LifeLock 2015 Annual Report Download

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Table of contents

  • Page 1
    ...the fiscal year ended December 31, 2015 OR ¨ TRTNSITION REPORT PURSUTNT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHTNGE TCT 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 (State or other...

  • Page 2
    ... Disclosures About Market Risk Item 8. Financial Statements and Supplementary Data Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information PTRT III Item 10. Directors, Executive Officers and Corporate...

  • Page 3
    ..., references in this Annual Report on uorm 10-K to the "company," "LifeLock," "we," "us," and "our" refer to LifeLock, Inc. and, where appropriate, its subsidiaries. "LifeLock," our logo, and other trade names, trademarks, and service marks of LifeLock appearing in this Annual Report on uorm 10...

  • Page 4
    ...and consumer risk management services for enterprises. We protect our members by monitoring certain identity-related events, such as new account openings and credit-related applications. If we detect that a member's personally identifiable information is being used, we offer notifications and alerts...

  • Page 5
    ...against identity theft and identity fraud, solutions must overcome the following limitations that are common in the market: • Reactive response. Credit monitoring services are typically not proactive and can sometimes take days, weeks, or up to even a month to alert consumers that their identities...

  • Page 6
    ... consumer risk management services for enterprises. Based on our research indicating that two-thirds of U.S. adults are concerned about identity theft, we believe the total addressable market for our consumer identity theft protection services is approximately 148 million adults in the United States...

  • Page 7
    In our consumer business, we protect our members in a number of different ways. First, by monitoring identity-related events, such as new account openings and applications, that may present a risk of identity theft. If we detect that a member's personally identifiable information is being used, we ...

  • Page 8
    ... account alerting, remediation services, and $1 million service guarantee backed by an identity theft insurance policy, has enabled us to develop what we believe to be proactive and comprehensive identity theft protection services for consumers and consumer risk management services for enterprises...

  • Page 9
    ... of an address or phone number or using the same personally identifiable information to attempt to establish new accounts at multiple enterprises at the same time. This information can be used by our enterprise customers to determine the identity risk of customers and potential fraud. Technology...

  • Page 10
    ... services. At the heart of our consumer service offerings is our LifeLock Identity Alert system, which provides our members with certain notifications and alerts, including actionable alerts for new account openings and applications, and a response system for identity threats via text message, phone...

  • Page 11
    ...'s identity by, among other things, using another individual's social security number, name, address, phone number, or date of birth. We also offer credit risk services that are designed to provide real-time visibility into consumer stability and that augment and enhance traditional credit scores...

  • Page 12
    ... enterprise customers to continually improve our services. Customers Members. As of December 31, 2015, we had approximately 4.2 million members. Our members range from those looking to minimize the risk of identity theft and identity fraud to those who have experienced the personal traumatic event...

  • Page 13
    ... protect our members' privacy and data could result in a loss of member confidence in our services and ultimately in a loss of members and enterprise customers, which could adversely affect our business. In March 2010, we and Todd Davis, our Chairman and Chief Executive Officer, entered into the FTC...

  • Page 14
    ...changes in the nature of the services we offer to consumers since the investigation by the FTC in 2007 and 2008, including our adoption of new technology that permits us to provide protection against identity theft and identity fraud. The FTC investigation of our advertising and marketing activities...

  • Page 15
    .... Our principal executive offices are located at 60 East Rio Salado Parkway, Suite 400, Tempe, Arizona 85281, and our telephone number is (480) 682-5100. Our website address is www.lifelock.com. The information on our website is not incorporated by reference into this Annual Report on Form 10-K or...

  • Page 16
    ...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...

  • Page 17
    ... 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: • determine...

  • Page 18
    ...offerings, including designing and introducing new services; brand recognition; technology; effectiveness and cost-efficiency of customer acquisition; customer satisfaction; price; quality and reliability of customer service; and accurate identification of appropriate target markets for our business...

  • Page 19
    ... 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...

  • Page 20
    ... add new customers. In our consume 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...

  • Page 21
    ... and marketing, servicing of consumer products and services, and insurance products and services, govern out 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...

  • Page 22
    ... to the SEC. 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...

  • Page 23
    ...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...

  • Page 24
    ... 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...

  • Page 25
    ... board time. 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...

  • Page 26
    ... 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...

  • Page 27
    ...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...

  • Page 28
    ... 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 likely hire additional employees in the future. We must successfully manage our growth to achieve our objectives...

  • Page 29
    ... which could adversely affect our growth rate and operating results. We have acquired several businesses including ID Analytics in March 2012, Lemon in December 2013 and BitYota in August 2015. We may not realize all of the benefits anticipated with such acquisitions and may experience unanticipated...

  • Page 30
    ... 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...

  • Page 31
    .... 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...

  • Page 32
    ... 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...

  • Page 33
    ... 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...

  • Page 34
    ... a public company may strain our resources, divert management's attention, and affect our ability to attract and retain qualified board members. We will incur significant legal, accounting, and other expenses as a public company, including costs resulting from public company reporting obligations...

  • Page 35
    ... 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...

  • Page 36
    ... Report on Form 10-K, 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...

  • Page 37
    ... 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...

  • Page 38
    ... all members enrolled in one of the company's identity theft protection plans since January 1, 2010, through the present. On November 3, 2015, LifeLock signed an agreement to settle the Ebarle Class Action and release all of the class's related claims. The Ebarle Class Action settlement remains...

  • Page 39
    ...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...

  • Page 40
    ... of our services, our data security program, and our compliance with the FTC Order, in certain public statements made by us. According to the Munson complaint, the Individual Defendants' conduct has damaged us through costs associated with the defense of the securities class actions discussed above...

  • Page 41
    ... papers in support thereof by February 22, 2016. The Company expects the Court to issue an order effecting the parties' stipulation on consolidation. On December 23, 2015, we filed an insurance coverage action in Arizona state court against our 2013-2014 primary and excess directors' and officers...

  • Page 42
    ...2012. Prior to that time, there was no public market for our common stock. The following table sets forth, for the periods indicated, the high and low sales price of our common stock as quoted on The New York Stock Exchange. High Low Fiscal Year Ended December 31, 2015: First Quarter Second Quarter...

  • Page 43
    ... - - Period October 1, 2015 - October 31, 2015 November 1, 2015 - November 30, 2015 December 1, 2015 - December 31, 2015 Total Number of Shares Purchased - - 3,951 Tverage Price Paid Per Share - - 14.35 Total Number of Shares Purchased as Part of Publicly Tnnounced Plans or Programs - - - $ On...

  • Page 44
    ... consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. We have completed several acquisitions including ID Analytics in March 2012, Lemon in December 2013 and BitYota in August 2015. The consolidated statements of operations data only include the...

  • Page 45
    ...2015 Consolidated Statements of Operations Data: Revenue: Consumer revenue Enterprise revenue Total revenue Cost of services (1) Gross profit Costs and expenses: Sales and marketing... Weighted-average common shares outstanding: Basic Diluted 2014 2013 2012 2011 (in thousands, except per share data) ...

  • Page 46
    ...Data: Cumulative ending members (1) Gross new members (2) Member retention rate (3) Average cost of acquisition per member (4) Monthly average revenue per member (5) Enterprise transactions (6) Adjusted net income (7) Adjusted EBITDA (8) Free cash flow (9) (1) 2014 2013 2012 2011 $ $ $ $ $ (in...

  • Page 47
    ... related to insurance claims for legal costs that were incurred in 2008 and 2009. For the year ended December 31, 2010, we have added to net cash used in operating activities the $11.0 million for a consumer redress payment pursuant to the FTC Order. For more information about free cash flow and...

  • Page 48
    ... from changes in our deferred tax assets, and acquisition related expenses. For the year ended December 31, 2015, we have also excluded the impact of legal reserves for the settlements with the FTC and a nationwide class of consumers, along with a possible settlement with certain states' attorneys...

  • Page 49
    ... tax (benefit) expense, and acquisition related expenses. For the year ended December 31, 2015, we have also excluded the impact of legal reserves for the settlements with the FTC and a nationwide class of consumers, along with a possible settlement with certain states' attorneys general for related...

  • Page 50
    ... made with respect to our Lemon acquisition. For comparative purposes, we also modified our calculation of adjusted EBITDA for 2012 to exclude favorable legal settlements related to insurance claims for legal costs that were incurred in 2008 and 2009. In the fourth quarter of 2013, we modified our...

  • Page 51
    ... for acquisitions of property and equipment. For the year ended December 31, 2015, we have also added to net cash used in operating activities the $100.0 million settlement paid in the settlement agreement with the FTC and $7.5 million of cash paid for expenses related to the FTC Contempt Action and...

  • Page 52
    ... and consumer risk management services for enterprises. We protect our members by monitoring identity-related events, such as new account openings and credit-related applications. If we detect that someone is using a member's personally identifiable information, we offer notifications and alerts...

  • Page 53
    ... 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...

  • Page 54
    ... the success of our marketing campaigns, increased awareness of data breaches, media coverage of identity theft, and our member retention rate. 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...

  • Page 55
    ... that enroll in our consumer services in a relatively short period of time. 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 on a year over year basis due in part...

  • Page 56
    ... accounted for more than 40% of our gross new members for the year ended December 31, 2015. Enterprise transactions. Our enterprise transactions are processed by ID Analytics and are calculated as the total number of enterprise transactions processed for either an identity risk or credit risk score...

  • Page 57
    ... 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...

  • Page 58
    ...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...

  • Page 59
    ... identity theft insurance that we provide to our members, and merchant credit card fees. Costs of services in our enterprise segment includes primarily wages and benefits of personnel, and the facility costs that are directly associated with the data analytics and data management. We expect our cost...

  • Page 60
    ... premium service offerings, including the release of our new LifeLock Advantage and LifeLock Ultimate Plus services at the end of July 2014, and our advertising and marketing campaigns designed to increase the overall awareness of our services and identity theft. Enterprise revenue increased in 2015...

  • Page 61
    ....6% 2014 to 2015 % Change 14.1% 26.6% 2013 to 2014 % Change 20.3% 31.9% The year over year increases in our gross profit from resulted primarily from increased revenue associated with the growth in the number of our members and increased monthly average revenue per member. The increase in our gross...

  • Page 62
    ... 31.2% 15.9% 2014 to 2015 % Change 142.2% 2013 to 2014 % Change 79.6% The year over year increase in general and administrative expenses in 2015 relates primarily to an additional $96 million of expenses related to the settlement with the FTC and a national class of consumers to resolve outstanding...

  • Page 63
    ... to us or at all. Operating Activities For the year ended December 31, 2015, operating activities used $3.8 million in cash, largely impacted by the payment of $100.0 million to settle claims with the FTC and a nationwide consumer class, in addition we paid $5.8 million of expenses related to this...

  • Page 64
    ... the expansion of our office locations, invested a net $79.1 million of cash in marketable securities, and invested $4.3 million in the purchase of company-owned life insurance policies. For the year ended December 31, 2013, we used $42.4 million of cash to acquire Lemon and $10.4 million of cash to...

  • Page 65
    ... to issues presented in the FTC Order, if any, the revolving line of credit under the Senior Credit Facility is limited to letters of credit in the ordinary course of business not to exceed $2 million in the aggregate at any one time and certain permitted acquisitions of up to $25 million in the...

  • Page 66
    ...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...

  • Page 67
    ...of the segments. In our consumer segment, we offer identity theft protection services to consumers on a monthly or annual subscription basis. In our enterprise segment, we offer consumer risk management services to enterprise customers who pay us based on their monthly volume of transactions with us...

  • Page 68
    ... DISCLOSURES TBOUT MTRKET RISK Interest Rate Sensitivity Our cash and cash equivalents and marketable securities include cash, commercial paper, corporate debt securities, municipal securities, and certificates of deposit. Cash and cash equivalents also include credit and debit card receivables due...

  • Page 69
    ... FINTNCITL STTTEMENTS TND SUPPLEMENTTRY DTTT LifeLock, Inc. Consolidated Financial Statements Ts of December 31, 2015 and 2014 and for the Years Ended December 31, 2015, 2014, and 2013 Table of Contents Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated...

  • Page 70
    ... a whole, presents fairly in all material respects the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), LifeLock, Inc.'s internal control over financial reporting as of December 31, 2015, based on...

  • Page 71
    .... In our opinion, LifeLock, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the...

  • Page 72
    LIFELOCK, INC. CONSOLIDTTED BTLTNCE SHEETS (in thousands, except share and per share amounts) December 31, 2015 Tssets Current assets: Cash and cash equivalents Marketable securities...Current liabilities: Accounts payable Accrued expenses and other liabilities Deferred revenue Total current ...

  • Page 73
    LIFELOCK, INC. CONSOLIDTTED STTTEMENTS OF OPERTTIONS (in thousands, except per share amounts) Year Ended December 31, 2015 Revenue: Consumer revenue Enterprise revenue Total revenue Cost of services Gross profit Costs and expenses: Sales and marketing... 0.03 0.03 $ $ $ 2013 340,121 29,537 369,658 100...

  • Page 74
    LIFELOCK, INC. CONSOLIDTTED STTTEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) Year Ended December 31, 2015 Net income (loss) Other comprehensive loss, net of tax Unrealized loss on marketable securities Comprehensive income (loss) $ (51,003) (245) $ (51,248) $ $ 2014 2,495 (98) 2,397 $ $ 2013...

  • Page 75
    ... loss Net income Balance, December 31, 2013 Stock option and warrant exercises Common shares surrendered on net settlement of warrant exercises Shares purchased under ESPP Share-based compensation Vesting of restricted stock units Restricted stock units surrendered in lieu of withholding taxes...

  • Page 76
    ... plans Proceeds from warrant exercises Payments for employee tax withholdings related to restricted stock units and awards Payments for debt issuance costs Net cash provided by financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year...

  • Page 77
    ... annual or monthly subscription basis. We also provide consumer risk management services to our enterprise customers. We were incorporated in Delaware on April 12, 2005 and are headquartered in Tempe, Arizona. In October 2012, we completed our IPO and our common stock is listed on the New York Stock...

  • Page 78
    ... provide consumer services for which the primary customer is a corporation or other entity that purchases identity theft protection services on behalf of its employees or customers. In such cases, we defer revenue for each member (employees or customers) until the member's account has been activated...

  • Page 79
    ... two-class method to the extent applicable. Concentrations of Credit Risk In the normal course of business, we are exposed to credit risk. We believe our concentration of credit risk with respect to trade receivables is limited because of the large number of customers and customer dispersion across...

  • Page 80
    ...websites, developing solutions for new services, internal information systems and infrastructure, third-party development, and other internal-use software systems. Our development costs are primarily incurred in the United States and primarily devoted to enhancing our consumer and enterprise service...

  • Page 81
    ... Standards Board, or FASB, issued Accounting Standards Update (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...

  • Page 82
    ... of data warehouse as a service, for an aggregate purchase price of approximately $12.8 million. The team will focus on developing new data-based products within our consumer segment. We accounted for this asset acquisition as a business combination, using the acquisition method in accordance with...

  • Page 83
    ...signing bonuses, legal, accounting, and other professional services. Had the acquisition of assets from BitYota occurred on January 1, 2014, our pro forma consolidated revenue for the year ended December 31, 2015 and 2014, would have increased by less than 0.1%. Acquisition of Lemon In December 2013...

  • Page 84
    ... for the years ended December 2015, 2014, and 2013 was $9.6 million, $7.4 million, and $4.9 million, respectively. Included in assets not yet placed in service as of December 31, 2015 are costs of approximately $1.7 million related to the development of interal-use software and new business systems...

  • Page 85
    ... lives of seven years and our acquired customer relationships have estimated useful lives ranging from one year to ten years. In the year ended December 31, 2015 we acquired two assembled workforces through two asset acquisitions for a total of $1.0 million. Should the employees remain employed...

  • Page 86
    ... and Other Liabilities Accrued expenses and other liabilities consisted of the following as of December 31: 2015 Legal settlements Marketing, commissions and other services Employee salaries, wages, and benefits Consulting, contract labor and professional fees Fixed assets Sales, use, property, and...

  • Page 87
    ... 2016 related to the issues presented in the FTC Order, if any, the revolving line of credit under the Senior Credit Facility is limited to letters of credit in the ordinary course of business not to exceed $2.0 million in the aggregate at any one time and certain permitted acquisitions of up to $25...

  • Page 88
    ... vesting monthly over the remaining vesting period. In October 2012, we adopted the LifeLock, Inc. 2012 Incentive Compensation Plan, or 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...

  • Page 89
    ... 2012, we adopted an employee stock purchase plan, or the ESPP. The ESPP allows substantially all full-time and part-time employees, excluding members of senior management, to acquire shares of our common stock through payroll deductions over six month offering periods. The per share purchase price...

  • Page 90
    ... stock units and restricted stock awards activity under the 2012 Plan for the years ended December 31, 2014 and 2015: Weighted Tverage Grant Date Fair Value (per share) $ 12.65 16.41 13.79 14.77 15.61 12.21 13.20 14.94 12.46 Restricted Stock Units/Twards Unvested at December 31, 2013 Granted...

  • Page 91
    ...paper with maturities of greater than three months of $37.2 million classified in marketable securities. Includes commercial paper with maturities of three months or less at time of purchase of $45.2 million classified in cash and cash equivalents and commercial paper with maturities of greater than...

  • Page 92
    ...-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 years ended December 31: 2015 Stock...

  • Page 93
    ... reporting purposes...planning strategies...state net operating losses and our change in judgment regarding the realization of our deferred tax assets in prior periods, our valuation allowance decreased by $0.4 million, $0.7 million and $47.9 million in the years ended December 31, 2015, 2014, and 2013...

  • Page 94
    ... ownership changes of certain former shareholders, approximately $5.0 million of Lemon's federal and state net operating loss carryforwards will expire solely as a result of the Section 382 limitations. As of December 31, 2015, we had $1.0 million of federal alternative minimum tax credit carryover...

  • Page 95
    ..., 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. Financial information about our segments for the year ended December 31, 2015 and as...

  • Page 96
    ... all members enrolled in one of the company's identity theft protection plans since January 1, 2010, through the present. On November 3, 2015, LifeLock signed an agreement to settle the Ebarle Class Action and release all of the class's related claims. The Ebarle Class Action settlement remains...

  • Page 97
    ... billing address who were enrolled in a LifeLock protection plan or subscription service between December 1, 2010, and July 24, 2015, who did not opt out of the settlement and who paid one or more auto renewed monthly or annual membership fees will automatically receive a cash payment. Cash payments...

  • Page 98
    ... we must defend against the FTC's July 21, 2015 motion seeking to hold us in contempt of the FTC Order, and the shareholder securities class action filed on July 22, 2015 discussed above. The complaint seeks unspecified monetary damages, a return to the company of all personal compensation received...

  • Page 99
    ... of our services, our data security program, and our compliance with the FTC Order, in certain public statements made by us. According to the Munson complaint, the Individual Defendants' conduct has damaged us through costs associated with the defense of the securities class actions discussed above...

  • Page 100
    ... statement of the quarterly information when read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K: Three Months Ended Dec 31, 2015 Revenue: Consumer revenue Enterprise revenue Total revenue Gross profit Income...

  • Page 101
    ..., an independent registered public accounting firm, as stated in its report which is included in this Annual Report on Form 10-K. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting identified in management's evaluation pursuant...

  • Page 102
    ... 120 days after the end of our fiscal year ended December 31, 2015, and is incorporated in this Annual Report on Form 10-K by reference. We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers, and employees, including our principal executive officer and...

  • Page 103
    ... filed as a part of this report: 1. Financial Statements: The information concerning our financial statements and Report of Independent Registered Public Accounting Firm required by this Item is incorporated by reference herein to the section of this Annual Report on Form 10-K in Item 8, titled...

  • Page 104
    ...15(d) 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. Dated: February 23, 2016 By: /s/ Todd Davis Todd Davis Chairman and Chief Executive Officer LIFELOCK, INC. Dated: February...

  • Page 105
    ... Power, Hilary Schneider, and Sharon Segev, and each of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form10...

  • Page 106
    ... as Sole Lead Arranger and Sole Book Manager (11) First Amendment to the Credit Agreement and Consent dated as of November 6, 2015 among LifeLock, Inc., the Guarantors named therein, and Bank of America, N.A., as Administrative Agent (Filed herewith) Office Lease, dated as of May 18, 2007...

  • Page 107
    ... Don Beck 2015 Sales Commission Plan Agreement, dated February 17, 2015, by and between LifeLock, Inc. and Don Beck Consumer Disclosure Agreement dated as of December 23, 2015, by and between LifeLock, Inc. and Equifax Consumer Services LLC (Filed herewith) Consumer Class Action Settlement Agreement...

  • Page 108
    ...Securities and Exchange Commission on February 22, 2013, and incorporated herein by reference. Filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on April 30, 2015... the Securities and Exchange Commission on September 14, 2012, and...

  • Page 109
    ....2 to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2015, and incorporated herein by reference Indicates management contract or compensatory plan or arrangement. Confidential treatment has been granted by the SEC for portions of this...

  • Page 110
    ... of the Credit Agreement is hereby amended to read as "Change of Control" means the occurrence of any of the following events: follows: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of...

  • Page 111
    ... with the quarter ending December 30, 2014, settlement payments, legal expenses, administration fees and other third party costs actually incurred or expensed and related to the litigation and settlement of the Ebarle Class Action Lawsuit, the FTC Contempt Action and the States' Attorneys General...

  • Page 112
    ...hereby amended to read as follows: "Letter of Credit Sublimit" means an amount equal to the lesser of (a) the Aggregate Revolving Commitments and (b) (i) $2,000,000, until the later of (x) the one (1) year anniversary of the Litigation Matters Settlement Date, and (y) the date the Loan Parties have...

  • Page 113
    ... styled Avila v. Lifelock, Inc., Case No. 2:15-cv-01398-SRB currently pending in the United States District Court for the District of Arizona. "Litigation Matters Escrow Date" means the date the settlement in principal in each of the FTC Contempt Action and Ebarle Class Action Lawsuit has been...

  • Page 114
    ... any proceedings currently pending or initiated on or before November 6, 2016 by states' attorneys general related to the issues presented in the FTC Contempt Action. "Supermajority Lenders" means, at any time, Lenders having Total Credit Exposures representing more than 66 and 2/3% of the Total...

  • Page 115
    ... later of (i) one (1) year after the Litigation Matters Settlement Date or (ii) such time as the Loan Parties have obtained court approval of settlements with at least 50% of the States with States' Attorneys General Matters, promptly (but in no event later than five (5) Business Days after receipt...

  • Page 116
    ... and marketable securities. (p) A new Section 8.11(c) is hereby added to the Credit Agreement to read as follows: (c) Minimum Consolidated Cash EBITDA. From and after the First Amendment Effective Date until the end of the fourth full fiscal quarter ending after the Litigation Matters Settlement...

  • Page 117
    ... Loan Parties shall have until November 15, 2015 to deliver to the Administrative Agent all documentation necessary to satisfy the requirements of Sections 7.12(a) and (b) of the Credit Agreement as they relate to the joinder of LifeLock Consumer Development LLC. The above consent shall not modify...

  • Page 118
    ..., assigns, officers, managers, directors, employees, agents, attorneys, representatives, and affiliates (hereinafter all of the above collectively referred to as the "Lender Group"), from any and all claims, counterclaims, demands, damages, debts, suits, liabilities, actions and causes of action of...

  • Page 119
    ..., insolvency or other similar laws affecting creditors' ...consent, exemption, authorization or other action by, or notice to, ... been obtained and are in full force and effect. (d) The Borrower and...Credit Agreement or any other Loan Document, or which are contained in any document furnished at any time...

  • Page 120
    ...of the Credit Agreement,... by facsimile or other electronic imaging means (e.g. "pdf" or "tif") ...WITH THS LAWS OF THS STATS OF NSW YORK. THS TSRMS OF SSCTIONS 11.14 AND 11...) the parties shall endeavor in good faith negotiations to replace the illegal...effect of which comes as close as possible to that of ...

  • Page 121
    ... the date first above written. BORROWER: LIFELOCK, INC., a Delaware corporation By: /s/ Chris Power Name: Chris Power Title: Chief Financial Officer GUARANTORS: ID ANALYTICS, LLC, a Delaware limited liability company By: /s/ Chris Power Name: Chris Power Title: Executive Vice President SAGESTREAM...

  • Page 122
    ADMINISTRATIVE AGENT: BANK OF AMERICA, N.A., as Administrative Agent By:/s/ Mollie S. Canup Name: Mollie S. Canup Title: Vice President LIFELOCK, INC. FIRST AMENDMENT TO CREDIT AGREEMENT 13

  • Page 123
    LENDERS: BANK OF AMERICA, N .A., as a Lender, Swing Line Lender and L/C Issuer By: /s/ Julie Yamauchi Name: Julie Yamauchi Title: Senior Vice President LIFELOCK, INC. FIRST AMENDMENT TO CREDIT AGREEMENT 14

  • Page 124
    SILICON VALLEY BANK, as a Lender By: /s/ Kurt Nichols Name; Kurt Nichols Title: Director LIFELOCK, INC. FIRST AMENDMENT TO CREDIT AGREEMENT 15

  • Page 125
    ROYAL BANK OF CANADA, as a Lender By: /s/ Nicholas Heslip Name: Nicholas Heslip Title: Authorized Signatory LIFELOCK, INC. FIRST AMENDMENT TO CREDIT AGREEMENT 16

  • Page 126
    ... the direction of the management and policies of another legal entity, whether through the ownership of voting securities, by contract or otherwise. "Mlert" means a Credit Information Update delivered by Broker as part of its Alert Product. "MlertSProdect" means a product offered by Broker, in which...

  • Page 127
    ...MultiBureau Report, (iii) Credit Information Updates, and (iv) Score. "CreditSInformationSUpdates" means the output of a batch processing service in which Equifax monitors an enrolled Consumer's Equifax credit file and notifies Broker regarding specific changes to such Consumer's Equifax credit file...

  • Page 128
    ...by Equifax and the full name and mailing address of the Equifax office identified by Equifax as providing the Equifax Credit Information. Equifax Products shall be delivered to the Consumer as is with no changes or revisions. Broker may display the Credit Information in Broker Product offerings that...

  • Page 129
    ... applicable law, including without limitation, consumer financial protection law. (C) Submission of Inquiries; Facilities. Broker will request the Credit Information from Equifax by electronic means or other means as may be agreed to from time to time by Equifax and Broker. Each request will contain...

  • Page 130
    ... in accordance with the Member Services Exhibit K, Broker will refer all Consumers who have questions or disputes about Equifax's Credit Information to the telephone number and/or address for Equifax's consumer assistance center (as provided to Broker from time to time by Equifax), and not to any...

  • Page 131
    ...Addendum for LifeLock Vendors that has been reviewed and discussed by the parties, the final version of which will be documented via email acknowledgment on or shortly after the Effective Date. . (D) Services Exhibt G. Member Services. Equifax shall provide the customer service support in accordance...

  • Page 132
    ... from Equifax Credit Information. Broker covenants not to sue or maintain any claim, cause of action, demand, cross-action, counterclaim, thirdparty action or other form of pleading against Equifax, Equifax's parent, sister, and affiliated companies, and its and their officers, agents, employees and...

  • Page 133
    ...its directors, officers, employees, agents and contractually affiliated consumer reporting agencies, harmless from and against any and all liabilities, claims, actions, suits, costs, damages, penalties *** Certain information on this page has been omitted and filed separately with the Securities and...

  • Page 134
    ...access to, Equifax Credit Information by Broker or any other person or entity that receives improper access to Equifax Credit Informaiton as a result of Broker's actions or omissions. 7.2 Equifax will indemnify, defend and hold LifeLock and its directors, officer, employees, agents and contractually...

  • Page 135
    ... (b) For Equifax: Name: Laurie Kolb *** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. LifeLock Agreement for Consumer Disclosure Service RES-43904...

  • Page 136
    ... or by certified mail, addressed as follows: (a) If to Broker: LifeLock, Inc. Name: Sharon Segev Attn: Office of General Counsel 200 West Evelyn Avenue Mountain View, CA 94041 (b) If to Equifax: Equifax Consumer Services LLC 1550 Peachtree Street, NW Post Office Box 4091 Atlanta, Georgia 30309...

  • Page 137
    ...Effective Date which would require Equifax to incur additional material costs to comply with such change, Equifax may, at its good faith discretion and upon six (6) months prior written notice to Broker establish new prices which will apply to the Equifax Credit Information or any affected component...

  • Page 138
    ... are necessary. Such meetings shall occur on a quarterly basis and shall include key business team members as well as operations, risk management and other employees who may be necessary for purposes of advancing the joint strategy. The relationship managers from each Party shall mutually agree upon...

  • Page 139
    ...as of the day and year first above written. LIFELOCK, INC. ("Broker") By: /s/ Todd Davis Name: Todd Davis Title: CEO EQUIFAX CONSUMER SERVICES LLC ("Equifax") By: /s/ J. Dann Adams J. Dann Adams, President Equifax Personal Solutions LifeLock Agreement for Consumer Disclosure Service RES-43904 14

  • Page 140
    ... website(s) when they are accessing the Services through the Equifax API. Each party will comply with its respective privacy policy regarding the use of Consumer Information in its possession, and Equifax acknowledges that upon termination of the Agreement that Broker may offer substantially similar...

  • Page 141
    ...are expected to comply with all state and federal laws and regulations related to consumer protection and fair trade practices. The Guidance establishes rules and procedures for presenting products to consumers that include Equifax information, including credit reports. This Guidance is not intended...

  • Page 142
    ... should be factually accurate and reflect a feature's benefits and limitations. Marketing materials must avoid misleading statements and overstating claims. The information below provides the guidance for the marketing of features. LifeLock Agreement for Consumer Disclosure Service RES-43904 17

  • Page 143
    ...2. b. Credit Score Products. 1. All credit score references should include "Equifax" or the name of the credit score provider (such as "VantageScore" or "FICO", if applicable) and followed by the word "credit", such as Equifax Credit Score, LifeLock Agreement for Consumer Disclosure Service RES...

  • Page 144
    ... to "daily monitoring" or "365 day monitoring" instead of "24/7 monitoring". iii. Identity Theft Products. a. Do not use phrases or words that imply that the product can detect, prevent, or remediate all forms of identity theft. LifeLock Agreement for Consumer Disclosure Service RES-43904 19

  • Page 145
    ... retail price, (ii) the cancellation and refund policy associated with the product or the offer, and (iii) any other disclosures regarding the product pricing, payment terms and limitations necessary to avoid misleading the customer. LifeLock Agreement for Consumer Disclosure Service RES-43904...

  • Page 146
    ...the current retail price, (ii) the method for obtaining the discount (e.g. "through this email only offer"), (iii) the period of time that the discount will be honored, (iv) the cancellation and refund policy associated with the product or offer, (v) any upfront payment information requirements, and...

  • Page 147
    ... with repeated claims. b. c. ii. Banner Ads. a. b. c. Banner Ads must link to a landing page so that full information can be provided to the customer. Free trial banner ads must include "with subscription to XX." Banner ads referencing scores must include "Equifax Credit Score" in description...

  • Page 148
    ...- Fix - Cure - Improve - Protect credit, credit protection - Credit Management - Service, Credit Protection Service, Credit Repair Service, Credit Monitoring Service - Credit Restoration specialists - Alternative: Identity Restoration specialists - How to increase your credit score, Tips to Improve...

  • Page 149
    ... as legal advice or otherwise relieve of you of your obligation to comply with applicable laws, this Guidance or your service agreement with Equifax. I.S OfferSDiscloseres 1. a. Free trial Free Trial Advertising (not order funnel) LifeLock Agreement for Consumer Disclosure Service RES-43904 24

  • Page 150
    ... your card the stated price above and will charoe the card that amount for each month you continue your subscription. We hope you will enjoy this product, but you may cancel at any time. Unfortunately, we do not provide partial month refunds. LifeLock Agreement for Consumer Disclosure Service RES...

  • Page 151
    ...you to provide your payment information when you sion up and we will immediately charoe your card $XX. Product is active for XX days once purchased. Cancellation is not applicable to one-time report products and we do not offer refunds. 5. One-Time Products Discounted Price. a. Ads and web - Next...

  • Page 152
    ... score usually means you pose a lower risk to the lender, who will, in turn, be more likely to offer you favorable interest rates. The information contained in your credit files changes over time and so might any new scores based on your data. LifeLock Agreement for Consumer Disclosure Service...

  • Page 153
    ... service at a particular rate. Equifax is one of the leading credit reporting agencies in the United States. The other two major credit bureaus are Experian and TransUnion. Each credit agency maintains information about your credit history. While all consumers are eligible for one annual free credit...

  • Page 154
    ... our shared compliance oblioation with consumer protection laws and reoulations. If you have any questions about this Guidance please contact your Equifax account manaoer. This Guidance is subject to chanoe and update from time to time by Equifax, with any notice of updates and chanoes provided to...

  • Page 155
    ... is your responsibility to ensure your employees impacted by this Guidance are informed and appropriately trained on the procedures as needed. Equifax expects you to comply with this Guidance beginning with the initial contact with the consumer (advertisement or other communication), whether written...

  • Page 156
    ... you better protect your identity Manage your credit, Credit Management. Alternatives: Monitor your credit Credit Monitoring Will help. Alternative: May help Avoid phrases or words that imply that the product can detect, prevent, or remediate all forms of identity theft. Marketing of Free Products...

  • Page 157
    ...or discount period, and any other terms that helps the consumer understand the pricing of the product at all times. You should have a clearly defined refund policy, and which is disclosed to the consumer prior to the "call to action." LifeLock Agreement for Consumer Disclosure Service RES-43904 32

  • Page 158
    ...not be unreasonably withheld. S S*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.S LifeLock Agreement for Consumer Disclosure Service RES-43904 33

  • Page 159
    ...Equifax Consumer Services LLC to access my personal credit information in order to (i) confirm my identity, (ii) display my credit data to me related to my use and enjoyment of the product and (iii) provide my credit data to LifeLock so that LifeLock may create and deliver to me, certain fraud alert...

  • Page 160
    ... for secure API calls or related platform services and technology, including without limitation the API interface and specifications ( "NqeifaxSMPISTechnology "), solely for the purpose of allowing Equifax to deliver to consumers directly the Services (including any Consumer Credit Information) as...

  • Page 161
    ...the Annual Minimum for the current contract year during the Pricing Term has already been met, [***]. (i) 2. 3. S For each month that Equifax obtains [***]% Service Availability Uptime, Broker shall pay to Equifax, on a monthly basis, $[***]. Mlerts.SEquifax will provide Credit Information Updates...

  • Page 162
    ...time commitment between Equifax and the Broker. *** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. LifeLock Agreement for Consumer Disclosure Service...

  • Page 163
    ...365) days per year for the purposes of reporting Service Availability incidents. Refer to the Equifax Application Support Guidelines, as updated from time to time by Equifax, for further information on Equifax's support procedures. Support Levels Level 1 Support Roles Equifax Broker Support Center...

  • Page 164
    ... access Equifax's standard consumer services. [***] Educational Content - Upon request, Equifax will provide Broker with educational content to enable Broker's customer service representatives to assist Broker's customers with understanding credit reports, credit scores and credit information alerts...

  • Page 165
    ... SNRVICNSPROVIDNRS [***] [***] ** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. LifeLock Agreement for Consumer Disclosure Service RES-43904 40

  • Page 166
    ... Equifax Credit Information and Services as of the Effective Date of this Agreement. Broker agrees to abide by the additional terms and conditions of this Exhibit. Pages 41 through 44 have been omitted from this exhibit and filed separately with the Securities and Exchange Commission. . LifeLock...

  • Page 167
    ...a 3-digit credit score, ranging from 300 to 850. CreditSMonitoringS&SMlerts Credit monitoring and alerts reviews an enrolled consumer's credit file and provides those consumers with alerts related to key credit file changes including new accounts, inquiries, address change, name change, bankruptcies...

  • Page 168
    ... monitoring and alerts reviews an enrolled consumer's credit file and provides those consumers with alerts related to key credit file changes including new accounts, inquiries, address change, name change, bankruptcies, liens, and judgments. S LifeLock Agreement for Consumer Disclosure Service...

  • Page 169
    ... Dates: [***] Additional Activities *** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. LifeLock Agreement for Consumer Disclosure Service RES-43904...

  • Page 170
    ... and integration of the same Equifax API into Broker solutions, the following additional activities also need to be completed by the dates specified: [***] *** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment...

  • Page 171
    ...THE CLASS AND SETTLEMENT CLASS 12 SETTLEMENT RELIEF 13 NOTICE TO THE CLASS 17 CLASS CLAIMS PROCESS 22 REQUESTS FOR EXCLUSION 22 OBJECTIONS TO SETTLEMENT 24 SETTLEMENT ADMINISTRATOR 25 RELEASE AND WAIVER 27 ATTORNEYS' FEES AND EXPENSES AND PLAINTIFF SERVICE AWARDS 30 PRELIMINARY APPROVAL ORDER, FINAL...

  • Page 172
    .... I. INTRODUCTION A. On January 22, 2015, LifeLock was served with a Class Action Complaint filed by Plaintiffs Napoleon Ebarle and Jeanne Stamm alleging that LifeLock's advertisements regarding its identity theft protection services violated Arizona's Consumer Fraud Act, Ariz. Rev. Stat. § 44...

  • Page 173
    ... the Action on the terms stated herein in order to avoid further expense, inconvenience, and interference with its business operations and to dispose of burdensome litigation. Therefore, LifeLock has determined that the settlement of the Action on the terms set forth herein is in its best interests...

  • Page 174
    ... Class Period; (xiii) insurance policies underlying LifeLock's $1 million guarantee; (xiv) information regarding LifeLock subscribers; (xv) alert histories including times when alerts may not have been delivered immediately; (xvi) product pricing; (xvii) identity theft protection plan cancellations...

  • Page 175
    ...Class Members and Settlement Subclass Members. LifeLock will separately pay the reasonable costs of administering the Settlement, any Class Counsel fees and expenses awarded, and any Service Awards to the named Plaintiffs. G. This Settlement was reached over the course of seven months of settlement...

  • Page 176
    ...of this Settlement Agreement. 9. "Class" means all members of a LifeLock identity theft protection plan in the United States at any time between September 1, 2010, and the date of the Preliminary Approval Order. LifeLock estimates there will be approximately 6.8 million Class Members. 10. "Class...

  • Page 177
    ... Notice, processing Claims, and making Settlement payments, including information in LifeLock's possession identifying each Class Member's name, last known address and/or last known email address, and date of enrollment in a LifeLock identity theft protection plan. 12. "Class Fund" means the amount...

  • Page 178
    ... "Final Settlement Date" means the next business day after both of the following have occurred: (1) (2) This Settlement Agreement is fully executed by all signatories; and The Court enters the Final Approval Order. 21. "FTC Action" means the action currently pending in the United States District...

  • Page 179
    ..., and representatives of the foregoing, and each of them, and all of the present and former directors, officers, employees, agents, attorneys, and shareholders of LifeLock and each of their present and former parents, subsidiaries, divisions, affiliates, predecessors, successors, and assigns. 8

  • Page 180
    ...not timely and validly exclude themselves from the Class pursuant to the procedure set forth in Section IX of this Settlement Agreement. 39. 40. "Settlement Class Member" means any member of the Settlement Class. "Settlement Fund" means Sixty-Eight Million Dollars ($68,000,000), which LifeLock has...

  • Page 181
    ..."Settlement Subclass Member" means all individuals who are members of the Settlement Subclass. "Subclass" means all individuals who enrolled in (i.e., became a member of) a LifeLock identity theft protection plan in the United States at any time between January 1, 2012, and April 30, 2015. LifeLock...

  • Page 182
    ...a Second Amended Complaint ("SAC") naming Renier Jerome Ebarle as a Plaintiff. The proposed SAC is attached hereto as EEhibit 7. 53. As a material part of this Settlement, LifeLock stipulates to and does not oppose the filing of the SAC provided that a Preliminary Approval Order, a Final Approval...

  • Page 183
    ... Order or a Final Approval Order, this Settlement Agreement and the Settlement proposed herein does not become effective for any reason, or if this Settlement Agreement and the Settlement proposed herein is terminated, canceled, or fails to become effective for any reason whatsoever, the class...

  • Page 184
    ... or part of the Sixty-Eight Million Dollars ($68,000,000.00) has not been distributed from the Court's Registry in the FTC Action to the Settlement Administrator by the date of entry of the Final Approval Order, then LifeLock agrees to pay within three (3) business days following entry of the Final...

  • Page 185
    ...funds that remain after eighteen months from the date on which the Court in the FTC Action enters the Stipulated Consent Order must be returned by the Settlement Administrator, including interest accrued thereon, to the Court's Registry in the FTC Action, and LifeLock shall concurrently pay an equal...

  • Page 186
    ..., using the Class Data and the information submitted by Valid Claimants, shall create and provide to Class Counsel and LifeLock's Counsel a complete and final list of Valid Claimants and Settlement Subclass Members, including for each the member's name and total payment amount as calculated...

  • Page 187
    ...49-1 Filed 11/04/15 Page 29 of 289 Class Data, as updated by the Settlement Administrator through the National Change of Address Database and as otherwise stated in Section VII of this Settlement Agreement. Checks to Valid Claimants and Settlement Subclass Members shall be valid for a period of one...

  • Page 188
    ... than three (3) business days following the entry of the Preliminary Approval Order, LifeLock shall provide the Settlement Administrator with the Class Data. The Class Data shall include two separate data sets: (1) a list of all Class Members and (2) a list of all Subclass Members. Each list shall...

  • Page 189
    ... identified by the Skip Tracing. The Settlement Administrator shall resend via First Class U.S. Mail, proper postage prepaid, the Summary Notice to the new address for each such Class Member within three (3) business days of obtaining each such new address. (5) Any mailed Summary Notice returned to...

  • Page 190
    ... Fund and Subclass Fund, and a brief description of the FTC Action and the status of that action. (2) Opt-Out Rights: The notices shall inform Class Members that they have the right to opt-out of the Class and the Settlement and shall provide the deadline and procedures for exercising this right...

  • Page 191
    ... will be paid separately by LifeLock. (5) Claim Form for Class Members: The notices shall advise the Class Members that a Claim Form is available on the Settlement Website or may be obtained from the Settlement Administrator and that a Claim Form may be submitted online or emailed or mailed to the...

  • Page 192
    ...the Settlement Website to LifeLock. F. Toll-Free Telephone Number: The Settlement Administrator shall establish and maintain a toll-free telephone number ("Toll-Free Number") where Class Members can obtain further information about the Settlement and their rights and request that a hard copy Claim...

  • Page 193
    ... of the Settlement Agreement. VIII. CLASS CLAIMS PROCESS 68. Each Class Member may make a claim for Twenty Dollars ($20.00) from the Class Fund by submitting a completed Claim Form to the Settlement Administrator via email, via the Settlement Website, or via U.S. Mail at the address specified on...

  • Page 194
    ...' Fees and Costs, and/or the requested Service Awards to Plaintiffs. 74. Not later than ten (10) days after the Opt-out Deadline, the Settlement Administrator shall provide to Class Counsel and LifeLock's Counsel a complete and final list of Class Members who submitted timely and valid requests...

  • Page 195
    ..., the identity of such counsel; and (vi) the objector's signature. 76. Not later than ten (10) days after the Objection Deadline, the Settlement Administrator shall provide to Class Counsel and LifeLock's Counsel all objections submitted by Class Members. 77. Any Class Member who submits a timely...

  • Page 196
    ... a forwarding address; (e) attempting to obtain updated address information for any emailed Class Notice returned as undeliverable or that bounces back; (f) making any additional mailings or emailings required under the terms of this Settlement Agreement; (g) establishing a Settlement Website that...

  • Page 197
    ...Court's Registry in the FTC Action any sums remaining in the Qualified Settlement Fund after all payments have been made from the Settlement Fund; and (r) as otherwise ordered by the Court or jointly requested and agreed upon by the Parties. 82. If the number of Class Members who submit requests to...

  • Page 198
    ... 87. Subject to Section XIX of this Settlement Agreement, the Parties agree that within one (1) year plus thirty (30) days of the Payment Date, the Settlement Administrator shall destroy all Class Members' personal identifying information received from LifeLock and otherwise in connection with the...

  • Page 199
    ... in the Action; (2) for rescission, restitution, or unjust enrichment for all damages of any kind related in any way to their enrollment or re-enrollment in or renewal of a LifeLock identity theft protection plan; (3) for violations of any state's deceptive, unlawful, and/or unfair business and/or...

  • Page 200
    ... damages, consumer redress, ...claiming any interest, in whole or in part, in the Action, or in any benefits, proceeds, or values under the Action on their behalf. 93. Plaintiffs expressly understand and acknowledge that they and all Settlement Class Members will be deemed by the Final Approval Order...

  • Page 201
    ...term of this Settlement Agreement and shall be included by reference in any Final Approval Order and Final Judgment entered by the Court. XIII. ATTORNEYS' FEES AND EXPENSES AND PLAINTIFF SERVICE AWARDS 97. Subject to the provisions of this Section, Class Counsel will make, and LifeLock agrees not...

  • Page 202
    ... the Plaintiffs, the Class Members, and/or the Settlement Class Members, any Released Claim, or the Action. 101. Any Service Awards awarded by the Court shall not be paid out of the Settlement Fund but instead paid separately by LifeLock. Class Counsel will make, and LifeLock agrees not to oppose...

  • Page 203
    ... provisions of this Settlement Agreement shall remain in full force and effect. 103. In accordance with instructions for payment provided by Class Counsel to LifeLock, the Attorneys' Fees and Expenses and Service Awards awarded by the Court shall be paid within twenty (20) days following the later...

  • Page 204
    ... requirements of 28 U.S.C. § 1715(d). 108. Not later than thirty (30) days following the Claims Deadline, the Parties shall file motion(s) seeking final approval of the Settlement and asking the Court to enter the Final Approval Order and Final Judgment substantially in the form attached to this...

  • Page 205
    ... with paragraph 54 of this Settlement Agreement. XVI. CONDITIONS IMPACTING FINALITY OF SETTLEMENT 113. If more than two percent (2%) of the total number of Class Members to whom Summary Notice was mailed or emailed request to exclude themselves from the Settlement, LifeLock shall have the option...

  • Page 206
    ... such option within ten (10) days after being notified in writing by the Settlement Administrator that the number of Class Members who have timely requested exclusion exceeds two percent (2%) of the total number of Class Members to whom the Summary Notice was sent via email or mail. 114. The...

  • Page 207
    ...apply nunc pro tunc. Nothing herein shall limit Lifelock's rights to assert any legal or equitable defense to any claim by a Class Member if this Settlement does not become final for any reason related to a subsequent review by any appellate court(s) in the Action, as set forth in paragraph 114. 117...

  • Page 208
    ..., without limitation, any argument concerning class certification, consumer fraud, and damages; F. This Settlement Agreement, the fact of its having been made, the negotiations leading to it, any informal discovery or action taken by a Party or Class Member pursuant to or in connection with...

  • Page 209
    ...'s Registry in the FTC Action) Thirty (30) days after entry of Preliminary Approval Order Event Deadline for Preliminary Approval Motion Deadline for LifeLock to provide Class Data to Settlement Administrator Deadline for Settlement Administrator to provide notice to federal or state officials per...

  • Page 210
    ...and request for Service Awards Objection, Opt-Out Deadline Claim Deadline Deadline for LifeLock to notify Class Counsel and the Court that it is cancelling the settlement Settlement Administrator to provide to Class Counsel and LifeLock's Counsel a final list of Class Members who requested exclusion...

  • Page 211
    ... any statements or comments, written or oral, about this Settlement or Settlement Agreement to any person other than to Class Members in any way other than as provided in this Settlement Agreement, the Class Notice, on the Settlement Website, or as otherwise agreed upon by LifeLock in writing in...

  • Page 212
    ... the action; and (iii) the general terms of the Settlement, including the Settlement Fund of Sixty-eight Million Dollars ($68,000,000.00). 122. Within one hundred and eighty (180) days after the Final Settlement Date (unless the time is extended by written agreement of the Parties), Class Counsel...

  • Page 213
    ... or have received a detailed description of it from Class Counsel and they have agreed to its terms; (6) they have consulted with Class Counsel about the Action and this Settlement Agreement and the obligations imposed on them as representatives of the Class; and (7) they shall remain and serve as...

  • Page 214
    ... any claim or defense, or of any point of fact or law (including but not limited to matters respecting class certification) on the part of any of the Parties. 130. LifeLock expressly denies Plaintiffs' allegations in the Action, the original Complaint, the FAC, and the SAC. Neither this Settlement...

  • Page 215
    ...Filed 11/04/15 Page 57 of 289 made in good faith and have a basis in fact, but consider it desirable for the Action to be settled and dismissed because of the substantial benefits that the proposed Settlement will provide to Class Members. 132. The Parties expressly acknowledge and agree that this...

  • Page 216
    ...Class Counsel and LifeLock's Counsel. The Parties expressly acknowledge that no other agreements, arrangements, or understandings not expressed in this Settlement...the State of Arizona, notwithstanding its conflict of laws provisions. 137. Any disagreement and/or action to enforce this Settlement ...

  • Page 217
    ... other conditions have made the office of the clerk of the court inaccessible, in which event the period shall run until the end of the next day that is not one of the aforementioned days. 140. The Class, the Settlement Class, Plaintiffs, Class Counsel, LifeLock, or LifeLock's Counsel shall not be...

  • Page 218
    ... of the alleged breach and provide a reasonable opportunity to cure the breach before taking any action to enforce any rights under this Settlement Agreement. 144. This Settlement Agreement may be signed with a facsimile signature or .pdf scanned signature and in counterparts, each of which shall...

  • Page 219
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 61 of 289 DATED: 10/28/15 /s/ Jeanne Stamm Jeanne Stamm DATED: Brian Litton DATED: Renier Jerome Ebarle DATED: LIFELOCK, INC. By Its Chief Legal Strategist 48

  • Page 220
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 62 of 289 DATED: Jeanne Stamm DATED: 10/28/15 /s/ Brian Litton Brian Litton DATED: Renier Jerome Ebarle DATED: LIFELOCK, INC. By Its Chief Legal Strategist 48

  • Page 221
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 63 of 289 DATED: Jeanne Stamm DATED: Brian Litton DATED: Oct 28, 2015 /s/ Reiner Ebarle Renier Jerome Ebarle DATED: LIFELOCK, INC. By Its Chief Legal Strategist 48

  • Page 222
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 64 of 289 DATED: Brian Litton DATED: Renier Jerome Ebarle DATED: 11/3/2015 LIFELOCK, INC. By /s/ Clarissa Cerda Its Chief Legal Strategist 48

  • Page 223
    ... 65 of 289 EEhibit List Exhibit 1: Claim Form Exhibit 2: [Proposed] Final Approval Order Exhibit 3: [Proposed] Final Judgment Exhibit 4: Long Form Class Notice Exhibit 5: [Proposed] Preliminary Approval Order Exhibit 6: Summary Notice Exhibit 7: Second Amended Complaint Exhibit 8: General Release...

  • Page 224
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 66 of 289 EXHIBIT 1

  • Page 225
    ...): bbbbbbbbbbbbbbbbbbbbbbbbbbbb IUcertifyUthatUtheUforegoingUisUtrueUandUcorrect: Signature: Name (please print): bbbbbbbbbbbbbbbbbbbbbbbbbbbb Email (optional): Date: ww / ww / wwww To view GCG's Privacy Notice, please visit http://www.gcginc.com/pages/privacy-policy.php QUESTIONS?UVISITUWWW...

  • Page 226
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 68 of 289 EXHIBIT 2

  • Page 227
    ...3:15-cv-258-HSG STAMM, BRIAN LITTON, and REINER [PROPOSED] ORDER GRANTING FINAL JEROME EBARLE on behalf of APPROVAL OF CLASS SETTLEMENT themselves and all other similarly situated, Plaintiffs, v. LIFELOCK, INC., Defendant. Date: Time: Location: Courtroom 15, 18th Floor Judge: Hon. Haywood S. Gilliam...

  • Page 228
    ...individuals who enrolled in a LifeLock identity theft protection plan in the United States at any time between January 1, 2012, and April 30, 2015. 4. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, the Court hereby certifies for settlement purposes only the Class and Subclass, which it...

  • Page 229
    ... of the claims of the Settlement Class members; (d) the named Class Representatives and Class Counsel have adequately represented and will continue to adequately represent and protect the interests of the Settlement Class; (e) class-wide treatment of the disputes raised in this action is superior...

  • Page 230
    ... Representatives, and the Settlement Class Members in this Action, and fully and finally resolves all such claims. LifeLock and each Settlement Class Member shall be bound by the Settlement, including the Release set forth in Section XII of the Settlement, and by this Order and the Final Judgment...

  • Page 231
    ... the prosecution of this Action and the Settlement. 13. The Court hereby awards service awards in the amount of $2,000 each, to each of the Plaintiffs as Class Representatives, to compensate them for their commitments and efforts on behalf of the Class in this Action. LifeLock shall pay such amounts...

  • Page 232
    ... in the Action; (2) for rescission, restitution, or unjust enrichment for all damages of any kind related in any way to their enrollment or re-enrollment in or renewal of a LifeLock identity theft protection plan; (3) for violations of any state's deceptive, unlawful, and/or unfair business and/or...

  • Page 233
    ...not apply to the claims of any Class Members who have timely and validly requested to be excluded from the Class. This permanent bar and injunction is necessary to protect and effectuate the Settlement, this Order and this Court's authority to effectuate the Settlement, and is ordered in aid of this...

  • Page 234
    ... receipt and the Settlement Administrator shall post a copy of this Final Order on the Settlement Website immediately upon receipt. IT IS SO ORDERED. Dated HAYWOOD S. GILLIAM JR. United States District Judge - 7 - [PROPOSED] ORDER GRANTING FINAL APPROVAL 1275525.3 OF CLASS SETTLEMENT CASE NO...

  • Page 235
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 77 of 289 EXHIBIT 3

  • Page 236
    ... JUDGMENT JEROME EBARLE on behalf of themselves and all other similarly situated, Plaintiffs, v. LIFELOCK, INC., Defendant. Judgment is hereby entered consistent with the Court's Order Granting Final Approval to Class Settlement dated _____, 20__. This document constitutes a judgment and a separate...

  • Page 237
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 79 of 289 JUDGMENT ENTERED: _____, 201_ By: CLERK OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA - 2 - [PROPOSED] FINAL SETTLEMENT 1275526.2 CASE NO. 3:15-CV-258-HSG

  • Page 238
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 80 of 289 EXHIBIT 4

  • Page 239
    ...alleged in the lawsuit, you are a Class Member and are eligible to submit a claim to receive a cash payment. If you enrolled in a LifeLock identity theft protection plan between January 1, 2012, and April 30, 2015, you are also a Subclass Member. As a result of the settlement, LifeLock has agreed to...

  • Page 240
    ... Contains Basic iNformatioN ...Page 3 1. Why is there a notice? ...Page 3 2. What is the lawsuit about?...Page 3 3. How does LifeLock respond to the allegations? ...Page 3 4. Has the Court decided who is right? ...Page 3 5. Why is this a class action?...Page 3 6. Why is there a settlement?...Page...

  • Page 241
    ... its information security program; and (4) LifeLock's promise to provide a "$1 Million Total Service Guarantee," which the Class Representatives allege purports to promise insurance in an amount up to $1,000,000 against identity theft. The Second Amended Complaint filed in the Lawsuit, which...

  • Page 242
    ... theft protection plan between January 1, 2012 and April 30, 2015. LifeLock is excluded from the Class as well as any parent, subsidiary, affiliate, or controlled person of LifeLock, as well as the officers, directors, agents, servants or employees of LifeLock and the immediate family members...

  • Page 243
    ...Settlement Agreement. If the Settlement Administrator needs more information, it may contact you directly. 12. How will payment amounts be calculated? Payment amounts will depend on two things: how many people file valid claims, and the date you enrolled in a LifeLock identity theft protection plan...

  • Page 244
    ... the request for service awards for each of the Class Representatives. Any objection must be made in writing and include the following information: • The name of this case, which is Ebarle et al. v. LifeLock, Inc., Case No. 3:15-CV-258-HSG; • Your full name, address and telephone number; • If...

  • Page 245
    ... LifeLock about the issues raised in the Lawsuit as described in Question 15 . The Settlement Agreement, available at www.EbarleClassSettlement.com, describes all of the claims you will release (give up). If you do nothing and are a Subclass Member, you will automatically receive a cash payment...

  • Page 246
    ...different date or time without notice, so check for updates on this website. At this hearing, the Court will consider whether the proposed settlement is fair, reasonable and adequate. The Court will also consider Class Counsel's application for attorneys' fees and expenses and for service awards for...

  • Page 247
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 89 of 289 EXHIBIT 5

  • Page 248
    ...-258-HSG STAMM, BRIAN LITTON, and REINER [PROPOSED] ORDER GRANTING JEROME EBARLE on behalf of PRELIMINARY PPROVAL OF CLASS themselves and all other similarly situated, SETTLEMENT Plaintiffs, v. LIFELOCK, INC., Defendant. Date: December 17, 2015 Time: 2:00 pm Location: Courtroom 15, 18th Floor Judge...

  • Page 249
    ... is defined as follows: All members of a LifeLock identity theft protection plan in the United States at any time between September 1, 2010 and the date of the Preliminary Approval Order. - 1 - [PROPOSED] ORDER GRANTING PRELIMINARY 1275528.4 APPROVAL OF CLASS SETTLEMENT CASE NO. 3:15-CV-258-HSG

  • Page 250
    ...in a LifeLock identity theft protection plan in the United States at any time between January 1, 2012, and April 30, 2015. Excluded from the Class are Defendant, any parent, subsidiary, affiliate, or controlled person of Defendant, as well as the officers, directors, agents, servants or employees of...

  • Page 251
    ... Administrator the Class Data for the Settlement Administrator's use in disseminating notice and processing Claims. The Class Data shall identify each Class Member's name, last known address and/or last known email address, and date of enrollment in a LifeLock identity theft protection plan. 14. The...

  • Page 252
    ...those Class Members for whom an email address is not available. The subject line for all emails covered by this paragraph shall be: Notice of Class Action Settlement. 16. The Settlement Administrator shall update the mailing addresses in the Class Data through the National Change of Address Database...

  • Page 253
    ... (5) business days after the Settlement Website is taken down, the Settlement Administrator shall transfer ownership of the URL for the Settlement Website to LifeLock. 21. The Settlement Administrator shall establish and maintain a toll-free telephone number ("Toll-Free Number") where Class Members...

  • Page 254
    ... include the following: (a) the name of the Action (Ebarle v. LifeLock, Inc., No. 15-cv-00258-HSG); (b) the objector's full name, address and telephone number; (c) if applicable, the name and address of any person claiming to be legally entitled to object on behalf of a Class Member and the basis of...

  • Page 255
    ... be posted on the Settlement Website. 32. The Parties shall file any responses to any Class Member objections, and any reply papers in support of final approval of the Settlement or Class Counsel's Fee Application or request for Plaintiff service awards, by no later than 75 days following the Notice...

  • Page 256
    ...shall not apply to the claims of any Class Members who have timely and validly requested to be excluded from the Class. Such injunction shall remain in force until Final Settlement Date or until such - 8 - [PROPOSED] ORDER GRANTING PRELIMINARY 1275528.4 APPROVAL OF CLASS SETTLEMENT CASE NO. 3:15-CV...

  • Page 257
    ... Date and deadline for the Settlement Website and Toll-Free Number to go live Deadline for Class Counsel to file application for Attorneys' Fees and Expenses and request for Service Awards Objection, Opt-Out Deadline Claim Deadline Deadline for LifeLock to notify Class Counsel and the Court that...

  • Page 258
    ...(1) year plus thirty (30) days after Payment Date Any checks issued as further distribution expire Deadline for Class Counsel to return documents produced by LifeLock Deadline for Settlement Administrator to return documents received from Class Counsel or LifeLock's Counsel IT IS SO ORDERED. Dated...

  • Page 259
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 101 of 289 EXHIBIT 6

  • Page 260
    ... alleged in the lawsuit, you are a Class Member. If you enrolled in a LifeLock identity theft protection plan between January 1, 2012, and April 30, 2015, you are also a Subclass Member. HOW DO I GET A CASH PAYMENT IF THE SETTLEMENT IS APPROVED? All Class members may submit a Claim Form to receive...

  • Page 261
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 103 of 289 If you wish to UNSUBSCRIBE from future email messages from the Claims Administrator with regard to this Settlement, please click on this link. 2

  • Page 262
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 104 of 289 Ebarle, et al. v. LifeLock, Inc. c/o GCG P.O. BoE 10248 Dublin, OH 43017-5748 Forwarding Service Requested 1234567890 JANE CLAIMANT 123 4TH AVE APT 5 SEATTLE, WA 67890 Claim No: LL2011111111 Control No: 1234567890

  • Page 263
    ... alleged in the lawsuit, you are a Class Member. If you enrolled in a LifeLock identity theft protection plan between January 1, 2012, and April 30, 2015, you are also a Subclass Member. HOW DO I GET A CASH PAYMENT IF THE SETTLEMENT IS APPROVED? All Class members may submit a Claim Form to receive...

  • Page 264
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 106 of 289 EXHIBIT 7

  • Page 265
    ...STAMM, BRIAN LITTON, and REINER JEROME EBARLE on behalf of SECOND AMENDED CLASS ACTION themselves and all other similarly situated, COMPLAINT Plaintiffs, v. LIFELOCK, INC., Defendant. 1. VIOLATIONS OF THE ARIZONA CONSUMER FRAUD ACT (ARIZ. REV. STAT. § 44-1522(A)) 2. BREACH OF CONTRACT 3. DECLARTORY...

  • Page 266
    ... and credit card companies cannot, LifeLock does an inferior job of providing redundant services that these entities provide, oftentimes for free. 4. At its core, LifeLock represents that it is the "leading provider" of "comprehensive" and "proactive identity theft protection services for consumers...

  • Page 267
    ... card companies provide a superior product and they provide it for free; v. statistical analyses on the rising trends in identity theft; however, a closer review of current data reveals that the incidence of new account fraudthe mainstay of LifeLock's services- had actually declined in 2013, meaning...

  • Page 268
    ... that, in substance, offer little to no value; the risk of new account fraud was less than 1%, meaning LifeLock's principle service is inapplicable to 99% of American consumers; and LifeLock's $1 Million Total Service Guarantee is essentially worthless. 10. Upon information and belief, as a result...

  • Page 269
    ...Tempe, Arizona 85281. LifeLock conducts business throughout California and the United States. It is currently estimated that LifeLock provides identity theft services to over 3 million subscribers. JURISDICTION AND VENUE 16. This Court has subject matter jurisdiction over this action under the Class...

  • Page 270
    ...purports to offer LifeLock Standard services plus fictitious identity monitoring, court records scanning, data breach notifications, credit reports and scores, financial account activity alerts, and a $1 million total service guarantee for $19.99/mo. 22. LifeLock Ultimate Plus protection purports to...

  • Page 271
    ... $30 dollars a month in Membership Fees for the Company to monitor their identities, but as discussed, LifeLock falsely and misleadingly advertises and sells its services and does not provide the protections against identity theft as promised. II. Defendant's Products are Marketed, Offered, and Sold...

  • Page 272
    ...' address information; 3. that such product, service, or program constantly monitors activity on each of its customers' consumer reports; 4. that such product, service, or program ensures that a customer will always receive a phone call from a potential creditor before a new credit account is opened...

  • Page 273
    ... would notify me if there was activity using my personal information in order to detect possible identity fraud," LifeLock failed to send her a single alert when she moved, changed her address on her credit card accounts, purchased a vehicle, and had credit approved for a lease on a rental property...

  • Page 274
    ...largest credit card companies and/or businesses, or car loans. 37. In addition to falsely and/or misleadingly representing LifeLock's diminished network, LifeLock misrepresents the value of its services, many of which are available for free. For example, LifeLock's black market website monitoring is...

  • Page 275
    ... a credit monitoring service or credit report. Similarly, Consumer Reports advises that "credit monitoring is a primitive defense against ID theft that can scare you with lots of alerts for day-to-day nonfraudulent changes in your credit report - only 1 in 20 alerts is actual illicit activity - and...

  • Page 276
    ...recounted that he reported the problems of delayed alerts, diminished alert notification service, and "throttling" of alerts with the following LifeLock officers and employees, among others: Lenstrohm, Director, Direct Response; Erick Dickens, 1279432.1 - 12 - AMENDED CLASS ACTION COMPLAINT CASE NO...

  • Page 277
    ... he raised concerns to these officers and employees about the effects of not sending out alerts, specifically addressing that "throttling" might violate the FTC Order. Burke also recommended that LifeLock "adjust its marketing messaging to reflect this diminished service." Id. at ¶¶ 16, 19. 49. In...

  • Page 278
    ... Lifelock subscribers, including Plaintiffs and all members of the proposed Class, provide Lifelock with sensitive personal data, including credit card, social security and bank account numbers. The FTC Order, in addition to what has previously been listed, ordered LifeLock (as well as any business...

  • Page 279
    ..., and LifeLock Chief Information Officer, Rich Stebbins, that LifeLock should immediately hire 12 information security professionals. Peters reports that in response, LifeLock fired Peters, resulting in Peters filing suit. (Id. at ¶¶ 20-25.) 1279432.1 - 15 - AMENDED CLASS ACTION COMPLAINT CASE NO...

  • Page 280
    ...intrusive, illegal, illegitimate, and then blacklist the source address. Id. 62. Accordingly, company insiders have confirmed that LifeLock intentionally misled its customers concerning the scope and effectiveness of its services. 1279432.1 - 16 - AMENDED CLASS ACTION COMPLAINT CASE NO. 3:15-CV-258

  • Page 281
    ...do so is itself a violation of the FTC Order. 66. In addition, upon information and belief, LifeLock fails to adequately inform its members that the Company only runs a credit report once a year and that the Sex Offender list maintained by LifeLock is not updated on a daily or weekly basis. 67. Upon...

  • Page 282
    ... Protection That It Purports Other Banks and Credit Card Companies Cannot Provide 70. In 2008, Experian Information Solutions, Inc. ("Experian"), a credit reporting agency, filed suit against LifeLock alleging that LifeLock's practice of placing and renewing "fraud alerts" under consumers' names...

  • Page 283
    ... procedures, and practices. Upon information and belief, the FTC investigation remains ongoing. 79. Thus, Defendant's representations that LifeLock offers protection that other banks and credit companies can't are misleading, at best. 1279432.1 - 19 - AMENDED CLASS ACTION COMPLAINT CASE NO. 3:15-CV...

  • Page 284
    ... because LifeLock does not monitor charges on customers' existing accounts, only on new accounts. Stated another way, LifeLock does not protect against those instances where someone steals your credit-card number and begins making purchases with that information. Thus, LifeLock's services only...

  • Page 285
    ... other banks and credit companies cannot offer. 86. Moreover, LifeLock's use of such statistics fails to inform consumers that LifeLock does not protect against tax and wage-related fraud, which the FTC listed as the most common type of identity theft in 2012. See https://www.truthinadvertising...

  • Page 286
    ...then states that he signed up for LifeLock and has had no problems since. This testimonial falsely and/or misleadingly leads consumers to believe that the result a customer can expect after signing up with LifeLock is a complete reduction in identity theft threats, i.e. that LifeLock's services will...

  • Page 287
    ...member, we'll spend up to $1 million to hire experts, lawyers, investigators, consultants and whomever else it takes to help your recovery. Benefits under the Service Guarantee are provided under a zero deductible identity theft insurance policy." Also promising, "Our U.S. based recovery agents work...

  • Page 288
    ...LifeLock member we will spend up to $1 million to hire experts, lawyers, investigators, consultants, and whoever else it takes to help your recovery." Thus, the service guarantee is supposed to cover legal costs, remediation, service costs, and case management costs in the event of an identity theft...

  • Page 289
    ... its advertising, website, and Service Terms, LifeLock made analogous offers to Plaintiffs and the members of the Class to protect their identity by, among other things, providing "comprehensive" protection that "banks and credit card companies" cannot provide, "up-to-the-minute" alerts, adequate...

  • Page 290
    ..." identity theft protection. Subscribers rely on LifeLock's promise of "comprehensive" monitoring to mean that LifeLock does in fact have the capability of providing such a service. As stated above, LifeLock's services do not cover some of the largest credit card companies and businesses...

  • Page 291
    ... in credit monitoring, let alone provide a service superior to that provided by banks and credit card companies for free. 113. Finally, LifeLock's fifth contractual obligation is that it will use statistical analyses on rising trends in identity theft to better protect its subscribers. Subscribers...

  • Page 292
    ... Stamm submitted her personal information to LifeLock. 124. At no time relevant hereto was Plaintiff Stamm aware that LifeLock was not permitted to submit fraud alerts on her behalf; that LifeLock's consumer alert notification 1279432.1 - 28 - AMENDED CLASS ACTION COMPLAINT CASE NO. 3:15-CV...

  • Page 293
    ... late February 2015, Mr. Litton received correspondence from a credit company that someone was attempting to open a credit account in his name. He informed the company that it was not him, and the credit card company closed the account. Mr. Litton never received an alert from LifeLock. 128. Shortly...

  • Page 294
    ... to submit fraud alerts on her behalf; that LifeLock's consumer alert notification services were routinely disabled by the Company; or that LifeLock's technology and personnel were deficient and incapable of protecting the security, confidentiality, and integrity of personal information collected...

  • Page 295
    ... "Class Period") subscribers of LifeLock's fee-based theft protection services. Excluded from the Class are Defendant, any parent, subsidiary, affiliate, or controlled person of Defendant, as well as the officers, directors, agents, servants or employees of Defendant and the immediate family members...

  • Page 296
    ... failed to disclose the effects of not sending out alerts. 149. LifeLock's advertisements, marketing, and customer service representatives purposely used inconsistent and confusing terms and/or high pressure sales tactics so as to 1279432.1 - 32 - AMENDED CLASS ACTION COMPLAINT CASE NO. 3:15-CV-258

  • Page 297
    ... 49-1 Filed 11/04/15 Page 139 of 289 confuse customers and prevent them from bringing legitimate claims and/or canceling their services. 150. Upon information and belief, LifeLock knowingly violated the terms of the FTC Order and used false, misleading, and deceptive representations and/or omissions...

  • Page 298
    ... that LifeLock's Membership Plans provide: (a) protection from fraud or unauthorized account charges or "peace of mind"; (b) a solution to financial security; (c) live member support 24/7/365 and up-tothe-minute "alerts" of any threat of identity theft; and (d) a $1 million total service guarantee...

  • Page 299
    ... an order declaring that Defendant's actions are unlawful; and d) grant such other legal and equitable relief as the Court may deem appropriate, including costs and attorneys' fees. JURY DEMAND. Plaintiffs and the Class members hereby request a trial by jury. Dated: October 15, 2015 Respectfully...

  • Page 300
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 142 of 289 EXHIBIT 8

  • Page 301
    ...its identity theft protection services or information security program; (f) Any and all claims that LifeLock's advertising or disclosures regarding LifeLock's identity theft protection services or information security program constituted a fraudulent, unlawful, unfair, or deceptive business practice...

  • Page 302
    ... consequences, including any penalties or interest, relating to the payment of any settlement benefits described in the Class Action Settlement Agreement 5. Ebarle and the Released Parties expressly agree that any and all force and effectiveness of this General Release is entirely contingent upon...

  • Page 303
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 145 of 289 EXHIBIT 9

  • Page 304
    ...its identity theft protection services or information security program; (f) Any and all claims that LifeLock's advertising or disclosures regarding LifeLock's identity theft protection services or information security program constituted a fraudulent, unlawful, unfair, or deceptive business practice...

  • Page 305
    ... tax consequences,including any penalties or interest, relating to the payment of any settlement benefits described in the Class Action Settlement Agreement 6. Stamm and the Released Parties expressly agree that any and all force and effectiveness of this General Release is entirely contingent upon...

  • Page 306
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 148 of 289 EXHIBIT 10

  • Page 307
    ...its identity theft protection services or information security program; (f) Any and all claims that LifeLock's advertising or disclosures regarding LifeLock's identity theft protection services or information security program constituted a fraudulent, unlawful, unfair, or deceptive business practice...

  • Page 308
    ... tax consequences, including any penalties or interest, relating to the payment of any settlement benefits described in the Class Action Settlement Agreement Litton and the Released Parties expressly agree that any and all force and effectiveness of this General Release is entirely contingent upon...

  • Page 309
    Case 3:15-cv-00258-HSG Document 49-1 Filed 11/04/15 Page 151 of 289 EXHIBIT 11

  • Page 310
    ...its identity theft protection services or information security program; (f) Any and all claims that LifeLock's advertising or disclosures regarding LifeLock's identity theft protection services or information security program constituted a fraudulent, unlawful, unfair, or deceptive business practice...

  • Page 311
    ... consequences, including any penalties or interest, relating to the payment of any settlement benefits described in the Class Action Settlement Agreement R.J.Ebarle and the Released Parties expressly agree that any and all force and effectiveness of this General Release is entirely contingent upon...

  • Page 312
    ... identity theft protection service (Section I.A.5); 2. The Permanent Injunction enjoins LifeLock from "misrepresenting in any manner, expressly or by implication, the manner or extent to which they maintain and protect the privacy, confidentiality, or security of any personal information collected...

  • Page 313
    ...that LifeLock violated the Permanent Injunction by: (a) failing to establish and maintain a comprehensive information security program to protect its users' sensitive personal data, including credit card, social security, and bank account numbers; (b) falsely advertising that it protected consumers...

  • Page 314
    ... LifeLock pursuant to settlement: (i) of the Covered Class Action, or (ii) with any State Attorney General's Office entered within four (4) months from the date of this Order; b. Either: (i) a credit card company, bank, or other financial institution has credited the Affected Consumer's financial...

  • Page 315
    ... as follows: 1. Pursuant to L.R. Civ. 67.1 and Fed. R. Civ. P. 67, LifeLock shall: (a) deposit One Hundred Million Dollars ($100,000,000) ("Settlement Funds") into the Court's Registry within five (5) business days of entry of this Order to be held in escrow for the sole purpose of distributing the...

  • Page 316
    ... by the earlier of eighteen (18) months from the date of this Order or two hundred seventy (270) days from the date of final court approval of the settlement agreement in the Covered Class Action. E. Subject to Section II.D, LifeLock may use up to Sixty Eight Million Dollars ($68,000,000) of the...

  • Page 317
    ... the amount of Settlement Funds remaining in the Court's Registry equal to: (1) Money Received by Affected Consumers, other than such Money Received that was paid out of an escrow account funded under Section II.D and compliant with Section II.D.2 at the time of issuance of payment to the Affected...

  • Page 318
    ... (including consumer information remedies) as it determines to be reasonably related to LifeLock's practices as set forth in this Order. Any money not used for such equitable relief is to be deposited to the U.S. Treasury as disgorgement. LifeLock has no right to challenge any actions the Commission...

  • Page 319
    ... that, in order that compliance with the provisions of the Permanent Injunction and this Order may be monitored: A. For a period of five (5) years from the date of entry of this Order, LifeLock shall notify the Commission of any changes in its corporate structure or any business entity that -8-

  • Page 320
    ... Injunction or this Order; or a change in the business name or address, at least thirty (30) days prior to such change, provided that, with respect to any proposed change in the business entity of which LifeLock learns less than thirty (30) days prior to the date such action is to take place...

  • Page 321
    ..., for the purpose of monitoring LifeLock's compliance with the Permanent Injunction and this Order: A. Within fourteen (14) days of receipt of written notice from a representative of the Commission, LifeLock shall submit additional written reports or other requested information, which are true and...

  • Page 322
    ...related to identity theft: 1. Accounting records that reflect the cost of goods or services sold, revenues generated, and the distribution of such revenues; 2. Personnel records accurately reflecting: the name, address, and telephone number of each person employed in any capacity by such business...

  • Page 323
    ... to all plans, reports, studies, reviews, audits, audit trails, policies, training materials, and assessments, and any other materials relating to LifeLock's compliance with the Section of the Permanent Injunction titled "Biennial Assessment Requirements." C. For a period of five (5) years from the...

  • Page 324
    ... that each payment was credited to an Affected Consumer's financial account or was otherwise cashed, and (6) all escrow account activity and balances. VIII. DISTRIBUTION OF ORDER IT IS FURTHER ORDERED that: For a period of five (5) years from the date of entry of this Order, LifeLock shall deliver...

  • Page 325
    ... sworn statement acknowledging receipt of this Order. X. RETENTION OF JURISDICTION IT IS FURTHER ORDERED that the Court shall continue to retain jurisdiction of this matter for all purposes. IT IS SO ORDERED, this day of 2015. U.S. District Judge United States District Court for the District of...

  • Page 326
    ...JJT Document 64-1 Filed 12/17/15 Page 15 of 16 STIPULTTED TND TGREED TO BY: FOR DEFENDTNT LIFELOCK: /s/ Todd Davis /s/ David Boies Richard Todd Davis David Boies Chief Executive Officer, LifeLock, Inc. Boies, Schiller & Flexner LLP 333 Main Street Armonk, NY 10504 (914) 749-8200 (telephone) (914...

  • Page 327
    ... Hong Park Federal Trade Commission 600 Pennsylvania Ave, NW Mail Drop CC-9528 Washington , DC 20580 (202) 326-2426 (Madden) (202) 326-3197 (facsimile) [email protected] - 16 -

  • Page 328
    Exhibit 21.1 SUBSIDIARIES OF LIFELOCK, INC. Name Jurisdiction of Incorporation/Formation ID Analytics, LLC SageStream, LLC Lemon, LLC Lemon Argentina, S.R.L. Lavender Holding, LLC LifeLock Consumer Development, LLC Delaware Delaware Delaware Argentina Delaware Delaware

  • Page 329
    ... No. 333-194741) pertaining to the Lemon, Inc. 2008 Equity Incentive Plan of LifeLock, Inc.; (4) Registration Statement (Form S-8 No. 333-206118) pertaining to the 2012 Incentive Compensation Plan and the 2012 Employee Stock Purchase Plan of LifeLock, Inc. of our reports dated February 23, 2016 with...

  • Page 330
    ...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, Todd Davis, cdrtify that: 1. 2. I havd rdvidwdd this Annual...accounting...thd rdgistrant's board of dirdctors...financial information; and Any fraud, ...

  • Page 331
    ...report financial information; and 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. /s/ Chris Power Chris Power Chief Financial Officer (Principal Financial and Accounting Officer...

  • Page 332
    ...In connection with the Annual Report on Form 10-K of LifeLock, Inc. (the "Company") for the year ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Todd Davis, Chief Executive Officer of the Company, certify, to the best of my knowledge...

  • Page 333
    ... connection with the Annual Report on Form 10-K of LifeLock, Inc. (the "Company") for the year ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Chris Power, Chief Financial Officer of the Company, certify, to the best of my knowledge...

  • Page 334