		)	528,799

Revenue and loss from operations by operating segment for the six-month period ended June 30, 2016 was as follows:

	Consumer			Enterprise			Eliminations		Total
	(in thousands)
Revenue
External customers	$	308,589		$	15,123		$	—	$	323,712
Intersegment revenue	—			(4,612		)	4,612		—
Loss from operations	(21,756		)	(9,546		)	—		(31,302		)

Revenue and loss from operations by operating segment for the three-month period ended June 30, 2015 and goodwill and total assets by operating segment as of December 31, 2015 was as follows:

	Consumer		Enterprise			Eliminations			Total
	(in thousands)
Revenue
External customers	$	138,329	$	6,628		$	—		$	144,957
Intersegment revenue	—		2,109			(2,109		)	—
Income (loss) from operations	4,548		(3,683		)	—			865
Goodwill	112,550		59,537			—			172,087
Total assets	492,796		100,753			(740		)	592,809

XML

Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2016
Accounting Policies [Abstract]
Operating leases, term of contract	11 years

XML

Marketable Securities - Summary of Marketable Securities Designated as Available-for-Sale (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 126,277	$ 196,817
Gross Unrealized Gains	35	4
Gross Unrealized Losses	(47)	(347)
Estimated Fair Value	126,265	196,474
Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	87,638	125,132
Gross Unrealized Gains	13	1
Gross Unrealized Losses	(45)	(304)
Estimated Fair Value	87,606	124,829
Municipal bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	9,964	16,228
Gross Unrealized Gains	0	2
Gross Unrealized Losses	(2)	(6)
Estimated Fair Value	9,962	16,224
Government securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	9,694	8,704
Gross Unrealized Gains	19	1
Gross Unrealized Losses	0	(17)
Estimated Fair Value	9,713	8,688
Commercial paper
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	10,472	37,236
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	10,472	37,236
Agency securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	7,261	7,273
Gross Unrealized Gains	3	0
Gross Unrealized Losses	0	(20)
Estimated Fair Value	7,264	7,253
Certificates of deposit
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,248	2,244
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 1,248	$ 2,244

XML

Marketable Securities - Summary of Amortized Cost and Estimated Fair Value of Marketable Securities by Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 126,277	$ 196,817
Gross Unrealized Gains	35	4
Gross Unrealized Losses	(47)	(347)
Estimated Fair Value	126,265	196,474
Due in one year or less
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	116,006	164,147
Gross Unrealized Gains	18	2
Gross Unrealized Losses	(40)	(221)
Estimated Fair Value	115,984	163,928
Due after one year
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	10,271	32,670
Gross Unrealized Gains	17	2
Gross Unrealized Losses	(7)	(126)
Estimated Fair Value	$ 10,281	$ 32,546

XML

Fair Value Measurements - Fair Value of Financial Assets (Details) - USD ($) $ in Thousands		Jun. 30, 2016		Dec. 31, 2015
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Total assets measured at fair value		$ 135,561		$ 224,645
Level 1
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Total assets measured at fair value		9,296		18,114
Level 2
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Total assets measured at fair value		126,265		206,531
Level 3
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Total assets measured at fair value		0		0
Money market funds (1)
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[1]	9,296		18,114
Money market funds (1) | Level 1
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[1]	9,296		18,114
Money market funds (1) | Level 2
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[1]	0		0
Money market funds (1) | Level 3
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[1]	0		0
Corporate bonds
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	87,606		124,829
Corporate bonds | Level 1
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	0		0
Corporate bonds | Level 2
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	87,606		124,829
Corporate bonds | Level 3
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	0		0
Municipal bonds
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	9,962		16,223
Municipal bonds | Level 1
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	0		0
Municipal bonds | Level 2
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	9,962		16,223
Municipal bonds | Level 3
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	0		0
Government securities
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	9,713		8,688
Government securities | Level 1
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	0		0
Government securities | Level 2
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	9,713		8,688
Government securities | Level 3
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	0		0
Commercial paper
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value				10,100
Assets measured at fair value		10,472	[2]	47,294	[3]
Commercial paper with maturities of three months or less				37,200
Commercial paper | Level 1
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value		0	[2]	0	[3]
Commercial paper | Level 2
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value		10,472	[2]	47,294	[3]
Commercial paper | Level 3
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value		0	[2]	0	[3]
Agency securities
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	7,264		7,253
Agency securities | Level 1
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	0		0
Agency securities | Level 2
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	7,264		7,253
Agency securities | Level 3
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	0		0
Certificates of deposit
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	1,248		2,244
Certificates of deposit | Level 1
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	0		0
Certificates of deposit | Level 2
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	1,248		2,244
Certificates of deposit | Level 3
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	[2]	$ 0		$ 0

[1] Classified in cash and cash equivalents

[2] Classified in marketable securities.

[3] Includes commercial paper with maturities of three months or less at time of purchase of $10.1 million classified in cash and cash equivalents and commercial paper with maturities of greater than three months of $37.2 million classified in marketable securities.

XML

Financing Arrangements (Details) $ in Millions	Jun. 30, 2016 USD ($)
Letter of credit
Debt Instrument [Line Items]
Letter of credit oustanding	$ 1.3

XML

Leases (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Apr. 30, 2016	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Leases [Abstract]
Building in progress - leased facility acquired under financing obligation	$ 10,700			$ 10,746	$ 0
Operating leases, rent expense, net		$ 1,900	$ 1,600	4,000	$ 2,900
Operating Leased Assets [Line Items]
Operating leases, future minimum payments due, remaining 2016		3,915		3,915
Operating leases, future minimum payments due, 2017		7,429		7,429
Operating leases, future minimum payments due, 2018		6,751		6,751
Operating leases, future minimum payments due, 2019		6,355		6,355
Operating leases, future minimum payments due, 2020		4,773		4,773
Operating leases, future minimum payments due, thereafter		14,151		14,151
Operating leases, future minimum payments due, gross		43,374		43,374
Operating leases, future minimum payments due, future minimum sublease rentals		(858)		(858)
Operating leases, rent expense, net of future minimum lease payments		42,516		42,516
Contractual obligation, future minimum payments due, remaining 2016		0		0
Contractual obligation, future minimum payments due, 2017		1,717		1,717
Contractual obligation, future minimum payments due, 2018		4,222		4,222
Contractual obligation, future minimum payments due, 2019		4,349		4,349
Contractual obligation, future minimum payments due, 2020		4,480		4,480
Contractual obligation, future minimum payments due, thereafter		27,605		27,605
Contractual obligation, future minimum payments due		$ 42,373		$ 42,373
Building
Operating Leased Assets [Line Items]
Property, plant and equipment, useful life				30 years

XML

Stockholders' Equity - Additional Information (Details) - USD ($)	1 Months Ended			3 Months Ended	6 Months Ended
	Jul. 31, 2016	May 31, 2016	Feb. 29, 2016	Jun. 30, 2016	Jun. 30, 2016	Aug. 05, 2016	Dec. 31, 2015	Nov. 30, 2015
Accelerated Share Repurchases [Line Items]
Authorized stock repurchase program amount								$ 100,000,000
Percentage of outstanding stock authorized for repurchase								7.00%
Treasury stock transaction				$ 79,824,000	$ 79,824,000		$ 0
Shares of common stock repurchased					200,000.0
Average price of common stock repurchased (in dollars per share)					$ 10.49
Accelerated Share Repurchase, February 2016
Accelerated Share Repurchases [Line Items]
Authorized stock repurchase program amount								$ 100,000,000
Payment for accelerate share repurchase program			$ 50,000,000
Number of shares to be repurchased under accelerated share repurchase program			4,200,000	76,000
Treasury stock transaction			$ 42,500,000
Forward contract indexed to common stock			$ 7,500,000
Accelerated Share Repurchase, February 2016 | Additional paid-in capital
Accelerated Share Repurchases [Line Items]
Forward contract indexed to common stock				$ 7,500,000	$ 7,500,000
Accelerated Share Repurchase, February 2016 | Treasury stock
Accelerated Share Repurchases [Line Items]
Forward contract indexed to common stock				1,000,000	1,000,000
Accelerate Share Repurchase, May 2016
Accelerated Share Repurchases [Line Items]
Authorized stock repurchase program amount		$ 100,000,000
Payment for accelerate share repurchase program		$ 48,100,000.0
Number of shares to be repurchased under accelerated share repurchase program		3,500,000
Treasury stock transaction		$ 40,900,000
Forward contract indexed to common stock		$ 7,200,000
Accelerate Share Repurchase, May 2016 | Additional paid-in capital
Accelerated Share Repurchases [Line Items]
Forward contract indexed to common stock				$ 7,200,000	$ 7,200,000
Accelerate Share Repurchase, May 2016 | Subsequent event
Accelerated Share Repurchases [Line Items]
Number of shares to be repurchased under accelerated share repurchase program	300,000
Accelerate Share Repurchase, May 2016 | Subsequent event | Additional paid-in capital
Accelerated Share Repurchases [Line Items]
Treasury stock transaction						$ 4,800,000

XML

Stockholders' Equity - Summary of Components of Share-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	$ 8,245	$ 7,054	$ 16,897	$ 12,424
Unrecognized share-based compensation expenses	78,500		$ 78,500
Weighted-average time period to recognize share-based compensation expenses			3 years
Cost of services
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	462	465	$ 959	837
Sales and marketing
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	1,503	1,215	3,121	2,147
Technology and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	2,526	2,003	5,319	3,712
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	$ 3,754	$ 3,371	$ 7,498	$ 5,728

XML

Stockholders' Equity - Summary of Warrants (Details)	6 Months Ended
	Jun. 30, 2016 shares
Class Of Stock [Line Items]
Warrants outstanding	0
Common Stock
Class Of Stock [Line Items]
Stock issued as a result of warrants exercised	2,210,335
Warrant One | Common Stock
Class Of Stock [Line Items]
Warrants outstanding	2,334,044

XML

Net Income (Loss) Per Share - Computation of Basic and Diluted Net Income (Loss) Per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Net income (loss)	$ (7,566)	$ 520	$ (18,792)	$ (8,638)
Denominator (basic):
Weighted average number of shares outstanding, basic (in shares)	92,385,195	94,592,297	93,566,920	94,314,192
Denominator (diluted):
Weighted average number of shares outstanding, basic (in shares)	92,385,195	94,592,297	93,566,920	94,314,192
Dilutive stock options outstanding (in shares)	0	3,050,106	0	0
Dilutive restricted stock units and awards (in shares)	0	411,066	0	0
Dilutive shares purchased under ESPP (in shares)	0	7,017	0	0
Weighted average common shares from warrants (in shares)	0	2,228,386	0	0
Weighted average number of shares outstanding, diluted (in shares)	92,385,195	100,288,872	93,566,920	94,314,192
Earnings per share, basic (in dollars per share)	$ (0.08)	$ 0.01	$ (0.20)	$ (0.09)
Earnings per share, diluted (in dollars per share)	$ (0.08)	$ 0.01	$ (0.20)	$ (0.09)

XML

Net Income (Loss) Per Share - Number of Outstanding Stock Options, Warrants to Purchase Common Preferred Stock and Convertible Redeemable Preferred Stock Excluded from Computation of Diluted Net Income (Loss) Per Share (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common equivalent shares from stock warrants (in shares)	0	2,228,386	0	0
Excluded from earnings per share calculation
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options outstanding (in shares)	9,648,039	4,651,910	9,379,323	7,436,319
Restricted stock units and restricted stock awards (in shares)	2,546,119	327,405	2,656,439	718,507
Common equivalent shares from stock warrants (in shares)	0	0	462,480	2,224,271
Shares purchased under ESPP (in shares)	0	0	5,806	9,443
Antidilutive securities excluded from computation of earnings per share, amount, total (in shares)	12,194,158	4,979,315	12,504,048	10,388,540

XML

Income Taxes (Details) - USD ($) $ in Thousands		1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 17, 2015	Dec. 31, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Income Tax Contingency [Line Items]
Income tax expense (benefit)			$ (4,830)	$ 317	$ (12,328)	$ (5,709)
Term of cumulative pretax net losses					3 years
Term of improvement in book income					5 years
FTC contempt action | Settled litigation
Income Tax Contingency [Line Items]
Payments for legal settlements	$ 100,000	$ 100,000
Loss contingency, cumulative accrual		$ 16,000
Settlement amount							$ 116,000
Legal reserve
Income Tax Contingency [Line Items]
Reserves							$ 96,000	$ 20,000

XML

Segment Reporting - Additional Information (Details)	6 Months Ended
	Jun. 30, 2016 segment
Segment Reporting [Abstract]
Number of reportable segments	2

XML

Segment Reporting - Financial Information of Segments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Revenue
External customers	$ 164,443	$ 144,957	$ 323,712	$ 279,365
Intersegment revenue	0	0	0	0
Loss from operations	(12,395)	865	(31,302)	(14,267)
Goodwill	172,087		172,087		$ 172,087
Total assets	528,799		528,799		592,809
Consumer
Revenue
External customers	156,659	138,329	308,589	266,530
Intersegment revenue	0	0	0	0
Loss from operations	(8,279)	4,548	(21,756)	(6,208)
Goodwill	112,550		112,550		112,550
Total assets	436,359		436,359		492,796
Enterprise
Revenue
External customers	7,784	6,628	15,123	12,835
Intersegment revenue	(2,326)	2,109	(4,612)	4,164
Loss from operations	(4,116)	(3,683)	(9,546)	(8,059)
Goodwill	59,537		59,537		59,537
Total assets	93,229		93,229		100,753
Eliminations
Revenue
External customers	0	0	0	0
Intersegment revenue	2,326	(2,109)	4,612	(4,164)
Loss from operations	0	$ 0	0	$ 0
Goodwill	0		0		0
Total assets	$ (789)		$ (789)		$ (740)

XML

Contingencies (Details) - USD ($) $ in Millions			1 Months Ended	6 Months Ended
	Feb. 11, 2016	Dec. 17, 2015	Dec. 31, 2015	Jun. 30, 2016
Loss Contingencies [Line Items]
Value of the service guarantee				$ 1.0
Settled litigation | FTC contempt action
Loss Contingencies [Line Items]
Payments for legal settlements		$ 100.0	$ 100.0
Amount distributed to the overseeing court		68.0
Amount authorized to fund consumer redress by any states' attorneys general		$ 32.0
Settled litigation | Ebarle class action
Loss Contingencies [Line Items]
Amount distributed to the overseeing court	$ 68.0
Settled litigation | Manthangodu action
Loss Contingencies [Line Items]
Payments for legal settlements				6.0
Pending litigation | FTC contempt action
Loss Contingencies [Line Items]
Loss contingency accrual				3.0
Pending litigation | Ebarle class action
Loss Contingencies [Line Items]
Loss contingency accrual				$ 13.0