LifeLock 2013 Annual Report Download - page 81

and when any redemption features could be exercised; (3) whether the holders of preferred stock were entitled to dividends; (4) the voting rights of the preferred
stock; and (5) the existence and nature of any conversion rights. As a result of our determination that each series of the preferred stock was an “equity host,”
we determined that the embedded conversion options did not require bifurcation as derivative liabilities.
We determined the adjustment to the ratio at which the Series E and E-2 convertible redeemable preferred stock would automatically convert into shares
of common stock did not require bifurcation as derivative liabilities as it was clearly and closely related to the equity host instrument; however, these features
represented a potential contingent beneficial co nversion feature, which would be triggered in the event the conversion ratio multiplied by the fair value of the
common stock at March 14, 2012 (the issuance date of the Series E and E-2 convertible redeemable preferred stock) exceeds the allocated value per share of the
Series E and E-2 convertible redeemable preferred stock. As a result of the IPO price of $9.00 per share, we recognized a beneficial conversion feature related to
the Series E and Series E-2 convertible redeemable preferred stock of $2,452, which was treated as a deemed dividend.
We determined the cash settlement term of the Series E-1 convertible redeemable preferred stock required bifurcation and separate accounting as an
embedded derivative. The fair value of this embedded feature was determined to be $7,934 at the issuance date of March 14, 2012, which was bifurcated
from the issuance value of the Series E-1 convertible redeemable preferred stock and presented in long term liabilities. The embedded derivative was settled for
$10,719 in connection with the closing of our IPO. Accordingly, we have recorded a realized loss of $2,785 with respect to the embedded derivative in the
statement of operations.
We have authorized 10,000,000 shares of preferred stock, with a par value of $0.001 per share. As of December 31, 2013 and 2012, no shares of
preferred stock were issued and outstanding.
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As of December 31, 2013, we had the following warrants to purchase common stock outstanding:
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October 3, 2014 2,334,044 0.70
December 19, 2014 166,666 4.50
On October 9, 2012, warrants to purchase Series E and E-2 convertible redeemable preferred stock were terminated in connection with the closing of
our IPO and we recognized a gain of $4,372 in other income (expense).
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In November 2006, we adopted the LifeLock, Inc. 2006 Incentive Compensation Plan (the “2006 Plan”). We reserved 18,426,332 shares of common
stock under the 2006 Plan. The 2006 Plan provided for awards in the form of restricted shares, stock units, stock options (which could constitute incentive
stock options or non-statutory stock options), and stock appreciation rights. Gene rally, stock options awarded under the 2006 Plan had a ten-year term and
typically vested over a period of four years, with 25% of the grant vesting on the first anniversary of the date of grant and the remainder vesting monthly over
the remaining vesting period.
In October 2012, we adopted the LifeLock, Inc. 2012 Incentive Compensation Plan (the “2012 Plan”), which superseded the 2006 Plan. The total
remaining shares of 4,902,708 available for issuance under the 2006 Plan were added to the number of shares reserved under the 2012 Plan, and no further
awards will be granted under the 2006 Plan. In addition, we reserved an additional 4,200,000 shares of common stock under the 2012 Plan. The 2012 Plan
provides for awards in the form of stock options (which may constitute incentive stock options or non-statutory stock options), stock appreciation rights,
performance-based stock awards, restricted stock units, and restricted shares. Generally, stock options awarded under the 2012 Plan have a ten-year term and
typically vest over a period of four years, with 25% of the grant vesting on the first anniversary of the date of grant and the remainder vesting monthly over
the remaining vesting period.
The total amount of compensation cost for stock-based payment arrangements recognized in the consolidated statements of operations related to stock
options, restricted stock units, and performance stock units was $ 14,700, $6,758, and $3,285 for the years ended December 31, 2013, 2012, and 2011,
respectively.
As of December 31, 2013, a total of $56,250 of unrecognized compensation costs related to unvested stock options and unvested restricted stock units
issued are expected to be recognized over the remaining weighted-average period of 3.2 years.
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In October 2012, we adopted an employee stock purchase plan (the “ESPP”). The ESPP allows substantially all full-time and part-time employees to
acquire shares of our common stock through payroll deductions over six month offering periods. The per share purchase price is equal to the lesser of 85% of
the fair market value of a share of our common stock on the grant date or 85% of the fair market value of a share of our common stock on the last day of the
offering period. Purchases are limited to 15% of an employee’s salary, up to a maximum of $25,000 of stock value per calendar year. We are authorized to
grant up to 2,000,000 shares of our
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